The Global Airline Industry (Aerospace Series (PEP))

509 Pages·2009·5.05 MB·English

by  Peter Belobaba

THE GLOBAL AIRLINE
INDUSTRY
The G lobal A i rline I ndustry E d i t e d B y P e t e r B e lobaba, Amedeo Odoni and Cynthia Barnhart
© 2009 John Wiley & Sons, L td. ISBN: 978-0-470-74077-4
THE GLOBAL AIRLINE
INDUSTRY
Edited By
Peter Belobaba
DepartmentofAeronautics&Astronautics,MIT, USA
Amedeo Odoni
DepartmentsofAeronautics&AstronauticsandCivil&EnvironmentalEngineering,MIT,
USA
Cynthia Barnhart
DepartmentofCivil&EnvironmentalEngineering,MIT, USA
A John Wiley and Sons, Ltd., Publication
Thiseditionfirstpublished2009
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Contents
List of Contributors xiii
Series Preface xv
Notes on Contributors xvii
Acknowledgements xxiii
1 Introduction and Overview 1
PeterP. Belobaba andAmedeoOdoni
1.1 Introduction: The Global Airline Industry 1
1.1.1 Deregulationand Liberalization Worldwide 5
1.1.2 RecentIndustry Evolution 6
1.1.3 LookingAhead: Industry Challenges 12
1.2 Overview of Chapters 13
References 17
2 The International Institutional and Regulatory Environment 19
AmedeoOdoni
2.1 Introduction 19
2.2 Background on the International Regulatory Environment 20
2.2.1 TheChicago Convention 20
2.2.2 “Freedomsof the Air” 21
2.3 Airline Privatization and International Economic Regulation 24
2.3.1 Airline Privatization 24
2.3.2 TypesandCritical Aspects of Air ServiceAgreements(ASAs) 25
2.3.3 TypicalContent ofBilateral and Multilateral ASAs 26
2.3.4 TheUnified EuropeanUnion Marketand OtherMajor
Developments 30
2.4 Airports 32
2.4.1 Restrictions on Airport Access 33
2.4.2 Airport Ownership andManagement 36
2.5 Air Traffic Management 39
2.6 Key Organizations and Their Roles 40
vi Contents
2.6.1 International Organizations 41
2.6.2 Organizations in the USA 43
2.7 Summary and Conclusions 45
References 46
3 Overview of Airline Economics, Markets and Demand 47
PeterP. Belobaba
3.1 Airline Terminology and Definitions 47
3.1.1 Basic Airline Profit Equation 49
3.2 Air Transportation Markets 51
3.2.1 TypicalAir PassengerTrip 51
3.2.2 Spatial Definitions of Airline Markets 53
3.3 Origin–Destination Market Demand 55
3.3.1 Dichotomy of Airline Demandand Supply 56
3.3.2 Factors Affecting Volume of O-D Demand 57
3.3.3 Quality ofService Factors 58
3.3.4 Total TripTime andFrequency 59
3.4 Air Travel Demand Models 60
3.4.1 Elasticity of Air TravelDemand 61
3.4.2 Air TravelDemandSegments 62
3.4.3 O-DMarketDemandFunctions 65
3.5 Airline Competition and Market Share 67
3.5.1 MarketShare/FrequencyShare Model 68
3.5.2 S-curveModelFormulation 70
3.6 Chapter Summary 70
References 71
4 Fundamentals of Pricing and Revenue Management 73
PeterP. Belobaba
4.1 Airline Prices and O-D Markets 74
4.1.1 Regulatedvs. Liberalized Pricing 74
4.1.2 TheoreticalPricing Strategies 75
4.1.3 Price Discrimination vs. ProductDifferentiation 77
4.2 Airline Differential Pricing 78
4.2.1 MarketSegmentation 79
4.2.2 Fare ProductRestrictions 80
4.2.3 Traditional Airline FareStructures 82
4.2.4 RecentTrendsin Airline Pricing 84
4.3 Airline Revenue Management 88
4.3.1 ComputerizedRevenueManagementSystems 90
4.3.2 Flight Overbooking 93
4.3.3 EMSR Methodsfor Flight LegRevenueOptimization 98
4.3.4 NetworkRevenueManagement 101
4.3.5 RevenueManagementfor LessRestrictedFare Structures 108
References 111
Contents vii
5 Airline Operating Costs and Measures of Productivity 113
PeterP. Belobaba
5.1 Airline Cost Categorization 114
5.1.1 Administrative vs. Functional CostCategories 114
5.1.2 CostDrivers by Functional Category 119
5.2 Operating Expense Comparisons 119
5.2.1 PercentageBreakdownof Operating Expenses 120
5.2.2 Legacyvs.Low-CostAirlines 122
5.2.3 Flight Operating Cost Comparisons 132
5.3 Comparisons of Airline Unit Costs 136
5.3.1 Total Operating Costs vs. Unit Costs 136
5.3.2 Legacyvs.Low-CostAirline Unit Costs 138
5.3.3 Unit CostComparisons inEurope, Asia and Worldwide 142
5.4 Measures of Airline Productivity 146
5.4.1 Aircraft Productivity 146
5.4.2 LaborProductivity 148
References 150
6 The Airline Planning Process 153
PeterP. Belobaba
6.1 Fleet Planning 153
6.1.1 Airline FleetDecisions 154
6.1.2 FleetPlanning Methods 159
6.2 Route Planning 162
6.2.1 HubEconomicsand NetworkStructure 163
6.2.2 Route Planning andEvaluation 168
6.3 Airline Schedule Development 173
6.3.1 FrequencyPlanning 174
6.3.2 Timetable Development 175
6.3.3 FleetAssignment and Aircraft Rotations 178
6.4 The Future: Integrated Airline Planning 180
References 180
7 Airline Schedule Optimization 183
CynthiaBarnhart
7.1 Schedule Optimization Problems 184
7.2 Fleet Assignment 185
7.2.1 TheFleet Assignment Model 188
7.2.2 FleetAssignment Solutions/Impacts 192
7.2.3 ExtendingBasic FleetAssignment Models 192
7.3 Schedule Design Optimization 197
7.3.1 Modelingthe Optimization of Flight Retiming andFleet
Assignment Problems 199
7.4 Crew Scheduling 201
7.4.1 TheCrewPairing Problem 202
7.4.2 CrewSchedulingProblem Solutions andImpacts 206
viii Contents
7.5 Aircraft Maintenance Routing and Crew Pairing Optimization 207
7.5.1 Modelingand Solving the EnhancedCrewPairing
Problem 208
7.6 Future Directions for Schedule Optimization 210
References 210
8 Airline Flight Operations 213
Alan H.Midkiff, R. JohnHansman and Tom G. Reynolds
8.1 Introduction 213
8.2 Regulation and Scheduling 214
8.2.1 GeneralRegulatory Requirements 214
8.2.2 Flight CrewRegulation 214
8.2.3 Flight CrewScheduling 216
8.3 Flight Crew Activities During a Typical Flight 217
8.3.1 Flight CrewSign-in 217
8.3.2 Operations/Planning 218
8.3.3 Pre-flight 223
8.3.4 Pre-departure 230
8.3.5 Gate Departure 231
8.3.6 Taxi-out 233
8.3.7 Takeoff 233
8.3.8 Terminal AreaDeparture 234
8.3.9 Climb 236
8.3.10 Cruise 237
8.3.11 Descent 240
8.3.12 Terminal AreaArrival 242
8.3.13 Final Approach 243
8.3.14 Landingand Rollout 246
8.3.15 Taxi-in 246
8.3.16 Parking 247
8.3.17 Post-flight 248
8.4 Summary 249
8.5 Appendix: List of Acronyms 250
References 251
9 Irregular Operations: Schedule Recovery and Robustness 253
CynthiaBarnhart
9.1 Introduction 253
9.2 Irregular Operations 254
9.2.1 Managing IrregularOperations: Airline Operations Control
Centers 256
9.2.2 Options for Schedule Recoveryfrom Irregular Operations 257
9.2.3 ScheduleRecoveryfrom IrregularOperations: Objectivesand
Process 259
9.2.4 Evaluating the Costs of RecoveryOptions: TheChallenges
Impartedby Uncertainty andDownstream Effects 268
Contents ix
9.3 Robust Airline Scheduling 269
9.3.1 Robust Schedule Design 270
9.3.2 Robust FleetAssignment 270
9.3.3 Robust Aircraft Routing 271
9.3.4 Robust CrewScheduling 272
9.4 Directions for Ongoing and Future Work on Schedule Recovery from
Irregular Operations 273
References 274
10 Labor Relations and Human Resource Management in the Airline
Industry 275
JodyHoffer Gittell, Andrew vonNordenflycht,ThomasA. Kochan, Robert
McKersieand GregJ. Bamber
10.1 Alternative Strategies for the Employment Relationship 276
10.2 Labor Relations in the US Airline Industry 277
10.2.1 Regulatory Framework for USLabor Relations 278
10.2.2 USAirline Responses to CostPressuresPost-deregulation 281
10.2.3 USLabor Relations Post-9/11 285
10.3 Labor Relations in the Airline Industry in Other Countries 287
10.3.1 TheInternational Regulatory Frameworkfor LaborRelations 288
10.3.2 Summary of Airline Labor Relations Strategies: What Works? 296
10.4 Human Resource Management at Airlines 297
10.4.1 Hiring and Training for Relational Competence 301
10.4.2 Flexible Boundaries BetweenJobs 302
10.4.3 Supervisory Coachingand Feedback 302
10.4.4 Performance Measurementat the ProcessLevel 303
10.4.5 ConflictResolution 304
10.4.6 Boundary Spanning Roles 305
10.4.7 Partnering with OtherKeyPlayers 306
10.5 Conclusions 307
References 308
11 Aviation Safety and Security 313
Arnold Barnett
11.1 Safety 314
11.1.1 Measuring Air Safety: Some Hazards 314
11.1.2 TheQ-statistic 316
11.1.3 Some CalculatedQ-values 317
11.1.4 MoreCalculated Q-statistics 318
11.1.5 Are Some Airlines Safer ThanOthers? 319
11.1.6 A Collision Risk Assessment 321
11.1.7 Midair Collision Risk 324
11.2 Security 325
11.2.1 September11in Context 325
11.2.2 Some Costs ofAviation Security 326
11.2.3 Some Security Procedures 327
x Contents
11.2.4 IsItWorth It? 332
11.2.5 TwoEconomic Paradigms 332
11.2.6 A EuropeanDilemma 334
11.2.7 MoreSecurity Dilemmas 336
11.2.8 Final Remarks 340
References 341
12 Airports 343
AmedeoOdoni
12.1 Introduction 343
12.2 General Background 345
12.3 Physical Characteristics 349
12.3.1 Airside DesignStandards 349
12.3.2 GeometricConfiguration on Airside 352
12.3.3 Typology of PassengerBuildings 355
12.3.4 Assessing PassengerBuilding Concepts 357
12.3.5 GroundAccess 358
12.4 Capacity, Delays and Demand Management 360
12.4.1 Airside Capacity 360
12.4.2 Airside Delaysand Mitigation 362
12.4.3 Landside Capacity and Levelof Service 364
12.5 Institutional, Organizational and Economic Characteristics 367
12.5.1 Airport Ownership andManagement 367
12.5.2 Airport User Charges 368
12.5.3 Economic Regulation, Single Tilland Dual Till 372
12.5.4 Financing Capital Projects 374
References 375
13 Air Traffic Control 377
R. JohnHansman andAmedeoOdoni
13.1 Introduction 377
13.2 The Generic Elements of an ATC System 378
13.2.1 Communications Systems 378
13.2.2 Navigation Systems 379
13.2.3 Surveillance Systems 384
13.2.4 Flight and WeatherInformation Systems 387
13.3 Airspace and ATC Structure 387
13.4 ATC Operations 389
13.5 Standard Procedures 392
13.6 Capacity Constraints 393
13.7 Congestion and Air Traffic Management 398
13.8 Future ATC Systems 403
References 403