Peter Belobaba

The global airline industry

List of Contributors. Series Preface. Notes on Contributors. Acknowledgements. 1 Introduction and Overview (P eter P. Belobaba and Amedeo Odoni). 1.1 Introduction: The Global Airline Industry. 1.2 Overview of Chapters. References. 2 The International Institutional and Regulatory Environment (Amedeo Odoni). 2.1 Introduction. 2.2 Background on the International Regulatory Environment. 2.3 Airline Privatization and International Economic Regulation. 2.4 Airports. 2.5 Air Traffic Management. 2.6 Key Organizations and Their Roles. 2.7 Summary and Conclusions. References. 3 Overview of Airline Economics, Markets and Demand (Peter P. Belobaba). 3.1 Airline Terminology and Definitions. 3.2 Air Transportation Markets. 3.3 Origin-Destination Market Demand. 3.4 Air Travel Demand Models. 3.5 Airline Competition and Market Share. 3.6 Chapter Summary. References. 4 Fundamentals of Pricing and Revenue Management ( Peter P. Belobaba). 4.1 Airline Prices and O-D Markets. 4.2 Airline Differential Pricing. 4.3 Airline Revenue Management. References. 5 Airline Operating Costs and Measures of Productivity ( Peter P. Belobaba). 5.1 Airline Cost Categorization. 5.2 Operating Expense Comparisons. 5.3 Comparisons of Airline Unit Costs. 5.4 Measures of Airline Productivity. References. 6 The Airline Planning Process (Peter P. Belobaba). 6.1 Fleet Planning. 6.2 Route Planning. 6.3 Airline Schedule Development. 6.4 The Future: Integrated Airline Planning. References. 7 Airline Schedule Optimization (Cynthia Barnhart). 7.1 Schedule Optimization Problems. 7.2 Fleet Assignment. 7.3 Schedule Design Optimization. 7.4 Crew Scheduling. 7.5 Aircraft Maintenance Routing and Crew Pairing Optimization. 7.6 Future Directions for Schedule Optimization. References. 8 Airline Flight Operations (Alan H. Midkiff, R. John Hansman and Tom G. Reynolds). 8.1 Introduction. 8.2 Regulation and Scheduling. 8.3 Flight Crew Activities During a Typical Flight. 8.4 Summary. 8.5 Appendix: List of Acronyms. References. 9 Irregular Operations: Schedule Recovery and Robustness (Cynthia Barnhart). 9.1 Introduction. 9.2 Irregular Operations. 9.3 Robust Airline Scheduling. 9.4 Directions for Ongoing and Future Work on Schedule Recovery from Irregular Operations. References. 10 Labor Relations and Human Resource Management in the Airline Industry (Jody Hoffer Gittell, Andrew von Nordenflycht, Thomas A. Kochan, Robert McKersie and Greg J. Bamber). 10.1 Alternative Strategies for the Employment Relationship. 10.2 Labor Relations in the US Airline Industry. 10.3 Labor Relations in the Airline Industry in Other Countries. 10.4 Human Resource Management at Airlines. 10.5 Conclusions. References. 11 Aviation Safety and Security (Arnold Barnett). 11.1 Safety. 11.2 Security. References. 12 Airports (Amedeo Odoni). 12.1 Introduction. 12.2 General Background. 12.3 Physical Characteristics. 12.4 Capacity, Delays and Demand Management. 12.5 Institutional, Organizational and Economic Characteristics. References. 13 Air Traffic Control (R. John Hansman and Amedeo Odoni). 13.1 Introduction. 13.2 The Generic Elements of an ATC System. 13.3 Airspace and ATC Structure. 13.4 ATC Operations. 13.5 Standard Procedures. 13.6 Capacity Constraints. 13.7 Congestion and Air Traffic Management. 13.8 Future ATC Systems. References. 14 Air Transport and the Environment (Karen Marais and Ian A. Waitz). 14.1 Introduction. 14.2 Limiting Aviations Environmental Impact: The Role of Regulatory Bodies. 14.3 Airport Water Quality Control. 14.4 Noise. 14.5 Surface Air Quality. 14.6 Impact of Aviation on Climate. 14.7 Summary and Looking Forward. References. 15 Information Technology in Airline Operations, Distribution and Passenger Processing (Peter P. Belobaba, William Swelbar and Cynthia Barnhart). 15.1 Information Technology in Airline Planning and Operations. 15.2 Airline Distribution Systems. 15.3 Distribution Costs and E-commerce Developments. 15.4 Innovations in Passenger Processing. References. 16 Critical Issues and Prospects for the Global Airline Industry (William Swelbar and Peter P. Belobaba). 16.1 Evolution of US and Global Airline Markets. 16.2 Looking Ahead: Critical Challenges for the Global Airline Industry. References. Index.

Survey Paper---Airline Yield Management An Overview of Seat Inventory Control

The seat inventory control component of airline yield management is examined, with an emphasis on the practical aspects of the problem. A survey of current airline practice indicates that seat inventory control is dependent on human judgment rather than systematic analysis. Past work on the development of mathematical methods in this area has focused on large-scale optimization models and simplified representations of the problem. There remains a need for practical solution approaches that incorporate quantitative decision tools.

Applications of Operations Research in the Air Transport Industry

This paper presents an overview of several important areas of operations research applications in the air transport industry. Specific areas covered are: the various stages of aircraft and crew schedule planning; revenue management, including overbooking and leg-based and network-based seat inventory management; and the planning and operations of aviation infrastructure (airports and air traffic management). For each of these areas, the paper provides a historical perspective on OR contributions, as well as a brief summary of the state of the art. It also identifies some of the main challenges for future research.

Impacts of yield management in competitive airline markets

This paper presents the results of the first known study of the impacts of airline yield management (YM) under competitive market conditions, taking into account the YM capabilities of competing airlines. This study makes use of a simulation model that includes both passenger choice behavior and the actual functions of airline yield management systems. We used this simulation model to evaluate the impacts of YM systems on the market shares, traffic and revenues of each competitor in a hypothetical market, as well as on the market as a whole.

Competitive fare and frequency effects in airport market share modeling

Previous efforts to model the distribution of passenger traffic between airports in a multi-airport system have focused on ‘catchment areas’ associated with competing airports, which generally do not change in the short to medium term. Since deregulation of US airline markets, however, there have been substantial shifts in airport market shares as a result of changes in relative airline fares and service frequency at competing airports serving the same metropolitan area. In this paper, we develop and estimate an airport market share model based on the dynamics of airline pricing and frequency decisions, which can in fact vary dramatically over time. We argue that the distribution of traffic between competing airports is modeled most correctly at the level of the origin-destination market, as a function of relative fares charged by airlines at each airport and the effective frequency of service in the O-D market from each airport. The statistical estimation of price and time elasticities for several case studies demonstrates the importance of including these airline supply decisions in the modeling of airport market shares.

Yield Management Impacts on Airline Spill Estimation

The correct estimation of spill, or passenger demand turned away, is an integral part of the determination of optimal aircraft capacities in the airline fleet assignment process. While making advances in the solution of the large-scale fleet assignment optimization problem, airlines have continued to use an aggregate approach to spill estimation. This aggregate approach ignores the effects of yield management practices that have been widely implemented by airlines during the past decade. In this paper, we illustrate the importance of incorporating the effects of yield management booking limits into the methodology used to estimate both the number of passengers spilled at a given aircraft capacity and their associated revenue value. We describe an approach to spill estimation that makes use of the detailed demand information provided by yield management systems, and we present recursive algorithms that can be used to obtain more accurate spill estimates in cases when multiple booking classes are used. Numerical examples are presented to illustrate the extent to which the outcomes of the different estimation approaches differ, suggesting that these differences can be large enough to have an impact on optimal fleet assignment.

Airline market concentration

Changes in competition in selected US domestic airline markets since deregulation of the airline industry are examined in this paper, focusing on both the top 100 markets and the largest markets out of dominated cities. Our analysis of carrier concentration in origin-destination markets since 1978 shows an increasing trend in concentration in recent years, after an initial period of decreases. The average concentration levels in the top 100 markets were still lower in 1991 than in 1979. At the same time, average concentration levels in 150 markets out of ‘dominated’ cities had returned to 1979 levels by 1991, after reaching a low point in 1985. Both the increases in competition that occurred during the first years of deregulation and the subsequent decreases can be explained by two structural changes experienced in the US airline industry: the numerous mergers of large carriers during the late 1980s and, more important, the development of extensive hub and spoke networks by virtually all airlines.

Framing the discussion on regulatory liberalisation: a stakeholder analysis of Open Skies, ownership and control

This paper provides a framework for the ongoing debate over regulatory liberalisation in air transportation. With a focus on the US debate surrounding the Stage 2 negotiations of US-EU Open Skies, we present a stakeholder analysis of foreign ownership restrictions and the implications of change for those air transportation stakeholders with the most direct impacts. Literature from academic journals and trade publications is reviewed to reinforce the stakeholder analysis. The stakeholder analysis concludes with a discussion of vehicles for regulatory liberalisation and the competitive environment looking beyond the first stage of US-EU Open Skies.