The Design of a Large Scale Airline Network

294 Pages·2012·6.66 MB·English

The Design of a Large Scale Airline Network

Rafael Bernardo Carmona Benítez
Delft University of Technology
Cover: Photo courtesy by Yao Zhou
The Design of a Large Scale Airline Network

Proefschrift
ter verkrijging van de graad van doctor
aan de Technische Universiteit Delft;
op gezag van de Rector Magnificus prof. ir. K.C.A.M. Luyben;
voorzitter van het College voor Promoties
in het openbaar te verdedigen op maandag 11 juni 2012 om 15:00 uur

door

Rafael Bernardo CARMONA BENITEZ

Master of Research in Materials Engineering, The University of Birmingham &
Industrial Engineer and Operations, Instituto Tecnológico Autónomo de México (ITAM)
geboren te Mexico Stad, Mexico.
Dit proefschrift is goedgekeurd door de promotor:
Prof. dr. ir. G. Lodewijks

Samenstelling promotiecommissie:
Rector Magnificus, voorzitter
Prof. dr. ir. G. Lodewijks Technische Universiteit Delft, promotor
Prof. dr. A. Lozano Universidad Nacional Autonoma de Mexico, Mexico
Prof. dr. E. van de Voorde Universiteit Antwerpen, België
Prof. dr. K.I. Aardal Technische Universiteit Delft
Prof. dr. R. Curran Technische Universiteit Delft
Prof. dr. ir. L.A. Tavasszy Technische Universiteit Delft
Dr. M. Janic Technische Universiteit Delft

This dissertation is the result of research carried out from 2008 to 2012 at Delft University of
Technology, Faculty of Mechanical, Maritime and Materials Engineering, Department of
Transport Technology, Section of Transport Engineering and Logistics. The research
described in this thesis was supported by The National Council of Science and Technology
(CONACyT), México.

TRAIL Thesis Series no. T2012/2, the Netherlands TRAIL Research School

TRAIL Research School
P.O. Box 5017
2600 GA Delft
The Netherlands
Phone: [phone]
Fax: [phone]
Email: [email protected]

ISBN: 978-90-5584-154-7

Keywords: Airlines network design, long-haul low-cost business model, optimal route
selection, air passenger transportation system, optimization method, large scale system.

Copyright © 2012 by Rafael Bernardo Carmona Benítez

All rights reserved. No part of the material protected by this copyright may be reproduced or
utilized in any form or by any means, electronic or mechanical, including photocopying,
recording or by any information storage and retrieval system, without written permission from
the author.

Printed in the Netherlands
Preface

The research presented in this thesis has been supported by the National Council of Science
and Technology of Mexico (CONACyT), and the Faculty of Mechanical, Maritime and
Materials Engineering, Delft University of Technology. The study has been developed at the
department of transport engineering and logistics (TEL). I want to thank both institutions for
supporting me during the development of this PhD thesis.

I would like to thank my promoter and daily supervisor Prof. dr. ir. Gabriel Lodewijks for all
the support he gave me since the moment I first met him. Our discussions, his suggestions for
improvement, and guide were essential for the outcome of this thesis. He always supported
my decisions what in my opinion is his greatest quality because a PhD is a research that must
be performed by the PhD researcher and not by the professor or advisor. Then, the resulted
thesis is a product of my job, ideas, and our discussions.

To Prof. Dr. Angelica Lozano and Dr. Milan Janic, since we met and besides they were not
my thesis director or supervisor, they always were opened to discuss my project, and make
important observations that had a huge impact on the development of this thesis.

To all my colleagues in the department of Transport Engineering and Logistics enormous
thanks, I have enjoyed working at this department, and I will always remember our chats,
discussions, jokes, dinners, and pubs. I had a great time.

Finally, I thank my parents, Rafael and Veronica, who always support me and my brother in
any decision we have taken in our lives. They always encourages us to pursue high goals
always keeping in mind that happiness is the most important thing in life, and teaching us that
family is what we will always have. I am very grateful to my mother because she has been
always a great mom. I am thankful to my father because he has thought me how to analyze,
identify and solve any problem. His advices during the development of this thesis impressed
me, because he always understands what I am doing. His explanations and suggestions of
mathematical modeling were important for the developing of this thesis. My brother
Alejandro and his wife Gabriela, they always have supported me deeply on my decision. I
ii The Design of a Large Scale Airline Network

want to thank to my grandparents, uncles and cousins “the pilots” for their support, their
explanations of how aircrafts flight help me to understand and develop the models presented
in this thesis. Lastly, I want to thank God.
Table of Contents

PREFACE ............................................................................................................................................... I
TABLE OF CONTENTS .................................................................................................................... III
1 INTRODUCTION ........................................................................................................................ 1
1.1 AIM OF THE THESIS .................................................................................................................... 6
1.2 METHODOLOGY .......................................................................................................................... 7
1.3 OUTLINE OF THE THESIS ............................................................................................................. 9
2 THE AIRLINE BUSINESS MODELS AND STRATEGIES ................................................. 11
2.1 FULL SERVICE MODEL ............................................................................................................. 12
2.2 REGIONAL CARRIERS ................................................................................................................ 16
2.3 LOW-COST MODEL .................................................................................................................... 16
2.4 LOW-COST LONG-HAUL MODEL ................................................................................................ 20
2.5 CHARTER MODEL ..................................................................................................................... 22
2.6 DISCUSSION .............................................................................................................................. 23
3 AIRLINE AND AIRCRAFT OPERATION COSTS CALCULATION MODELS ............. 25
Database........................................................................................................................................ 25
3.1 AIRLINE AND AIRCRAFT OPERATION COSTS ............................................................................. 26
3.1.1 Econometric Approach .................................................................................................... 27
3.1.2 Engineering approach ...................................................................................................... 29
3.2 MODELS DESIGN AND VARIABLES ............................................................................................ 30
3.2.1 Airline operation cost model (AOC) ............................................................................... 31
3.2.2 Aircraft operating cost model (POC) ............................................................................... 34
3.3 AGE EQUATION MODEL VS BREGUET RANGE EQUATION MODEL ........................................... 40
3.4 ANALYSES OF THE LOW-COST AND FULL SERVICE CARRIERS AIR TRANSPORTATION SYSTEM
USING THE AOC MODEL .................................................................................................................... 44
3.4.1 Airlines business models competition analysis using the AOC model............................ 46
3.5 DISCUSSION .............................................................................................................................. 47
4 MODELS FOR COMPETITIVE AIRLINE ROUTE AVERAGE PRICING ..................... 49
4.1 AIRFARE DETERMINATION ....................................................................................................... 50
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4.2 THE MAIN FACTOR TO OPEN NEW ROUTES ................................................................................ 55
4.3 FARE ESTIMATION MODEL ........................................................................................................ 60
4.4 COMPETITIVE FARE ESTIMATION MODEL (CFEM) ................................................................... 67
4.4.1 CFEM model routes selection method ............................................................................ 71
4.4.2 Example ........................................................................................................................... 72
4.5 AIR FARES FORECASTING METHOD FOR LONG-TERM ............................................................... 77
4.6 DISCUSSION .............................................................................................................................. 78
5 AIRLINES PASSENGER INDUCED DEMAND FORECASTING MODEL ..................... 81
5.1 FORECASTING METHODS APPLIED TO THE AIRLINE INDUSTRY ................................................. 82
5.2 INDUCED DEMAND FORECASTING MODEL ................................................................................ 86
5.2.1 Pax induced demand estimation model (PEM) ............................................................... 92
5.3 AIR PASSENGER FORECASTING METHOD FOR LONG-TERM ..................................................... 100
5.4 DISCUSSION ............................................................................................................................ 104
6 OPTIMIZATION MODEL FOR AIRLINES ROUTES SELECTION AND LARGE
SCALE NETWORK DESIGN ......................................................................................................... 107
6.1 PROFIT OPTIMIZATION MODELS APPLIED TO THE AIRLINE INDUSTRY .................................... 108
6.2 OPTIMIZATION MODEL CONCEPTS AND PARAMETERS ............................................................ 109
6.2.1 Airline link, aircraft route/sub-network and network definitions .................................. 109
6.2.2 Optimization model main concepts ............................................................................... 109
6.2.3 Business financial evaluation methods .......................................................................... 114
6.2.4 Optimization model main constraints ............................................................................ 115
6.2.5 Financial constraints ...................................................................................................... 116
6.2.6 Airport average waiting times ....................................................................................... 117
6.2.7 Link distances ................................................................................................................ 120
6.2.8 Aircraft payload, load and cargo capacities ................................................................... 120
6.2.9 Jet fuel volume that maximize aircraft utilization time and profits ............................... 121
6.2.10 Aircraft performance characteristics related to link flight ........................................ 122
6.2.11 The flight cycle of an aircraft .................................................................................... 124
Link Block time (LBT) ............................................................................................................... 124
Air time (AIRTime) .................................................................................................................... 124
Ground time or Turnaround time (Tr) ........................................................................................ 127
6.2.12 Airport airside and Airport characteristics related to aircraft .................................... 130
6.2.13 Airport terminal side, land side and characteristics related to pax capacity .............. 137
6.2.14 The optimum number of aircraft to invest ................................................................. 139
6.3 ROUTE GENERATION ALGORITHM ......................................................................................... 140
6.4 MODEL THAT MAXIMIZE THE NET PRESENT VALUE OF AN AIRLINE NETWORK BY ASSIGNING
THE OPTIMUM AIRCRAFT TYPE UNDER COMPETITION ..................................................................... 145
6.5 SOCIAL IMPACT ...................................................................................................................... 153
6.6 DISCUSSION ............................................................................................................................ 154
7 SHORT-HAUL AND LONG-HAUL OPTIMIZATION CASES......................................... 157
7.1 SHORT-HAUL LOW-COST UNITED STATES DOMESTIC MARKET CASE .................................... 158
7.1.1 Short-haul low-cost case non-limited number of frequencies ....................................... 158
7.1.2 Short-haul low-cost case limited number of frequencies ............................................... 161
7.2 LONG-HAUL LOW-COST MODEL PROPOSITION AND HYPOTHETICAL CASE OF STUDY ............ 165
7.2.1 Long-haul low-cost direct flights non hubs ................................................................... 166
7.2.2 Long-haul low-cost passenger’s connections through hubs .......................................... 170
7.2.3 Long-haul low-cost whole network ............................................................................... 174
7.3 DISCUSSION ............................................................................................................................ 175
8 CONCLUSIONS AND FUTURE WORK .............................................................................. 177
8.1 FUTURE WORK ....................................................................................................................... 183
Table of contents v

REFERENCES .................................................................................................................................. 185
APPENDIX A: THE FREEDOMS OF THE AIR .......................................................................... 195
APPENDIX B: AIRLINES IATA CODES ..................................................................................... 196
APPENDIX C: AIRLINES AIRCRAFT NUMBER OF SEATS CONFIGURATIONS ............ 197
APPENDIX D: AOC MODEL COEFFICIENT VALUES ........................................................... 201
APPENDIX E: AIRCRAFT PAYLOAD - JET FUEL CONSUMPTION VOLUME CHARTS ....
.................................................................................................................................................... 209
APPENDIX F: DATABASE AIRLINE BUSINESS MODELS AND AIRPORT TYPE’S
DEFINITION ANALYSIS ................................................................................................................ 213
APPENDIX G: FEM MODEL COEFFICIENT VALUES AND ANOVA TESTS RESULTS . 221
APPENDIX H: CFEM MODEL RESULTS AT DIFFERENT MARKETS ............................... 236
APPENDIX I: GREY PREDICTION ALGORITHM ................................................................... 242
APPENDIX J: DEMAND FUNCTION MODEL COEFFICIENT VALUES AND ANOVA
TEST RESULTS ............................................................................................................................... 245
APPENDIX K: OPTIMIZATION MODEL PARAMETERS VALUES ..................................... 250
APPENDIX L: AIRCRAFT AND AIRPORTS CLASSIFICATIONS ........................................ 256
APPENDIX M: AIRLINES EMPLOYEE DATA .......................................................................... 260
APPENDIX N: Q AND F CALCULATION FOR PAX CONNECTIONS .............................. 262
R R
GLOSSARY ....................................................................................................................................... 264
SAMENVATTING ............................................................................................................................ 270
SUMMARY ........................................................................................................................................ 274
RESUMEN ......................................................................................................................................... 278
BIOGRAPHY .................................................................................................................................... 282
TRAIL THESIS SERIES .................................................................................................................. 283
vi The Design of a Large Scale Airline Network