Integration of explicit supply-demand interactions in airline schedule planning and fleet assignment

In airline scheduling problems, integrated decision methodologies have aroused intense interest in the last decade. These integrated approaches allow for more efficient solutions due to the simultaneous decision making process. The studied integrated models mostly consist of planning phase subproblems. However in order to be demand responsive, demand related information should also be included in planning models. For that matter supply-demand interactions are now being introduced in airline decision problems. This is often carried out with simplified demand models that are exogenous to the supply model. In this paper we present an integrated airline scheduling, fleeting and pricing model which includes an explicit demand model formulation. The integrated model combines supply and demand related decisions. On the supply side, we have the decisions on the subset of flights to be flown and the aircraft types to be assigned to each flight. On the demand side, we have the pricing decision and spill and recapture effects which are facilitated through an itinerary choice model. This itinerary choice model is estimated based on real data which is a combination of RP and SP datasets. In this paper a sensitivity analysis is presented for the added-value of the integrated supply-demand interactions. Furthermore a reformulation of the model is proposed to reduce the complexity.