A mixed-integer nonlinear optimization model for integrated flight scheduling, fleet assignment, and ticket pricing in competitive market

Abstract

In the airline industry, ticket pricing is one of the most complex problems that researchers and practitioners are extensively involved on it. In fleet assignment and airline scheduling problems, ticket price is usually taken as an input. This paper presents an integrated model of fleet assignment, airline scheduling, and ticket pricing in a network of competitive market. Four essential factors are considered as important factors that can affect ticket pricing. The model is formulated as a mixed-integer nonlinear programming, and as it is NP-Hard, a tabu search metaheuristic method is proposed to solve the model. Results show that airport dominance, route dominance, time dominance, and flag carrier dominance have influence on average ticket price in the market and model finds the best time and routes for flights to increase pricing power and eventually airline profit.