Abstract
To provide the decision-making basis for operating unprofitable flights linked to small and medium-sized airports and decrease the risk of subsidy pricing resulting from the stochastic characteristics of passengers' demands. This paper presented a method of constructing the stochastic scenario set of passengers' demands, and then it established a pricing mathematical model of flight operation subsidy based on the space-and-time network with the objective of risk neutral principle. A numerical example with an airline's real operational data is computed and analyzed. The results show the advantage and validation of our proposed model.
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