Attractiveness-Based Airline Network Models with Embedded Spill and Recapture

Abstract

Purpose: In airline revenue management, the modeling of the spill and recapture effects is essential for an accurate estimation of the passenger flow and the revenue in a flight network. However, as most current approaches toward spill and recapture involve either non-linearity or a tremendous amount of additional variables, it is computationally intractable to apply those techniques to the classical network design and capacity planning models. Design/methodology: We present a new framework that incorporates the spill and recapture effects, where the spill from an itinerary is recaptured by other itineraries based on their attractiveness. The presented framework distributes the accepted demand of an itinerary according to the currently available itineraries, without adding extra variables for the recaptured spill. Due to its compactness, we integrate the framework with the classical capacity planning and network design models. Findings: Our preliminary computational study shows an increase of 1.07% in profitability anda better utilization of the network capacity, on a medium-size North American airline provided by Sabre Airline Solutions. Originality/value: Our investigation leads to a holistic model that tackles the network design and capacity planning simultaneously with an accurate modeling of the spill and re- capture effects.Furthermore, the presented framework for spill and recapture is versatile and can be easily applied to other disciplines such as the hospitality industry and product line design (PLD) problems.