Development of a Codeshare Flight-Profitability System at Delta Air Lines

Abstract

Delta Air Lines, Inc., forms alliances with other airlines to expand the network of markets it can serve through a process known as codesharing. Codesharing allows an airline to place its marketing code on an alliance partner's flights. A carrier can then sell these flights, although an alliance partner operates them. Alliances can improve the revenue streams of their members; however, the amount of revenue increase depends significantly on which flights are chosen for codeshare. As alliances have evolved, the number of flights being codeshared has grown, and the rules that airlines must follow have become more complex. The authors have built a codeshare flight-profitability system that automates the codeshare flight-selection process. The system chooses a set of codeshare flights that maximizes total system revenue for Delta while satisfying the rules that the alliance, the government, and the airlines' unions have set. The initial impact of this decision-making tool appears to be promising. Codeshared decisions, which Delta previously made without the benefit of optimization technologies, took one to two days to complete. The new system for choosing codeshared flights seeks to increase Delta's operating revenue by up to $50 M per year while reducing the planning cycle to several hours.