Zero displacement cost model: a simplified RM model for post-COVID-19 O&D management

Abstract

In the airline industry, the aim of O&D RM is to optimize network revenue by increasing seat availability for high-revenue connecting passengers while preventing connecting passengers from displacing high-yield local passengers to reduce displacement costs. Traditional O&D models rely heavily on complex historical data analysis. The outbreak of COVID-19 has led to an unprecedented disruption of the global airline industry. It has reset historical data, thereby reducing the reliability of the traditional forecasting and optimization results. This paper proposes Zero Displacement Cost (0DC) model as a simplified and flexible model for airlines to manage O&D in the post-COVID-19 world.