Coordinated scheduling models for allied airlines

Recently, as a means of forming global networks and improving operation efficiency, major air carriers have increasingly entered into alliances with other carriers. Fleet routing and flight scheduling are not only important in individual airline operations, but also affect the alliances. The setting of a good flight schedule can not only enhance allied airline operating performance, but can also be a useful reference for alliance decision-making. In this research, we develop several coordinated scheduling models, which will help the allied airlines solve for the most satisfactory fleet routes and timetables under the alliance. We employ network flow techniques to construct the models. The models are formulated as multiple commodity network flow problems which can be solved using a mathematical programming solver. Finally, to evaluate the models, we perform a case study based on real operating data from two Taiwan airlines. The preliminary results are good, showing that the models could be useful for airline alliances.     

Factors affecting the operational success of strategic airline alliances

With increased liberalisation in major air transport markets, the intensity of competition has increased amongst air carriers. Airlines have responded to the competitive pressures in many ways, one of which has been the formation of alliances. These alliances are linkages between the firms at various operational levels. They go beyond the common interlining agreement to encompass certain marketing and cost-reducing features. However, the question is how the success of these alliances can be ensured? While companies' culture compatibility is important and much has been written in that area, this paper focuses on factors that affect operational success of airline alliances. The operational success is measured by the change in the level of partners' inter-hub traffic due to formation of the alliance. This research has developed a methodology which could be used as a management tool to measure alliances' operational success before embarking on such agreements. The analysis of recent major alliances covering 52 inter-hub routes suggests that the main factors ensuring the alliances' operational success are: the partners' network size and their compatibility, the frequency of service between the hubs of the partners, the flight connection time at the hub and the level of competition on their network.

     

The benefits of airline global alliances: an empirical assessment of the perceptions of business travelers

Many claims have been made concerning the benefits of airline global alliances, often from the viewpoint of airline operators. By contrast, the focus of this paper is an empirical study of the perceptions of consumers. Studied first are the perceptions that business travelers have of the benefits of global alliances. Results show that a sizeable minority are unsure of the benefits or hold at least some misconceptions. This varies depending on the nature of the benefit and the type of respondent. Results also suggest that no major differences are perceived in the benefits offered by competing global alliances. Second, the importance of global alliance benefits in determining airline choice by business travelers is considered. Relative to other benefits, alliance benefits are not seen as particularly important.     

Congestion spill effects of Heathrow and Frankfurt airports on connection traffic in European and Gulf hub airports

We develop two stage fixed-effects single-spill and double-spill models for congestion connection spills of London Heathrow and Frankfurt airports on 9 hub airports in Europe and the Gulf. Our panel data covers connection traffic from 1997 to 2013 for Heathrow and 1997 to 2011 for Frankfurt. The single-spill results support strongly that the connection spills from Heathrow’s capacity limitations do strengthen competing hub airports of major alliance groups and to a lesser degree one Gulf hub. The double-spill model for Heathrow and Frankfurt shows nearly asymmetric overall spill characteristics between the two airports. Our results underline the influence of airline network strategies on congestion spills as European airline networks are shaped by alliances and umbrella mergers. Thus, the airline network perspective in airport capacity expansion decisions needs to play a greater role, as indicated by our asymmetric results for overall spill effects between Heathrow and Frankfurt airports.     

Assessment of product debundling trends in the US airline industry: Customer service and public policy implications

This paper reviews product debundling trends that have occurred in the US airline industry. Multiple sources of ancillary fees related to ticketing refunds and exchanges, checked baggage, on-board pets, preferred and/or advanced seating assignments, frequent flyer ticket redemptions, and day of departure standby policies are reviewed. Despite the fact that both low cost and network carriers stress the importance of future ancillary fees in their investor reports, our assessment suggests that these fees will be more broadly adopted by low cost carriers. We anticipate that many network carriers will eliminate ancillary fees, particularly as they begin to recognize how these fees can impact other system performance objectives such as minimizing the number of misconnecting passengers. We estimate that the debundling phenomenon has diluted revenues to the US Airport and Airways Trust Fund by at least 5%.     

The impact of Gulf carrier competition on U.S. airlines

Gulf carriers, such as Emirates Airline, Etihad Airways, and Qatar Airways, have expanded aggressively and are creating an increasingly dense global network. These carriers’ future growth prospects, however, hinge on their ability to gain access to markets in Europe and America, for example. Existing bilateral agreements stifle the Gulf carriers’ ambitious expansion plans in some instances, and incumbent carriers lobby to restrict further market access. To contribute to this debate, the objective of this research is to empirically examine the effects of Gulf carrier competition on U.S. carriers’ passenger volumes and fares in international route markets. Based on data obtained from the U.S. Department of Transportation, the empirical results suggest that greater competition by Gulf carriers in U.S. international markets is associated with (1) significant growth in U.S.–Middle East traffic volumes and (2) small but statistically significant traffic losses and fare reductions for U.S. carriers in route markets connecting the U.S. with Africa, Asia, Australia and Europe.     

A decision support framework for handling schedule perturbation

Perturbations of flight schedules may occur everyday. Poor scheduling of flights may result in a substantial loss of profit and decreased levels of service for air carriers. This research aims at developing a framework to help carriers in handling schedule perturbations caused by the breakdown of aircraft. The framework is based on a basic schedule perturbation model constructed as a dynamic network from which several perturbed network models are developed for scheduling following incidents. These network models are formulated as pure network flow problems or network flow problems with side constraints. The former are solved using the network simplex method while the latter are solved using Lagrangian relaxation with subgradient methods. To show how to apply the framework in the real world, a case study focusing on the operations of a major Taiwan air carrier in East Asia is presented.     

Competitiveness of container terminal operating companies in South Korea and the industry–university–government network

Burgeoning container port facilities have fostered intensified competition among container terminal operating companies (CTOCs). However, despite research into their survival strategies which identified antecedents of competitiveness including hard factors such as facilities, available cargo and cargo processing ability, softer factors spanning human resource management, networks and strategic alliances with universities and government agencies in industry–university–government (I–U–G) networks have been overlooked. This study aims to examine both hard and softer antecedents of competitiveness as perceived by 152 professionals in South Korean CTOCs; empirical relationships among these antecedents, I–U–G networks, and competitiveness itself; and the significance of the I–U–G network in establishing and improving competitiveness. Posited antecedents of competitiveness included human resources, facilities, service quality, customer orientation, reputation, and government support policy as independent variables; the I–U–G network as a moderating variable; and competitiveness as a dependent variable. Empirical structural relationships revealed that excepting government support policy, each variable significantly affected CTOC competitiveness. Further, the I–U–G network moderated the relationships between the antecedents of competitiveness and competitiveness. Because an effective I–U–G network was pivotal in controlling CTOC competitiveness, improved competitiveness requires not only differentiation of human resources, facilities, service quality, customer orientation, and reputation factors but also I–U–G network developments.     

Classifying the purpose of stopped truck events: An application of entropy to GPS data

This paper applies the concept of entropy to mine large volumes of global positioning system (GPS) data in order to determine the purpose of stopped truck events. Typical GPS data does not provide detailed activity information for a given stop or vehicle movement. We categorize stop events into two types: (1) primary stops where goods are transferred and (2) secondary stops where vehicle and driver needs are met, such as rest stations. The proposed entropy technique measures the diversity of truck carriers with trucks that dwell for 15 min or longer at a given location. Larger entropy arises from a greater variety of carriers and an even distribution of stop events among these carriers. An analysis confirms our initial hypothesis that the stop locations used for secondary purposes such as fuel refills and rest breaks tend to have higher entropy, reflecting the diversity of trucks and carriers that use these facilities. Conversely, primary shipping depots and other locations where goods are transferred tend to have lower entropy due to the lower variety of carriers that utilize such locations.     

The impact of collaborative backhaul routing on carbon reduction in the freight industry

The study investigates a practical freight carrier collaboration problem in a carbon-constrained business context. It examines to see if collaboration between carriers can reduce the environmental issues of freight movement. The introduction of carbon credit systems will stimulate freight carriers to decide whether it should trade carbon credits with its collaborators. This issue is examined by formulating the problem as a two-stage stochastic program to minimize the joint emission of the carriers while meeting their service commitments. The collaborative model developed can reduce emissions across a freight network by 3–20%.     

The impact of job assignment rules for straddle carriers on the throughput of container terminals

Straddle carriers represent a critical resource in the handling of containers within a container terminal. It is essential that they are deployed in an as efficient manner as possible. The research presented in this paper is motivated by the need to critically evaluate job assignment rules for straddle carriers that operate in a multiple straddle environment. This is achieved by developing a discrete event simulation model using industrial simulation software to model a container terminal located in Melbourne, Australia. The model accounts for variables such as the number of straddle carriers needed, the speed of straddle carriers, the arrival rate of trucks, and the job assignment rule. A principal finding of the study is that increasing the number of straddles in the present set‐up from 6 to 7 has a negligible effect on daily throughput. However, an increase in the number of straddles to 7 is expected to have a profound effect on reducing the average waiting time of trucks within the terminal from over 16 minutes to under 9 minutes, a decrease of 46.5%. However, a further increase in the number of straddles results in no further increase in daily throughput. It was observed that the throughput of the terminal is very sensitive to the speeds at which straddles travel. The management of the terminal has proposed a new heuristic job assignment rule for straddles, because the present rule does not assign the jobs to straddles closest to the truck requesting to load or unload a container. As a result a new heuristic job assignment rule was tested. The simulation results revealed that both the old and new rules performed equally well using performance indicators such as average container flow time, daily throughput, average waiting time of jobs, number of jobs in the queue, and straddle utilisation. Therefore, the new rule will not improve these performance measures if implemented     

Three-player game-theoretic model over a freight transportation network

With recent development in freight transportation industry, its network structure has become more complicated, as many decision-makers competing for profits with each other are involved. While most recent research in this area is focused on the perfectly competitive market and the prices are given as a constant tariff rate, little attention has been paid to the system optimization problem in the absence of regulatory authority. In this paper, we investigate the competitive equilibrium in an oligopolistic market on a freight network. A partially non-cooperative game among shippers, carriers and infrastructure companies (IC) is examined. All three kinds of players act as profit maximizing agents, except that the carriers and ICs are assumed to behave cooperatively in their own coalitions. We consider the vertically efficient nonlinear tariff schedules which are commonly used in the transportation industry. By introducing a three-stage game-theoretic model, we show that the equilibrium flows can also maximize total system profits if the IC and the carrier both use vertically efficient nonlinear pricing schedules. The division of the surplus associated with each shipment is obtained by solving a linear programming problem. We provide a few examples under different situations to show the existence of the resulting equilibrium.     

Measuring supply chain risk: Predicting motor carriers’ ability to withstand disruptive environmental change using conjoint analysis

Supply chain risk measurement is an expanding research stream that considers the ability of networked firms to anticipate and respond to significant environmental risks, including major disruptions and unexpected events. However measuring and quantifying supply chain risk has proved an enormous challenge and this research contributes to this goal by developing a risk assessment scorecard, using conjoint analysis, for motor carrier firms. The resultant motor-carrier scorecard has been scaled from 300 to 900, to resemble the well-known FICO score for assessing consumer creditworthiness. Our scoring model enables motor carriers – and the firms that depend upon them in intermodal supply chains – to assess carriers’ ability to withstand major disruptive events, which are broadly defined as events which might lead to a significant drop in carriers’ income and profitability (e.g., such as that which occurred on September 11, 2001). Carriers with weaker risk scores (<600, on a 300–900 scale) are more likely to experience financial distress (and as a result possibly exit the industry itself); those with scores above 600 are less likely to depart. The model correctly identified 77 percent of motor carriers that ultimately exited the trucking industry following the significant environmental disruption caused by 9/11. Our computational experience indicates that the model accuracy, quantified in terms of Type I and Type II errors, compares favorably to prior results reported in the credit scoring literature.     

How reliable is the bureau of motor carrier safety truck accident data?

This paper examines the degree of compliance with the accident reporting requirements imposed by the Bureau of Motor Carrier Safety (BMCS) of the U.S. Department of Transportation on motor carriers involved in interstate and foreign transport. It also examines the reliability and validity of the accident information reported by these carriers to the BMCS. The study shows that there is a high degree of accident underreporting, especially by the private and exempt carriers, and that the information reported on variables such as cargo weight, gross vehicle weights, and usage of seat belts at the time of accident, is biased toward the interests of the reporters of the accidents.     

Intermodal hub-and-spoke network design: Incorporating multiple stakeholders and multi-type containers

This paper develops a mathematical program with equilibrium constraints (MPEC) model for the intermodal hub-and-spoke network design (IHSND) problem with multiple stakeholders and multi-type containers. The model incorporates a parametric variational inequality (VI) that formulates the user equilibrium (UE) behavior of intermodal operators in route choice for any given network design decision of the network planner. The model also uses a cost function that is capable of reflecting the transition from scale economies to scale diseconomies in distinct flow regimes for carriers or hub operators, and a disutility function integrating actual transportation charges and congestion impacts for intermodal operators. To solve the MPEC model, a hybrid genetic algorithm (HGA) embedded with a diagonalization method for solving the parametric VI is proposed. Finally, the comparative analysis of the HGA and an exhaustive enumeration algorithm indicates a good performance of the HGA in terms of computational time and solution quality. The HGA is also applied to solve a large-scale problem to show the applicability of the proposed model and algorithm.     

A toll-based bi-level programming approach to managing hazardous materials shipments over an intermodal transportation network

This research proposes a bi-level bi-objective model to regulate the usage of rail intermodal terminals for hazardous materials (hazmat) shipments, where government imposes tolls to deter carriers from using certain terminals. The complexity of the resulting mathematical program motivates the development of a hybrid speed-constrained multi-objective particle swarm optimization algorithm, which is then integrated with CPLEX, to solve the model. Through a real problem instance based on the intermodal service chain of Norfolk Southern in US, the toll-setting model is examined and further compared with a regular network design approach, in which certain terminals are closed to hazmat containers. The computational results show that the toll-setting policy is more practical and efficient, and the two models can be combined as a two-stage strategy in long-term hazmat transportation regulations. Additional managerial insights are derived for different stakeholders.     

Effect of slot trading on route-level competition: Evidence from experience in the UK

This paper examines the effect of airport slot trading on route-level competition using data on slot trades in the UK. The estimation results suggest that the slot trades among partner carriers contributed to slightly increased competition measured in terms of the number of competitors per route, whereas the slot trades between rival carriers had a negative effect on the number of competitors at the route level. The results suggest that carriers seem to have used the slots obtained from their rivals not to compete with each other but to strengthen their dominance on their existing routes. This behavior is considered to be derived from the bilateral nature of slot trading, which facilitates mutual forbearance among competitors. To cope with the potential anticompetitive effect of mutual forbearance, it would be worthwhile to explore slot-trading schemes that make it harder for carriers to take advantage of multimarket contact as well as alternative methods of primary slot allocation.     

Electrical characteristics of cold ironing energy supply for berthed ships

The reduction of emissions in harbours is of particular importance due to the proximity to human habitation. Vessels normally run onboard generators, typically using diesel fuel, to provide the service loads while berthed. New and upcoming regulations aim to decrease emissions from shipping, and coupled with increased environmental consciousness of ship owners and harbour operators, shore supply is becoming a more popular and feasible option. Cold ironing provides an alternative locally emission-free solution by having berthed ships plug in to the shore electrical network, such that the onboard electrical energy demand is supplied from land. Electrically, a number of different shore network topologies are possible, providing different infrastructural options of supplying power to multiple berths. This paper examines the electrical characteristics of one such installation and the impact on the shoreside electrical network for an existing port using actual visiting ship power profiles. The paper examines how the cold ironing system influences important electrical network characteristics such as bus voltages and power quality, as well as the potential impact on the rest of the utility distribution system.     

Service network design with asset management: Formulations and comparative analyses

In this paper, we address the service network design with asset management problem, which integrates asset management considerations into service network design models for consolidation-based freight carriers. We propose model formulations based on arc variables for both flow and design, as well as formulations with path flow variables and new cycle design variables. Problem instances reflecting actual planning problems are used in the computational study to analyze the strengths and weaknesses of the various model formulations and the impact of asset management considerations on the transportation plan and the computational effort. Experimental results indicate that formulations based on cycle variables outperform traditional arc-based formulations, and that considering asset management issues may significantly impact the outcome of service planning models.     

Fuel burn and environmental implications of airline hub networks

Hubs act as switching points for interactions and so are places through which flows are concentrated. This research uses the interactions between a system of cities as an experimental context for understanding selected environmental costs and benefits of concentrated flow. Whether hub based networks create additional environmental costs has been debated in the literature. In this paper, fuel burn is used as an indicator of environmental cost. The essential ideas are: (1) to examine fuel costs associated with larger aircraft; (2) to determine implications of higher loads on dense routes; and (3) to model the resulting implications for hub and gateway location. Variants of these questions apply to passenger and freight flows, and the paper will initially concentrate on passenger models.The paper shows that by modeling fuel burn and introducing a fixed charge (like a set up cost), a multiple allocation hub and spoke model can be adjusted to direct more or less flow onto the inter-facility connector. In other words, usage of multiple connections and direct links can be controlled and modeled as a function of the fixed charge. The resulting networks are characterized by quite different levels of passenger miles, aggregate fuel burn and fixed charges. The preferred network in terms of minimal fuel burn is found by subtracting the fixed set up charge, thereby focusing attention on the modeled fuel burn. The lowest cost set up is a network with a high degree of connectivity, and a pure single assignment hub network has the highest fuel cost (as a result of larger passenger miles needed by connecting paths). The data also allow a tabulation of total passenger miles, which, not surprisingly, track very closely with the fuel burn. In an interesting application of the ideas, it is shown that a fuel efficient network may require a large number of smaller regional jets, and in the interests of avoiding noise and congestion from so many extra airport operations, the carriers may choose to substitute a smaller number of larger planes, thereby slightly increasing fuel needs. This paper also provides a key ingredient for models of an international network where it is impossible to serve many long distance market pairs without consolidation.