List of Contributors xiii
Series Preface xv
Notes on Contributors xvii
Acknowledgements xxiii
1 Introduction and Overview 1
Peter P. Belobaba and Amedeo Odoni
1.1 Introduction: The Global Airline Industry 1
1.1.1 Deregulation and Liberalization Worldwide 5
1.1.2 Recent Industry Evolution 6
1.1.3 Looking Ahead: Industry Challenges 12
1.2 Overview of Chapters 13
References 17
2 The International Institutional and Regulatory Environment 19
Amedeo Odoni
2.1 Introduction 19
2.2 Background on the International Regulatory Environment 20
2.2.1 The Chicago Convention 20
2.2.2 “Freedoms of the Air” 21
2.3 Airline Privatization and International Economic Regulation 24
2.3.1 Airline Privatization 24
2.3.2 Types and Critical Aspects of Air Service Agreements (ASAs) 25
2.3.3 Typical Content of Bilateral and Multilateral ASAs 26
2.3.4 The Unified European Union Market and Other Major Developments 30
2.4 Airports 32
2.4.1 Restrictions on Airport Access 33
2.4.2 Airport Ownership and Management 36
2.5 Air Traffic Management 39
2.6 Key Organizations and Their Roles 40
vi Contents
2.6.1 International Organizations 41
2.6.2 Organizations in the USA 43
2.7 Summary and Conclusions 45
References 46
3 Overview of Airline Economics, Markets and Demand 47
Peter P. Belobaba
3.1 Airline Terminology and Definitions 47
3.1.1 Basic Airline Profit Equation 49
3.2 Air Transportation Markets 51
3.2.1 Typical Air Passenger Trip 51
3.2.2 Spatial Definitions of Airline Markets 53
3.3 Origin–Destination Market Demand 55
3.3.1 Dichotomy of Airline Demand and Supply 56
3.3.2 Factors Affecting Volume of O-D Demand 57
3.3.3 Quality of Service Factors 58
3.3.4 Total Trip Time and Frequency 59
3.4 Air Travel Demand Models 60
3.4.1 Elasticity of Air Travel Demand 61
3.4.2 Air Travel Demand Segments 62
3.4.3 O-D Market Demand Functions 65
3.5 Airline Competition and Market Share 67
3.5.1 Market Share/Frequency Share Model 68
3.5.2 S-curve Model Formulation 70
3.6 Chapter Summary 70
References 71
4 Fundamentals of Pricing and Revenue Management 73
Peter P. Belobaba
4.1 Airline Prices and O-D Markets 74
4.1.1 Regulated vs. Liberalized Pricing 74
4.1.2 Theoretical Pricing Strategies 75
4.1.3 Price Discrimination vs. Product Differentiation 77
4.2 Airline Differential Pricing 78
4.2.1 Market Segmentation 79
4.2.2 Fare Product Restrictions 80
4.2.3 Traditional Airline Fare Structures 82
4.2.4 Recent Trends in Airline Pricing 84
4.3 Airline Revenue Management 88
4.3.1 Computerized Revenue Management Systems 90
4.3.2 Flight Overbooking 93
4.3.3 EMSR Methods for Flight Leg Revenue Optimization 98
4.3.4 Network Revenue Management 101
4.3.5 Revenue Management for Less Restricted Fare Structures 108
References 111
Contents vii
5 Airline Operating Costs and Measures of Productivity 113
Peter P. Belobaba
5.1 Airline Cost Categorization 114
5.1.1 Administrative vs. Functional Cost Categories 114
5.1.2 Cost Drivers by Functional Category 119
5.2 Operating Expense Comparisons 119
5.2.1 Percentage Breakdown of Operating Expenses 120
5.2.2 Legacy vs. Low-Cost Airlines 122
5.2.3 Flight Operating Cost Comparisons 132
5.3 Comparisons of Airline Unit Costs 136
5.3.1 Total Operating Costs vs. Unit Costs 136
5.3.2 Legacy vs. Low-Cost Airline Unit Costs 138
5.3.3 Unit Cost Comparisons in Europe, Asia and Worldwide 142
5.4 Measures of Airline Productivity 146
5.4.1 Aircraft Productivity 146
5.4.2 Labor Productivity 148
References 150
6 The Airline Planning Process 153
Peter P. Belobaba
6.1 Fleet Planning 153
6.1.1 Airline Fleet Decisions 154
6.1.2 Fleet Planning Methods 159
6.2 Route Planning 162
6.2.1 Hub Economics and Network Structure 163
6.2.2 Route Planning and Evaluation 168
6.3 Airline Schedule Development 173
6.3.1 Frequency Planning 174
6.3.2 Timetable Development 175
6.3.3 Fleet Assignment and Aircraft Rotations 178
6.4 The Future: Integrated Airline Planning 180
References 180
7 Airline Schedule Optimization 183
Cynthia Barnhart
7.1 Schedule Optimization Problems 184
7.2 Fleet Assignment 185
7.2.1 The Fleet Assignment Model 188
7.2.2 Fleet Assignment Solutions/Impacts 192
7.2.3 Extending Basic Fleet Assignment Models 192
7.3 Schedule Design Optimization 197
7.3.1 Modeling the Optimization of Flight Retiming and Fleet Assignment Problems 199
7.4 Crew Scheduling 201
7.4.1 The Crew Pairing Problem 202
7.4.2 Crew Scheduling Problem Solutions and Impacts 206
viii Contents
7.5 Aircraft Maintenance Routing and Crew Pairing Optimization 207
7.5.1 Modeling and Solving the Enhanced Crew Pairing Problem 208
7.6 Future Directions for Schedule Optimization 210
References 210
8 Airline Flight Operations 213
Alan H. Midkiff, R. John Hansman and Tom G. Reynolds
8.1 Introduction 213
8.2 Regulation and Scheduling 214
8.2.1 General Regulatory Requirements 214
8.2.2 Flight Crew Regulation 214
8.2.3 Flight Crew Scheduling 216
8.3 Flight Crew Activities During a Typical Flight 217
8.3.1 Flight Crew Sign-in 217
8.3.2 Operations/Planning 218
8.3.3 Pre-flight 223
8.3.4 Pre-departure 230
8.3.5 Gate Departure 231
8.3.6 Taxi-out 233
8.3.7 Takeoff 233
8.3.8 Terminal Area Departure 234
8.3.9 Climb 236
8.3.10 Cruise 237
8.3.11 Descent 240
8.3.12 Terminal Area Arrival 242
8.3.13 Final Approach 243
8.3.14 Landing and Rollout 246
8.3.15 Taxi-in 246
8.3.16 Parking 247
8.3.17 Post-flight 248
8.4 Summary 249
8.5 Appendix: List of Acronyms 250
References 251
9 Irregular Operations: Schedule Recovery and Robustness 253
Cynthia Barnhart
9.1 Introduction 253
9.2 Irregular Operations 254
9.2.1 Managing Irregular Operations: Airline Operations Control Centers 256
9.2.2 Options for Schedule Recovery from Irregular Operations 257
9.2.3 Schedule Recovery from Irregular Operations: Objectives and Process 259
9.2.4 Evaluating the Costs of Recovery Options: The Challenges Imparted by Uncertainty and Downstream Effects 268
Contents ix
9.3 Robust Airline Scheduling 269
9.3.1 Robust Schedule Design 270
9.3.2 Robust Fleet Assignment 270
9.3.3 Robust Aircraft Routing 271
9.3.4 Robust Crew Scheduling 272
9.4 Directions for Ongoing and Future Work on Schedule Recovery from Irregular Operations 273
References 274
10 Labor Relations and Human Resource Management in the Airline Industry 275
Jody Hoffer Gittell, Andrew von Nordenflycht, Thomas A. Kochan, Robert
McKersie and Greg J. Bamber
10.1 Alternative Strategies for the Employment Relationship 276
10.2 Labor Relations in the US Airline Industry 277
10.2.1 Regulatory Framework for US Labor Relations 278
10.2.2 US Airline Responses to Cost Pressures Post-deregulation 281
10.2.3 US Labor Relations Post-9/11 285
10.3 Labor Relations in the Airline Industry in Other Countries 287
10.3.1 The International Regulatory Framework for Labor Relations 288
10.3.2 Summary of Airline Labor Relations Strategies: What Works? 296
10.4 Human Resource Management at Airlines 297
10.4.1 Hiring and Training for Relational Competence 301
10.4.2 Flexible Boundaries Between Jobs 302
10.4.3 Supervisory Coaching and Feedback 302
10.4.4 Performance Measurement at the Process Level 303
10.4.5 Conflict Resolution 304
10.4.6 Boundary Spanning Roles 305
10.4.7 Partnering with Other Key Players 306
10.5 Conclusions 307
References 308
11 Aviation Safety and Security 313
Arnold Barnett
11.1 Safety 314
11.1.1 Measuring Air Safety: Some Hazards 314
11.1.2 The Q-statistic 316
11.1.3 Some Calculated Q-values 317
11.1.4 More Calculated Q-statistics 318
11.1.5 Are Some Airlines Safer Than Others? 319
11.1.6 A Collision Risk Assessment 321
11.1.7 Midair Collision Risk 324
11.2 Security 325
11.2.1 September 11 in Context 325
11.2.2 Some Costs of Aviation Security 326
11.2.3 Some Security Procedures 327
x Contents
11.2.4 Is It Worth It? 332
11.2.5 Two Economic Paradigms 332
11.2.6 A European Dilemma 334
11.2.7 More Security Dilemmas 336
11.2.8 Final Remarks 340
References 341
12 Airports 343
Amedeo Odoni
12.1 Introduction 343
12.2 General Background 345
12.3 Physical Characteristics 349
12.3.1 Airside Design Standards 349
12.3.2 Geometric Configuration on Airside 352
12.3.3 Typology of Passenger Buildings 355
12.3.4 Assessing Passenger Building Concepts 357
12.3.5 Ground Access 358
12.4 Capacity, Delays and Demand Management 360
12.4.1 Airside Capacity 360
12.4.2 Airside Delays and Mitigation 362
12.4.3 Landside Capacity and Level of Service 364
12.5 Institutional, Organizational and Economic Characteristics 367
12.5.1 Airport Ownership and Management 367
12.5.2 Airport User Charges 368
12.5.3 Economic Regulation, Single Till and Dual Till 372
12.5.4 Financing Capital Projects 374
References 375
13 Air Traffic Control 377
R. John Hansman and Amedeo Odoni
13.1 Introduction 377
13.2 The Generic Elements of an ATC System 378
13.2.1 Communications Systems 378
13.2.2 Navigation Systems 379
13.2.3 Surveillance Systems 384
13.2.4 Flight and Weather Information Systems 387
13.3 Airspace and ATC Structure 387
13.4 ATC Operations 389
13.5 Standard Procedures 392
13.6 Capacity Constraints 393
13.7 Congestion and Air Traffic Management 398
13.8 Future ATC Systems 403
References 403
Contents xi
14 Air Transport and the Environment 405
Karen Marais and Ian A. Waitz
14.1 Introduction 405
14.2 Limiting Aviation’s Environmental Impact: The Role of Regulatory Bodies 407
14.3 Airport Water Quality Control 408
14.3.1 Effects of Deicing Fluids 409
14.4 Noise 412
14.4.1 Effects 414
14.4.2 Noise Measurement 415
14.4.3 Noise Trends 417
14.4.4 Noise Controls 419
14.4.5 Emerging Issues 420
14.5 Surface Air Quality 421
14.5.1 Effects 424
14.5.2 Emissions Measurement 425
14.5.3 Emissions Trends 425
14.5.4 Emissions Controls 429
14.5.5 Emerging Issues 430
14.6 Impact of Aviation on Climate 431
14.6.1 Effects 431
14.6.2 Measurement 433
14.6.3 Greenhouse Emissions Controls 434
14.7 Summary and Looking Forward 435
References 436
15 Information Technology in Airline Operations, Distribution and Passenger Processing 441
Peter P. Belobaba, William Swelbar and Cynthia Barnhart
15.1 Information Technology in Airline Planning and Operations 441
15.2 Airline Distribution Systems 444
15.2.1 Evolution of Computer Reservations Systems 445
15.2.2 Terminology and Capabilities of Reservation Systems 447
15.2.3 Alternative Airline Distribution Channels 450
15.2.4 Impacts of Alliances and Code Sharing on Distribution 452
15.2.5 IT Challenges of Evolving Distribution Channels 453
15.3 Distribution Costs and E-commerce Developments 455
15.3.1 Internet Distribution Channels 458
15.3.2 Electronic Ticketing 461
15.3.3 Implications for Airlines and Consumers 462
15.4 Innovations in Passenger Processing 463
References 465
xii Contents
16 Critical Issues and Prospects for the Global Airline Industry 467
William Swelbar and Peter P. Belobaba
16.1 Evolution of US and Global Airline Markets 468
16.1.1 Implications for the Global Airline Industry 470
16.1.2 Government Policy and International Liberalization 471
16.1.3 Evolution of Global Airline Markets 471
16.2 Looking Ahead: Critical Challenges for the Global Airline Industry 473
16.2.1 Strategies for Sustained Profitability 473
16.2.2 Infrastructure and the Environment 476
References 478
Index 479