1.12 Consider an airline that
1.12 Consider an airline that operates a network offlights that serves 200 cities in the continental United States.What long-range forecasts do the operators of the airline need tobe successful? What forecasting problems does this business face ona daily basis? What are the consequences of forecast errors for theairline?
Answer:
There is no final solution to this Question but please find theVariables below which will impact the profitability and image ofairline
Boradlu it is divided into 3 groups
-> Enterprise Planning
1.) Route Structure
2.) Fleet
3.) Maintenance Bases
4.) Crew Bases
5.) Facilities
-> Product Planning
1.) Schedule
2.) Pricing Policies
-> Tactics and Operations
1.) Price
2.) Restrictions
3.) Availability
Planning and Marketing define an airline’s products anddetermine how they will be sold. This is a continuous process whichbegins 5 or more years before a flight’s departure and operatesuntil the last passenger is boarded and the aircraft door isclosed. This process can be viewed as a series of overlappingsequential steps that include scheduling, marketing anddistribution. This process requires an exchange of data andfeedback between scheduling, pricing and revenue management anddistribution. In addition, other considerations such as crewresources, maintenance and engineering and ground services helpdefine the boundaries by which the airline schedule must operateand be managed .
1.) Scheduling: Scheduling determines where andwhen the airline will fly. Schedules are built to maximizelong-term profitability. The revenue and cost associated with eachschedule are based on very different views of the same information.Although the schedule is composed of individual flight legs betweentwo cities, the airline’s product and revenues are based onpassenger origin and destination (O&D) markets. An O&Dmarket is defined by a passenger’s point of entry and exit from theairline system. The schedule is built to maximize itsattractiveness to customers in a wide variety of O&D markets.The development of hub and spoke networks was based on providingmaximum O&D coverage with a limited number of flight legs. Thecosts of operating the schedule depend on the flight legs, whichdrive the number and type of aircraft used. The schedule mustconsider the cost and availability of cabin and flight deck crews,as well as the requirement that aircraft cycle through maintenancebases at regular intervals. As a result, the schedule alsodetermines the location and size of ground facilities, and thenumber and location of crew and maintenance bases.
2.) Fleet Assignment
The fleet assignment process represents one of the mostimportant and well studied applications of operations research inthe airline industry. In many ways the schedule development andfleeting process embodies the complexities and computationaldifficulties characteristic of many aspects of the airlineindustry. To begin, many carriers use the fleet assignment processto help finalize market frequencies, flight times and enforcevarious operational requirements on the schedule. These may includeoperational needs such as station purity in which particularstations are limited to one or two types of fleet to meetmaintenance and engineering capabilities, the incorporation ofminimum revenue guarantees (MRG) in which municipalities contractfor service to their airport, and the increase or reduction ofavailable aircraft due to retirements and new deliveries. Later inthe schedule development process, the fleet assignment process andoptimization tools are used to finalize the fleet assignments,distribute various subfleets within the network based onoperational limitations such as range, and incorporate maintenanceopportunities and crew considerations. For example, a carrier mightfly several markets with a Boeing 737 but some of the markets mayrequire a 737–800 rather than a 737–200 due to range limitations.Incorporating maintenance opportunities may involve having aspecified number of aircraft of a specific type on the ground for12 hours beginning between 1800 (6:00 p.m.) and 2000 (8:00 p.m.) inthe evening to ensure that enough aircraft are available to launchoperations the following morning. The carrier may also want theirflight crews to stay with the same aircraft for as long as possibleto minimize ‘‘crew connections’’ in which the crew leaves oneaircraft upon arrival and flies anotheraircraft for their nextscheduled flight. Having the crew stay with the aircraft saves timefor both the crew and the airline and results in a more efficientoperation and better utilization of the aircraft. It alsofacilitates a more effective line maintenance operation during theoperating day due to the opportunity for maintenance personnel todiscuss issues with the crew during aircraft turns when needed. Theefficient utilization of expensive resources is an objective of anyprofitable airline. One important aspect of this utilizationprocess is fleet assignment. Fleet assignment involves the optimalallocation of a limited number of fleet types to flight legs in theschedule subject to various operational constraints. The mostcommon form of the FAM makes simplifying assumptions aboutpassenger demands, revenues and network flows to approximate theexpected revenue for each flight leg in the schedule.
3) Marketing: Marketing determines whatspecific products will be offered for sale and how many of eachwill be sold. The two primary components of airline marketing arepricing and yield management. Since deregulation of the U.S.domestic airline industry, both have evolved into very complexprocesses. Prior to deregulation, individual airlines servedspecific market segments. Scheduled carriers served the businesstraveler while charter carriers served the leisure market.Scheduled carriers flew with relatively low load factors butremained reasonably profitable due to the limited competitioncreated by government regulation
4.)Aircraft Maintenance OpportunityRouting:
The initial aircraft maintenance routing process focuses onevaluating routing feasibility of the fleeted schedule to meetvarious maintenance and operational requirements. In reality, theschedule planners simply try to insure that aircraft have ampleopportunity to receive maintenance within specified time intervals.The routing of individual aircraft within the schedule happens muchcloser to the day of departure and changes frequently due tooperational events such as weather delays throughout the network.FAA regulations require periodic maintenance checks for commercialaircraft based on metrics such as flown hours, the number oftake-offs and landings and elapsed time in service since the lastmaintenance check. These safety and maintenance requirements arevery strict and aircraft not meeting the minimum requirements willbe grounded. In addition to meeting regulatory requirements, manycarriers try to uniformly add wear and tear to the aircraft. Forexample, over a period of one month it is better to addapproximately 300 flying hours to all aircraft of a given fleetrather than add 400 hours to half of the fleet and only 200 hoursto the remaining fleet. To accomplish this, many carriers attemptto develop routings that represent an Euler Tour. For themaintenance routing problem, the nodes represent stations orairports and the arcs represent lines of flying over the day. AnEuler Tour in a directed graph represents a closed tour such thateach arc or line of flying is traversed exactly once even thoughnodes or airports may be traversed multiple times. Once an EulerTour exists, all aircraft will repeatedly experience the samesequence of dial routes though in any given day, each aircraft isassigned a different daily route
5.) Aircraft RotationsGenerally, the FAM and the fleeting process are driven by overallsystem profit or cost and do not determine aircraft turns withineach station in the network. As a result, the schedule plannersmust determine the best aircraft rotations by ‘‘connecting’’ or‘‘turning’’ the schedule in an efficient manner. During thisprocess, schedule planners will attempt to maximize the efficiencyof the station by effectively managing ground time and removing anyexcessively long ground times known as ‘‘drips’’.
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