16Itinerary‐based Fleet Assignment Model (IFAM)

16.1 Introduction

As explained in Chapter 11, the main objective of the fleet assignment model (FAM) is to maximize the net revenue of the airline. The net revenue is defined as the sum over all flights of the difference between the unconstrained revenue and the cost of the flight. The unconstrained revenue is assumed to be constant, which is the maximum possible revenue for a particular flight regardless of the assigned fleet capacity. The cost depends on the assigned fleet type. It includes the flight operating cost and the spill cost. The operating cost incorporates fuel cost, crew cost, landing fees, etc. The spill cost of a flight is the revenue lost in case the assigned aircraft (fleet type) cannot accommodate all passengers. The spill cost is incurred only when the passenger demand of the flight is more than the seat capacity of the assigned fleet.

The basic FAM is a flight‐based (or leg‐based) model. It assumes that both the demand and the revenue of a flight are independent of all other flights in the schedule. As explained earlier, for airlines that adopt the hub‐and‐spoke network structure, the demand of a flight is a mix of local and connecting passengers. Local passengers are traveling from the origin city of the flight to its destination city. Connecting passengers use the origin or the destination airport (or both) of the flight as a transfer point(s) to continue their travel to their final destinations. Passenger ...

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