This paper examines the determinants of profitability using operations strategy, productivity, and service measures in the context of the U.S. domestic airline industry. Data on ten carriers was collected on a quarterly basis between 1995 and 2007. An analysis is performed separately on data prior and post 9/11 attack. It is found that operations strategy and productivity measures are significant both before and after the 9/11 attack, whereas service measures are only significant before 9/11. Some managerial implications are provided. Additionally, it is found that the profitability of full-service carriers is improving faster than low-cost carriers after 9/11.

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Robust Airline Fleet Assignment Barry C. Smith 140 Pages Directed by Dr. Ellis L. Johnson Fleet assignment models are used by many airlines to assign aircraft to flights in a schedule to maximize profit. Major airlines report that the use of fleet assignment models increases annual profits by more than $100 million. The results of fleet assignment models affect subsequent planning, marketing and operational processes within the airline. Anticipating these processes and developing solutions favorable to them can further increase the benefits of fleet assignment models. We propose to produce fleet assignment solutions that increase planning flexibility and reduce cost by imposing station purity, limiting the number of fleet types allowed to serve each airport in the schedule. We demonstrate that imposing station purity on the fleet assignment model can limit aircraft dispersion in the network and make solutions more robust relative to crew planning, maintenance planning and operations. Because station purity can significantly degrade computational efficiency, we develop a solution approach, Station Decomposition, which takes advantage of airline network structure. Station Decomposition uses a column generation approach to solving the fleet assignment problem; we further improve the performance of Station Decomposition by developing a primal-dual method that increases the solution quality and model efficiency. Station Decomposition solutions can be highly fractional; we develop a fix and price heuristic to efficiently find integer solutions to the fleet assignment problem. Airline profitability can be increased if fleet assignment models anticipate the effects of marketing processes such as revenue management. We develop an approach, ODFAM, which incorporates airline revenue management effects into the fleet assignment model. We develop an approach to incorporate station purity and ODFAM using a combination of column and cut generation. This approach can increase airline profit up to $27 million per year.

Internet technology (IT) has changed the way information is disseminated, which has led to changes in transaction-making and the creation of new electronic markets. This has also led to the emer-gence of new types of online intermediaries, and new selling mechanisms. Since most online selling involves commodity goods and the discovery of low prices, the design of selling mechanism primarily focuses on the disclosure of price information. Low-price discovery selling mechanisms, however, have caused buyers to shift from one mechanism to another to get the best deals. Online sellers are facing profit pressures as a result. Price information only addresses a portion of consumer needs though. They need information to identify uncertainties that may harm them during transactions. Consumers also search for products and services that fit their individual preferences and are willing to pay a price premium for such offerings. Sellers have to offer additional information and to do decommoditization, or consumers will abandon selling mechanisms that do not match their needs. This dissertation examines these issues in three essays. It explores two online selling mechanisms: online group-buying auctions and a la carte pricing schemes in airline industry. The a la carte pricing is to offer flexible pricing to consumers. The research employs an Internet-based experimental test bed, a single-firm empirical case study, and an econometric model to test the relevant theories. I evaluate the design of online group-buying auctions, where consumers are more uncertain about group-buying as a mechanism for organizing economic exchange. I also evaluate the design of online selling mechanisms in the air travel services industry, where digitally-intermediation has created problems with suppliers¡¦ ownership of their customers and increasing channel conflicts. The results indicate that the dominance of price in consumer purchase decisions can be mitigated by complementary information, as well as value-added product and service information that an online selling mechanism provides. Consumer information requirements are dynamic and inconsistent though. So an effective selling mechanism must identify how to disclose an adequate amount of information to consumer. Some of the new mechanism designs that have emerged have produced a means for sellers to be more effective. My findings suggest that, in addition to price transparency, online selling mechanisms also affect transaction completion uncertainty, and support the expression of personal preferences.

In the recent years, due to the rapid advance of internet technology and its characteristics such as boundary-less, low cost, high-speed, and two-way communication, the airline companies have created websites and employed internet as a marketing tool to sell tickets directly to end-customers via the airline websites. This trend is gradually replacing the traditional technique such as selling the tickets via travel agencies. There are two major advantages of selling tickets via the airline websites. First, it could reduce the commission fee paid to the intermediary effectively; secondly, due to the utilization of electronic ticketing system, the airline companies could further reduce its overall operating cost by 10%. Thus, increasing number of firms, including the six major airline companies in Taiwan, in the airline industry are switching the ticket-selling channel to online-selling. However, it is uncertain whether the functional service provided by the airline companies in Taiwan meets the needs and expectation of the customers. Therefore, the survey developed in this research aims to confer three aspects of existing service of the major Taiwanese airline companies; these three aspects include: the service quality of the online ticketing system, customer satisfaction, and behavior intention. Furthermore, the research takes a step further to discuss the relationship between these three aspects and whether acknowledgement-differences occur between customer attribute and customer spending-behavior toward these three aspects. The findings of this research are as follows: 1. The five major factors that constitute service quality are positively related with customer satisfaction. Among the five, ¡§service convenience¡¨ has the greatest effect on customer satisfaction. 2. The five major factors that constitute service quality are highly and positively related with the ¡§customer loyalty¡¨ factor under the behavior intention aspect. 3. Customer Satisfaction is highly and positively related with the ¡§customer loyalty¡¨ factor under the behavior intention aspect; but it is unrelated with ¡§pay more¡¨ and ¡§switching and complaint¡¨. 4. The two Taiwanese airlines, China Airline and Eva Airline, which serves international route on a regular basis, outperforms the other four national airline companies ¡]Trains Asia Airways¡BFar Eastern Air Transport¡BMandarin Airlines¡BUni Air¡^on ¡§service tangibility¡¨ and ¡§service customization.¡¨ 5. The major customer for purchasing air tickets online is characterized by: younger age (21~35), high education, male and heavy internet user. Keywords: Service Quality, Customer Satisfaction, Behavior Intention,Online-Ticketing, Electronic-Ticket, Airline Companies

A column generation based approach is proposed to solve scheduling problems for fractional airlines efficiently and return near optimal schedules. Crew tours are building blocks of our approach, and our approach is focused on exploring more feasible tours than other approaches. In particular, all elements of a crew tour are optimized during the preparation and tour generation procedures. Moreover, time windows of customer-requested flights are handled exactly, and generalized to time window and crew time window of duties and tours. Furthermore, time windows of tours are contained in the MIP formulation to ensure more feasible connections between tours. In the pricing subproblem, an efficient constrained shortest path algorithm is proposed, which is necessary for our model and also provides extensibility for incorporating more complex constraints in the future. Computational results of our model show very small optimality gaps and consistent improvements over the model used in practice. Moreover, restricted versions of our model that have fast running time are provided, thus very desired in the case that running time has more priority than solution quality. In order to understand the demand, data mining of demand data is presented and analyzed. Moreover, a recovery model is proposed to deal with unscheduled maintenance in practice, by reserving airplanes and crews in the model. Computational experiments show the advantage of the recovery model, in the case of simulated unscheduled maintenance and comparing to models without recovery considerations.

Perhaps no single industry has benefited more from advancements in computation, analytics, and optimization than the airline industry. Operations Research (OR) is now ubiquitous in the way airlines develop their schedules, price their itineraries, manage their fleet, route their aircraft, and schedule their crew. These problems, among others, are well-known to industry practitioners and academics alike and arise within the context of the planning environment which takes place well in advance of the date of departure. One salient feature of the planning environment is that decisions are made in a frictionless environment that do not consider perturbations to an existing schedule. Airline operations are rife with disruptions caused by factors such as convective weather, aircraft failure, air traffic control restrictions, network effects, among other irregularities. Substantially less work in the OR community has been examined within the context of the real-time operational environment. While problems in the planning and operational environments are similar from a mathematical perspective, the complexity of the operational environment is exacerbated by two factors. First, decisions need to be made in as close to real-time as possible. Unlike the planning phase, decision-makers do not have hours of time to return a decision. Secondly, there are a host of operational considerations in which complex rules mandated by regulatory agencies like the Federal Administration Association (FAA), airline requirements, or union rules. Such restrictions often make finding even a feasible set of re-scheduling decisions an arduous task, let alone the global optimum. The goals and objectives of this thesis are found in Chapter 1. Chapter 2 provides an overview airline operations and the current practices of disruption management employed at most airlines. Both the causes and the costs associated with irregular operations are surveyed. The role of airline Operations Control Center (OCC) is discussed in which serves as the real-time decision making environment that is important to understand for the body of this work. Chapter 3 introduces an optimization-based approach to solve the Airline Integrated Recovery (AIR) problem that simultaneously solves re-scheduling decisions for the operating schedule, aircraft routings, crew assignments, and passenger itineraries. The methodology is validated by using real-world industrial data from a U.S. hub-and-spoke regional carrier and we show how the incumbent approach can dominate the incumbent sequential approach in way that is amenable to the operational constraints imposed by a decision-making environment. Computational effort is central to the efficacy of any algorithm present in a real-time decision making environment such as an OCC. The latter two chapters illustrate various methods that are shown to expedite more traditional large-scale optimization methods that are applicable a wide family of optimization problems, including the AIR problem. Chapter 4 shows how delayed constraint generation and column generation may be used simultaneously through use of alternate polyhedra that verify whether or not a given cut that has been generated from a subset of variables remains globally valid. While Benders' decomposition is a well-known algorithm to solve problems exhibiting a block structure, one possible drawback is slow convergence. Expediting Benders' decomposition has been explored in the literature through model reformulation, improving bounds, and cut selection strategies, but little has been studied how to strengthen a standard cut. Chapter 5 examines four methods for the convergence may be accelerated through an affine transformation into the interior of the feasible set, generating a split cut induced by a standard Benders' inequality, sequential lifting, and superadditive lifting over a relaxation of a multi-row system. It is shown that the first two methods yield the most promising results within the context of an AIR model.

Paslaugų kokybės vertinimas AB „flyLAL – Lithuanian Airlines“ pavyzdžiu Darbo objektas: Oro linijų bendrovės teikiamų paslaugų kokybė. Tyrimo problema: Nepakankamas dėmesys oro linijų bendrovės teikiamų paslaugų kokybei. Tyrimo tikslas: Ištirti, ar paslaugos teikėjo formuojami vartotojų lūkesčiai atitinka vartotojų suvoktą kokybę ir ar gaunama vertė atitinka už ją mokamą kainą. Tyrimo uždaviniai: • Ištirti, kaip vartotojai vertina skirtingas bendrovės paslaugų kokybės dimensijas; • Išanalizuoti vartotojų suvokiamą kokybę; • Ištirti vartotojų pasitenkinimo lygį bendrovės teikiamomis paslaugomis; • Ištirti vartotojų lojalumo lygį. Tiriamieji klausimai: • Kas įtakoja suteiktų paslaugų kokybės suvokimą? • Kuo remiantis vertinama paslaugų kokybė? • Koks vartotojų pasitenkinimo bendrovės teikiamomis paslaugomis lygis? • Ar tyrimo rezultatai parodo vartotojų lojalumo lygį? Hipotezė: Bendrovės teikiamų paslaugų kokybė neatitinka už šias paslaugas mokamos kainos – vartotojai nėra patenkinti teikiamų paslaugų kokybe. Išvados ir rekomendacijos: Oro linijų bendrovių teikiamos paslaugos iš kitų išsiskiria dideliu sudedamųjų proceso dalių skaičiumi. Svarbu suprasti, kad teikiamų paslaugų kokybė tiesiogiai įtakoja pardavimus. Svarbu suvokti šios specifinės verslo srities ypatumus, numatyti visus sektorius, kuriuose teikiamų paslaugų kokybę būtų galima gerinti. Šiame darbe užsibrėžta ištirti oro linijų bendrovės „flyLAL – Lithuanian Airlines“ teikiamų paslaugų kokybę siekiant... [toliau žr. visą tekstą] / Service quality evaluation based on the "flyLAL-Lithuanian Airlines" case The object of the thesis: Service quality of the airline. The problem of the research: Insufficient attention to the service quality of the airline. The aim of the research: To investigate whether the costumers’ expectations formed by service provider match the customers’ perceived quality, whether the value obtained corresponds to the price paid for it. The goals of the research: • To investigate how costumers evaluate the different dimensions of the service quality; • To analyze perceived quality of the costumers; • To investigate the level of costumers satisfaction of services provided; • To investigate the level of costumers’ loyalty. The investigative questions: • What influences the perception of the quality of the services provided? • On what based the service quality is evaluated? • What is the costumers’ satisfaction level of received services? • Do the results of the research show the level of costumers’ loyalty? Hypothesis: services quality provided does not correspond to the price paid for it – costumers are not satisfied with the quality of service provided. Conclusions and recommendations: Services provided by the airlines differ from other services because of the bigger amount of the components of a process. Service quality provided directly affects company’s sales. It is important to understand the peculiarities of this specific business area, to foresee all the factors of... [to full text]

An in-depth study of Advance Passenger Information and Passenger Name Record has never been accomplished prior to the events of September 11 th. It is of great importance to distinguish both of these concepts as they entail different legal consequence. API is to be understood as a data transmission that Border Control Authorities possess in advance in order to facilitate the movements of passengers. It is furthermore imperative that harmonization and inter-operability between States be achieved in order for this system to work. Although the obligations seem to appear for air carriers to be extraneous, the positive impact is greater than the downfalls. / Passenger Name Record access permits authorities to have additional data that could identify individuals requiring more questioning prior to border control clearance. This data does not cause in itself privacy issues other than perhaps the potential retention and manipulation of information that Border Control Authorities may acquire. In essence, bilateral agreements between governments should be sought in order to protect national legislation. / The common goal of the airline industry is to ensure safe and efficient air transport. API and PNR should be viewed as formalities that can facilitate border control clearance and prevent the entrance of potentially high-risk individuals.