Airline network design and adjustment in response to fluctuation in jet fuel prices

Abstract

This study develops a series of models to determine aircraft types and flight frequencies on individual routes, and evaluate the reliability of proposed network planning during fluctuations in jet fuel prices. The reliability of individual routes is evaluated as to whether revenues from flights with initially proposed flight frequencies and aircraft types can accommodate variations in jet fuel expenditures. We define reliability as the probability that the proposed flight frequencies will operate in at least a break-even condition under future fuel price fluctuations. A case study is provided using an international airline in Taiwan to evaluate its network reliability in response to jet fuel price fluctuations in 2008. The results indicate that not only do routes with low load factors show low reliability, but long distance routes with high load factors also show low reliability during periods with high fuel prices. The results of the study provide effective ways to enhance commercial airline network designs in response to the uncertainty of jet fuel prices.