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A risk averse approach to the capacity allocation problem in the airline cargo industry

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Listed:
  • Masato Wada

    (Pontificia Universidad Católica de Chile)

  • Felipe Delgado

    (Pontificia Universidad Católica de Chile)

  • Bernardo K. Pagnoncelli

    (Universidad Adolfo Ibáñez)

Abstract

In air cargo transportation, capacity can be reserved via allotment, which are long-term contracts with fixed price, and free, which is the space not assigned to allotment contracts. In this later case, reservations are made closer to the departure date, and normally higher tariffs are charged. The demand, the tariff, and the show-up rate for the free mode are stochastic. We consider risk neutral and risk averse formulations, using the Conditional Value-at-Risk as a risk measure. We solve the resulting problems using the Sample Average Approximation and test our models with nine experiments representing different demand patterns using real data from a major airline.

Suggested Citation

  • Masato Wada & Felipe Delgado & Bernardo K. Pagnoncelli, 2017. "A risk averse approach to the capacity allocation problem in the airline cargo industry," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(6), pages 643-651, June.
    • Handle: RePEc:pal:jorsoc:v:68:y:2017:i:6:d:10.1057_s41274-016-0135-x
    DOI: 10.1057/s41274-016-0135-x
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    Cited by:

    1. Delgado, Felipe & Trincado, Ricardo & Pagnoncelli, Bernardo K., 2019. "A multistage stochastic programming model for the network air cargo allocation under capacity uncertainty," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 131(C), pages 292-307.
    2. Delgado, Felipe & Sirhan, Cristóbal & Katscher, Mathias & Larrain, Homero, 2020. "Recovering from demand disruptions on an air cargo network," Journal of Air Transport Management, Elsevier, vol. 85(C).
    3. Tseremoglou, Iordanis & Bombelli, Alessandro & Santos, Bruno F., 2022. "A combined forecasting and packing model for air cargo loading: A risk-averse framework," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 158(C).
    4. Delgado, Felipe & Mora, Julio, 2021. "A matheuristic approach to the air-cargo recovery problem under demand disruption," Journal of Air Transport Management, Elsevier, vol. 90(C).

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