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The econometrics of airline network management

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  • GRAMMIG, Joachim
  • HUJER, Reinhard
  • SCHEIDLER, Michael

Abstract

The task of airline network management is to develop new flight schedule variants and evaluate thm in terms of expected passenger demand and revenue. Given the industry's trend towards global cooperation, this is especially important when evaluating the potential synergies with alliance partners. From the econometric point of view, this task represents a discrete choice modeling problem in which the analyst has to account for a large number of dependent alternatives. In this paper we discuss the applicability of recently proposed approaches and introduce a new multinomial probit specificationdesigned for the airline network management task. The superior performance of the new model is demonstrated both in a simulation study and in a real-world application using airline bookings data.

Suggested Citation

  • GRAMMIG, Joachim & HUJER, Reinhard & SCHEIDLER, Michael, 2001. "The econometrics of airline network management," LIDAM Discussion Papers CORE 2001055, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2001055
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    References listed on IDEAS

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    More about this item

    Keywords

    airline industry; transportation; discrete choice models; multinomial probit model;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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