MODELING OF AIRLINES’ BEHAVIOR ON CHOICE OF AIRCRAFT SIZE AND NETWORK DESIGN

Abstract

  This paper proposes the air transport market model considering airline’s network design strategy which consists of service frequency and choice of aircraft type. As for the modeling, we improve the existing bilevel market model to the model in which airlines can choose the aircraft type and adjust service frequency as well. We adopt the subgame perfect solution as the Nash equilibrium. Numerical computations which discuss the simple hub-spokes network show (i) downsizing the aircraft size depends on the difference of marginal cost between aircraft types, and the difference of passenger’s taste of flight frequency: (ii) relaxation of runway capacity at the hub airport brings downsizing the aircraft size and more service frequencies, but this change does not occur in every market.