Modeling Airline Decisions on Route Planning Using Discrete Choice Models

We propose a model for the airlines’ decisions on route planning, i.e., the decision on selecting which route to add and delete, using discrete choice random-utility theory. The central hypothesis is that a discrete choice model can effectively model the airlines’ decisions on route selection , and thereby help model the evolution of the air transportation network. We first model the airlines’ utility function as a linear function of decision variables with interaction effects. The decision of route selection is then modeled using a binary choice model derived from the utility function. The preferences for each variable in the utility function are estimated using historical datasets. Advantages of this approach include the ability to use statistical techniques to quantitatively construct decision models as well as to account for the uncertainty in unobserved attributes of the decision model. The proposed model helps predict the airlines’ decisions on routes addition and deletion which affect the network topology of air transportation and its future evolution. This capability can be beneficial to other stakeholders, such as Federal Aviation Administration, who may need to make their decisions in response to those made by the airlines, but do not have access to the airlines’ true decision models.