A Game-Theoretic Approach to Modeling and Forecasting Airline Frequency Decisions Under Competition

Federal, state and local aviation planners rely on air traffic forecasts for workforce staff planning, evaluation of current and future technological improvements at airports, planning of airport capacity expansion, and evaluation of federal funding requests for airport infrastructure improvements. While most existing forecasting models are econometric or statistical in nature, incorporating a more behavioral understanding of airline competition into the forecasts and planning process represents a significant opportunity to improve their efficacy. With these possibilities in mind, a two-stage game-theoretic model of airline capacity allocation decisions under competition is developed. Desirable theoretical properties and computational tractability of the authors' model are demonstrated, and then exploited to develop solution algorithms with fast convergence properties to enable rapid generation of forecasts, requiring only a few seconds of run-time. The authors' two-stage game model is then solved to equilibrium using a real-world dataset based on an 11-airport network from the western United States. The out-of-sample validations of traffic predictions at the airport and origin-destination level indicate a good fit to real-world traffic data for various look-ahead times and at various levels of granularity. It is thus demonstrated that a behaviorally consistent two-stage game model of airline competition provides a good fit to observed airline operations at various levels of aggregation, in turn highlighting the potential of game-theoretic models to improve air traffic forecasting and scenario analysis.

• Supplemental Notes:
  • This paper was sponsored by TRB committee AV040 Standing Committee on Aviation Economics and Forecasting.
• Authors:
  • Harder, Reed H
  • Vaze, Vikrant S
• Conference:
  • Transportation Research Board 97th Annual Meeting
  • Location: Washington DC, United States
  • Date: 2018-1-7 to 2018-1-11
• Date: 2018

Language

• English

Media Info

• Media Type: Digital/other
• Features: Figures; References; Tables;
• Pagination: 15p

Subject/Index Terms

• TRT Terms: Air traffic; Airlines; Airport planning; Competition; Computer models; Decision making; Fares; Game theory; Origin and destination; Resource allocation; Scheduling; Traffic data; Traffic forecasting
• Geographic Terms: Western States
• Subject Areas: Aviation; Economics; Planning and Forecasting;

Filing Info

• Accession Number: 01664286
• Record Type: Publication
• Report/Paper Numbers: 18-03309
• Files: TRIS, TRB, ATRI
• Created Date: Mar 27 2018 11:15AM