ABSTRACT
This chapter focuses on capacity planning and operational management for airlines (for airports, see Chapter 16). In general, the purpose of airline capacity planning is to respond to current and future travel demand of passengers (see Chapter 19). While the capacity of an airline is certain and can be planned, travel demand attracted to a particular airline is fairly uncertain. Travel demand typically depends on marketing, product offerings in the market, competition, and to some extent the market power (share) of an airline. Economies of density are identified in the literature for airlines running a hub-and-spoke network, while low cost carriers (LCCs) tend to run a point-to-point network on trunk routes and generate desired economies of scale (Button, 2002) (see Chapter 11 for a discussion of airline economies of density/scale). Since flights have various levels of demand, airlines respond to this capacity management issue by combining two techniques: the use of various fleets of different sizes, and the adjustment of service frequency on the route.
