An overview of the issues in the airline industry and the role of optimization models and algorithms

Optimization application has revolutionized the airline industry in all phases of the planning process. One of the current issues facing the airline industry is planning under uncertainty, especially in the context of schedule disruptions. We discuss the robust models and solution algorithms that have been proposed and developed to handle the uncertain parameters. We show that stochastic programming ( SP) provides an ideal paradigm for capturing the uncertainties and making robust decisions. We develop and investigate a prototype fleet assignment model formulated as a two-stage SP with recourse.