Analysis of Decision Postponement Strategies for Aircraft Assignment

The ability to effectively match supply and demand can result in significant revenue benefits in the airline industry, where supply and demand mismatches are common. We study the benefits of a decision postponement strategy for aircraft assignment under uncertainty. Our Demand Driven Swapping approach takes advantage of the inherent flexibilities in the system, and dynamically swaps aircraft as departures near and more accurate demand information is gathered. We analyze several swapping strategies characterized in terms of their frequency and timing. Our analytical results show that strategies that make the swapping decision early in time (so as to minimize disturbances to operations) perform very well on routes, where the demand uncertainty is low and the expected demands on the legs are well balanced. Otherwise, a swapping strategy, which revises the swapping decision over time, should be implemented. Our simulation results, based on real data obtained from United Airlines, confirm our analytical findings.