Flight scheduling and pricing with high-speed rail coopetition and delay uncertainty

Abstract

This paper explores flight scheduling and pricing strategies for airlines under coopetition with high-speed rail (HSR) in intercity travel markets, considering the impact of potential delays and missed connections on passenger choices. A stochastic user equilibrium model is developed to account for the passenger route choices under travel time variability, security control delays, and competition with HSR and other airlines. The model investigates coopetition between airlines and HSR operators to enhance profitability. Additionally, to address the capacity constraint, the model incorporates overbooking costs, accounting for passenger no-shows, the probability of exceeding flight capacity, and compensation costs by the operator. The proposed solution method employs decomposition, a variable neighborhood search method, and linearization techniques to address probabilistic terms and equilibrium conditions. A numerical case study focusing on the Europe-China market, considering demand from both long-haul and short-haul travel, evaluates the impact of changes in HSR travel times and fares on passenger choices. Our results show that reduced HSR travel times shift passenger demand away from flights and lead flight operators to terminate some short-haul services, while increased HSR fares boost flight demand, particularly on long-haul routes. The study further illustrates the policy of reducing flights in response to a more severe competition due to shorter flight transit time. The optimal pricing strategy produces similar fares for the connecting itinerary through a local transfer hub and direct itinerary to the transfer hub.