The Fleet-Level Environmental Evaluation Tool (FLEET) is a simulation tool that evaluates the impact of commercial aviation operations on environmental emissions. FLEET adopts a system dynamics-type approach in modeling airline operations as a resource allocation problem, where several variations of economic conditions, aircraft technology availability, and policy implementation initiatives can be studied. Previous work with FLEET included a 'duopoly' model that presented the economic competition between legacy and low cost airlines. This model solved the resource allocation problem for the two competing airlines independent of each other. The motivation for the current paper is to portray a more realistic airline market competition. We use the notion of Nash equilibrium from game theory to find local equilibrium strategies for both airline carrier types, where each airline's operation is dependent on the other's resource allocation solution. This work describes the resulting game theory-based duopoly model and compares the simulation results with the previously developed system dynamics-type duopoly model. The evolution of Market Share Ratio from each model is similar, but both differ substantially from historical data.
Nomenclature#,% = Block hours of aircraft type k on route j # = Capacity of aircraft type k #,% , = Direct Operating Cost (DOC) of aircraft type k on route j for airline i % = Total market demand on route j % 2 = Average fare on route j of airline i # , = Number of aircraft type k in the fleet of airline i MH 7,8 = Maintenance hours of aircraft type k on route j % , = Market share of airline i on route j #,% , = Number of passengers that fly on aircraft type k on route j for airline i #,% , = Ticket price on aircraft type k on route j for airline i % = Market share ratio on route j #,% , = Number of trips of aircraft type k on route j for airline i , = Turnaround time of airline i , = Payoff function of player i
This paper discusses a model of airlines' fleet planning decisions. In this model, aircraft retirement decisions are based on the net present value of potential new versus existing aircraft, and new aircraft acquisition decisions are based on the expected market demand to be satisfied in the future years. The model runs through three scenarios of passenger demand and aircraft technology evolution, and the results obtained show a comparison of effects of airline decision-making on their fleet composition and the environmental impact.
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