An algorithm for calculating consistent itinerary flows

As airlines have moved toward more concentrated "hub-and-spoke" schedules, connecting passengers have become an increasingly important part of their loads and revenues. Yet, many optimization approaches to such airline planning problems as revenue management and aircraft assignment have ignored the "cross-leg" effects of seating capacity on connecting traffic and the associated revenue. This paper presents a simple approach for calculating consistent on-board itinerary flows and the corresponding loads, revenues and marginal seat values given a set of underlying demands and an assignment of seating capacities to legs. An application of this approach to a large-scale airline network is presented and the implication of the results for decision-making discussed. Although the approach is presented in the context of airline planning, it is applicable to any transportation system in which connecting traffic plays a significant part as well as to hotel and automobile rentals.