A risk averse approach to the capacity allocation problem in the airline cargo industry

Masato Wada (), Felipe Delgado () and Bernardo K. Pagnoncelli ()
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Masato Wada: Pontificia Universidad Católica de Chile
Felipe Delgado: Pontificia Universidad Católica de Chile
Bernardo K. Pagnoncelli: Universidad Adolfo Ibáñez

Journal of the Operational Research Society, 2017, vol. 68, issue 6, 643-651

Abstract: Abstract In air cargo transportation, capacity can be reserved via allotment, which are long-term contracts with fixed price, and free, which is the space not assigned to allotment contracts. In this later case, reservations are made closer to the departure date, and normally higher tariffs are charged. The demand, the tariff, and the show-up rate for the free mode are stochastic. We consider risk neutral and risk averse formulations, using the Conditional Value-at-Risk as a risk measure. We solve the resulting problems using the Sample Average Approximation and test our models with nine experiments representing different demand patterns using real data from a major airline.

Keywords: air transport; stochastic programming; risk (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (4)

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DOI: 10.1057/s41274-016-0135-x

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