Stochastic Modeling of Airlines' Scheduled Services Revenue

Airlines' revenue generated from scheduled services account for the major share in the total revenue. As such, predicting airlines' total scheduled services revenue is of great importance both to the governments (in case of national airlines) and private airlines. This importance stems from the need to formulate future airline strategic management policies, determine government subsidy levels, and formulate governmental air transportation policies. The prediction of the airlines' total scheduled services revenue is dealt with in this paper. Four key components of airline's scheduled services are considered. These include revenues generated from passenger, cargo, mail, and excess baggage. Results show the appropriateness of the developed models and their ability to provide air transportation planners with future information vital to the planning and design processes.