Charter vs. scheduled airlines

Scheduled airlines cause delays to passengers due to compromises with the schedule. Poor service to the pertinent region coupled with high passenger value of time may warrant the use of a non-scheduled airline, particularly the use of a charter airline by a group of passengers. Recent advances in communication technology coupled with recent introduction of very light jet aircraft could further fuel the use of charter service.;The entry of such a non-scheduled airline would result in a price and/or frequency competition with existing service. Further, the competition would be at the network level. This research analyzes the competition between the charter service and scheduled service, and develops a model for charter strategic planning in light of such competition.;To analyze competition, we consider a market composed of individual and group passengers. The charter service competes by setting prices for various groups, and scheduled service sets the price and frequency. Using simple forms of demand and cost models, we analyze different scenarios of change in price and frequency for a simultaneous equilibrium and leader-follower equilibrium. The analysis is over a generalized setting of various groups with varying sizes and value of time. The analytical expressions are followed by a numerical treatment for a variety of cases, and the results show that charter is successful when the group sizes are large, and the entry of charter service benefits both the individual and group passengers.;We develop a mixed integer linear program for charter strategic planning over a network. In light of competition with the scheduled service, the model selects the most profitable or beneficial group-movements over a network, and assigns a limited charter fleet to them. The scheduling of charter group-movements is done over continuous and penalized time windows. The computational aspects of the model are tested and the solution time is reasonable for real-world problems. The model is used to explore the benefits of a charter service to student athlete travel. The time savings are substantial with little change in dollar cost of travel.