Profit Optimization Strategy in Airline Operations: An Integrated Fleet Assignment Model for Indonesian Domestic Flights

Abstract

Because of its speed, air travel is becoming more popular. Airlines operate a large fleet due to increased air travel demand. Airlines must operate wisely due to the high cost of operating aircraft. Competition among airlines has intensified with the liberalization of the aviation sector. The competition led to a decline in aircraft service quality and operational efficiency. This adversely affects the airline's financial status. Several airlines have ceased operations, potentially leaving some flight routes unserved. Another consequence is the tendency of airlines to form monopolies or oligopolies by charging higher fares. To address these issues, the author shifted the focus from unrestricted competition to airline collaboration in aircraft operations. This research aims to maximize profits by optimizing aircraft assignments using the Integrated Fleet Assignment (IFA) strategy. The strategy consolidated aircraft assignment under a singular managerial structure at the IFA, as though the IFA functioned as a merged operations management unit. An integer programming model is employed to optimize fleet assignment models. The objective of this model is to identify the optimal fleet composition to maximize profit. The study's findings indicate that the IFA strategy yields a better combination of fleet assignments and optimal profits than under previous conditions. The approach not only optimizes aircraft operations but also introduces innovations in flight service management. This study can also serve as a basis for policymaking, especially for the government, as the regulator of air transport services.