A Fuel Management Model for the Airline Industry

This model finds a minimum cost fuel tankering policy for an airline flight schedule based on fuel prices, station constraints and supplier constraints. A station constraint is an upper or lower bound on the amount of fuel that may be purchased at a particular station for all flights. A supplier constraint is an upper or lower bound on the amount of fuel that may be purchased from a particular supplier at all stations. The problem formulates as a linear program. However, if there are no station or supplier constraints it can be reduced to a pure network problem by a series of transformations on the constraints and variables. If there are either station or supplier constraints, but not both, it can be reduced to a generalized network problem. If both are present, the program is not a generalized network. However, the number of supplier constraints is likely to be small. When this is the case, other techniques may be used to decrease computation time. McDonnell Douglas uses this model to estimate the profit potential of various aircraft types under optimal fuel management policies. Cost savings of 5 to 6% are common.