Socially-oriented flight scheduling and fleet assignment model with an application to Norway

•A requirement design approach for subsidized air transport networks is proposed.•The approach is based on an integrated flight scheduling and fleet assignment model.•The objective of the model minimizes generalized total transport network costs.•A second-stage welfare analysis is conducted for all stakeholders based on results.•An application to Norway demonstrates large potential improvements due to approach.

One of the direct results of air transport liberalization has been the development of publicly supported links on thin markets in remote regions when service is deemed necessary. We present a flight scheduling and fleet assignment optimization model that may assist public authorities to establish the level of service requirements for subsidized air transport networks. With the results of the optimization model, a welfare analysis of the network is carried out, distinguishing between passenger, airline, airport and government surpluses. The optimization model and subsequent welfare analysis were applied to the PSO network of Norway, which is currently the largest in Europe. The results indicate that improvements over the current network can be obtained for all relevant stakeholders simultaneously, with savings in the order of $1.2 million daily.