A Coupled Direct Operating Costs and Discrete Choice Model for Airline Passengers

This technical documentation presents a coupled direct operating costs (DOC) and discrete choice model, which links airline DOC to passenger route choices. The model first computes DOC for different aircraft types, airline types, and policy settings, then converts these costs into indicative cost-based ticket prices. These prices, together with route-specific travel-time attributes, serve as inputs to a mixed logit model that captures preference heterogeneity, including transfer-related disutility and perceived service differences between carriers. To support long-term simulation horizons, the model also incorporates inflation and other time-dependent adjustments. By consolidating cost modeling and behavioral choice analysis, the model enables a systematic assessment of how regulatory, technological, and market developments shape future air transport outcomes. This document provides a complete set of mathematical formulations, parameter definitions, and implementation details.