Evaluating optimal multi-hub networks in a deregulated aviation market with an application to Western Europe

This paper develops, evaluates and ultimately aids in the choosing of an optimal, single allocation, hub-and-spoke network for an airline working in a deregulated market. An integer linear program evaluates potential hub network combinations, whose profits are then determined using a non-linear mathematical program. International gateway airports and regional hubs, profit, frequency and aircraft size are the decision variables. An adapted, conjugate-gradient projection algorithm is developed and the models are subsequently applied to Western Europe.

[1]  A. Graham,et al.  The Economic Performance of European Airports , 1995 .

[2]  Boaz Golany,et al.  Evaluation of deregulated airline networks using data envelopment analysis combined with principal component analysis with an application to Western Europe , 2001, Eur. J. Oper. Res..

[3]  A. Zhang,et al.  Airline Network Rivalry , 1995 .

[4]  A. Kanafani,et al.  AIRLINE HUBBING : SOME IMPLICATIONS FOR AIRPORT ECONOMICS , 1985 .

[5]  D. Goldfarb.  Extension of Davidon’s Variable Metric Method to Maximization Under Linear Inequality and Equality Constraints , 1969 .

[6]  Jadranka Skorin-Kapov,et al.  HUB NETWORK DESIGN WITH SINGLE AND MULTIPLE ALLOCATION: A COMPUTATIONAL STUDY , 1996 .

[7]  D. Skorin-Kapov,et al.  Tight linear programming relaxations of uncapacitated p-hub median problems , 1996 .

[8]  David Encaoua,et al.  Demand-Side Network Effect in Airline Markets , 1992 .

[9]  Andreas T. Ernst,et al.  Efficient algorithms for the uncapac-itated single allocation p-hub median problem , 1996 .

[10]  Hasan Pirkul,et al.  An Efficient Procedure for Designing Single Allocation Hub and Spoke Systems , 1998 .

[11]  Moshe Ben-Akiva,et al.  Discrete Choice Analysis: Theory and Application to Travel Demand , 1985 .

[12]  Harvey J. Miller,et al.  THE HUB NETWORK DESIGN PROBLEM: A REVIEW AND SYNTHESIS. , 1994 .

[13]  Vladimir Marianov,et al.  Location of hubs in a competitive environment , 1999, Eur. J. Oper. Res..

[14]  C. Winston,et al.  The Economic Effects of Airline Deregulation , 1986 .

[15]  Morton E. O'Kelly,et al.  The Location of Interacting Hub Facilities , 1986, Transp. Sci..

[16]  Richard A. Posner,et al.  Benefits and Costs of Airline Mergers: A Case Study , 1980 .

[17]  Aisling J. Reynolds-Feighan.  The E.U. and U.S. air freight markets: network organization in a deregulated environment , 1994 .

[18]  James F. Campbell.  Hub Location and the p-Hub Median Problem , 1996, Oper. Res..

[19]  Chawn-Yaw Jeng.  AN IDEALIZED MODEL FOR UNDERSTANDING IMPACTS OF KEY NETWORK PARAMETERS ON AIRLINE ROUTING , 1988 .

[20]  Oz Shy,et al.  Airline Deregulation and the Choice of Networks , 1991 .

[21]  Gang Yu,et al.  AIRLINE NETWORK DESIGN AND HUB LOCATION PROBLEMS , 1996 .

[22]  Clifford Winston,et al.  The Evolution of the Airline Industry , 1994 .

[23]  Tae Hoon Oum,et al.  A note on optimal airport pricing in a hub-and-spoke system , 1996 .