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.     

The design of capacitated intermodal hub networks with different vehicle types

In this study, we allow using alternative transportation modes and different types of vehicles in the hub networks to be designed. The aim of the problem is to determine the locations and capacities of hubs, which transportation modes to serve at hubs, allocation of non-hub nodes to hubs, and the number of vehicles of each type to operate on the hub network to route the demand between origin-destination pairs with minimum total cost. Total cost includes fixed costs of establishing hubs with different capacities, purchasing and operational costs of vehicles, transportation costs, and material handling costs. A mixed-integer programming model is developed and a variable neighborhood search algorithm is proposed for the solution of this problem. The heuristic algorithm is tested on instances from the Turkish network and CAB data set. Extensive computational analyzes are conducted in order to observe the effects of changes in various problem parameters on the resulting hub networks.     

The European freight railway system as a hub-and-spoke network

This paper addresses a hub-and-spoke network problem for railroad freight, where a central planner is to find transport routes, frequency of service, length of trains to be used, and transportation volume. Hub-and-spoke networks, often found in air freight, have not been favoured by railways in the past. Such a structure could be profitable, however, if there exist concentrated freight flows on some service links. We formulate a linear integer programming model whose objective function includes not only the typical operational cost, but also cost due to the transit time spent by freight in the network. We then develop heuristic algorithms to solve large scale instances occurring in rail freight systems in France plus Italy; Germany; and a 10-country European network. By assuming that every node is equipped with consolidation capability, we let the final solution naturally reveal potential hub locations, the impact of several of which is studied by sensitivity analysis.     

An aggregate demand model for air passenger traffic in the hub-and-spoke network

In this paper, we build an aggregate demand model for air passenger traffic in a hub-and-spoke network. This model considers the roles of airline service variables such as service frequency, aircraft size, ticket price, flight distance, and number of spokes in the network. It also takes into account the influence of local passengers and social-economic and demographic conditions in the spoke and hub metropolitan areas. The hub airport capacity, which has a significant impact on service quality in the hub airport and in the whole hub-and-spoke network, is also taken into consideration.Our demand model reveals that airlines can attract more connecting passengers in a hub-and-spoke network by increasing service frequency than by increasing aircraft size in the same percentage. Our research confirms the importance of local service to connecting passengers, and finds that, interestingly, airlines’ services in the first flight leg are more important to attract passengers than those in the second flight segment. Based on data in this study, we also find that a 1% reduction of ticket price will bring about 0.9% more connecting passengers, and a 1% increase of airport acceptance rate can bring about 0.35% more connecting passengers in the network, with all else equal. These findings are helpful for airlines to understand the effects of changing their services, and also useful for us to quantify the benefits of hub airport expansion projects.At the end of this paper, we give an example as an application to demonstrate how the developed demand model could be used to valuate passengers’ direct benefit from airport capacity expansion.     

A continuous approximation model for time definite many-to-many transportation

Time definite freight transportation carriers provide very reliable scheduled services between origin and destination terminals. They seek to reduce transportation costs through consolidation of shipments at hubs, but are restricted by the high levels of service to provide less circuitous routings. This paper develops a continuous approximation model for time definite transportation from many origins to many destinations. We consider a transportation carrier serving a fixed geographic region in which demand is modeled as a continuous distribution and time definite service levels are imposed by limiting the maximum travel distance via the hub network. Analytical expressions are developed for the optimal number of hubs, hub locations, and transportation costs. Computational results for an analogous discrete demand model are presented to illustrate the behavior observed with the continuous approximation models.     

Generic Framework for Transport Network Designs: Applications and Treatment in Intermodal Freight Transport Literature

Abstract

Six principles for the design of transport systems are described, including direct link, corridor, hub‐and‐spoke, connected hubs, static routes, and dynamic routes. The designs are theoretically discussed, defining the operational character of each design and their application in passenger, freight and rail freight transport. The theory is then applied to intermodal freight transport by comparing the terminology used in the paper with that in the scientific literature. The advantages of using a generic terminology over contextual ones are identified from the perspectives of researchers, commercial operators and policy‐makers.     

High-speed rail and air transport competition and cooperation: A vertical differentiation approach

This paper considers vertical differentiation between air transport and high-speed rail (HSR) with different ranges of travel distance to analyze the air-HSR competition effects on fares, traffic volumes and welfare, as well as the conditions under which air-HSR cooperation is welfare-enhancing. The analysis is conducted in a hub-and-spoke network with a network carrier, an HSR operator, and a spoke airline, taking into account potential hub airport capacity constraint. We find that air-HSR competition in the connecting market may result in the network airline charging an excessively high price in the HSR-inaccessible market. This effect is present even when the HSR-inaccessible route is a duopoly-airline market. On the other hand, air-HSR cooperation increases fares in the connecting market, and an improvement in rail speed or air-HSR connecting time reduces airfare on the routes where HSR and the airline compete. When the airline cannot serve all the markets due to limited hub airport capacity, it would withdraw from the market in which it has less competitive advantage over HSR. Finally, air-HSR cooperation is more likely to be welfare-improving when the hub airport is capacity constrained, and when either air transport or HSR exhibits strong economies of traffic density.     

Intermodal hub-and-spoke network design: Incorporating multiple stakeholders and multi-type containers

This paper develops a mathematical program with equilibrium constraints (MPEC) model for the intermodal hub-and-spoke network design (IHSND) problem with multiple stakeholders and multi-type containers. The model incorporates a parametric variational inequality (VI) that formulates the user equilibrium (UE) behavior of intermodal operators in route choice for any given network design decision of the network planner. The model also uses a cost function that is capable of reflecting the transition from scale economies to scale diseconomies in distinct flow regimes for carriers or hub operators, and a disutility function integrating actual transportation charges and congestion impacts for intermodal operators. To solve the MPEC model, a hybrid genetic algorithm (HGA) embedded with a diagonalization method for solving the parametric VI is proposed. Finally, the comparative analysis of the HGA and an exhaustive enumeration algorithm indicates a good performance of the HGA in terms of computational time and solution quality. The HGA is also applied to solve a large-scale problem to show the applicability of the proposed model and algorithm.     

Finding potential hub locations for liner shipping

The current models for hub location problems are unable to find potential hub locations in uncharted areas that currently have no port. To explore hub locations that are not selected from the present ports, this study proposes a two-stage method to address this gap in knowledge. A concave cost multicommodity network flow model is solved in the first stage to obtain container traffic in waterways. Then, in the second stage, a hubbing probability is evaluated for each node to indicate potential hub locations. A case study including emerging Arctic routes is provided to demonstrate this method.     

A structured flexible transit system for low demand areas

Public transit structure is traditionally designed to contain fixed bus routes and predetermined bus stations. This paper presents an alternative flexible-route transit system, in which each bus is allowed to travel across a predetermined area to serve passengers, while these bus service areas collectively form a hybrid “grand” structure that resembles hub-and-spoke and grid networks. We analyze the agency and user cost components of this proposed system in idealized square cities and seek the optimum network layout, service area of each bus, and bus headway, to minimize the total system cost. We compare the performance of the proposed transit system with those of comparable systems (e.g., fixed-route transit network and taxi service), and show how each system is advantageous under certain passenger demand levels. It is found out that under low-to-moderate demand levels, the proposed flexible-route system tends to have the lowest system cost.     

Effects of high-speed rail and airline cooperation under hub airport capacity constraint

This paper analyzes the effects of cooperation between a hub-and-spoke airline and a high-speed rail (HSR) operator when the hub airport may be capacity-constrained. We find that such cooperation reduces traffic in markets where prior modal competition occurs, but may increase traffic in other markets of the network. The cooperation improves welfare, independent of whether or not the hub capacity is constrained, as long as the modal substitutability in the overlapping markets is low. However, if the modal substitutability is high, then hub capacity plays an important role in assessing the welfare impact: If the hub airports are significantly capacity-constrained, the cooperation improves welfare; otherwise, it is likely welfare reducing. Through simulations we further study the welfare effects of modal asymmetries in the demands and costs, heterogeneous passenger types, and economies of traffic density. Our analysis shows that the economies of traffic density alone cannot justify airline–HSR cooperation.     

Hub location with flow economies of scale

A characteristic feature of hub and spoke networks is the bundling of flows on the interhub links. This agglomeration of flows leads to reduced travel costs across the interhub links. Current models of hub location do not adequately model the scale economies of flow that accrue due to the agglomeration of flows. This paper shows that current hub location models, by assuming flow-independent costs, not only miscalculate total network cost, but may also erroneously select optimal hub locations and allocations. The model presented in this paper more explicitly models the scale economies that are generated on the interhub links and in doing so provides a more reliable model representation of the reality of hub and spoke networks.     

成都等交通物流融合发展经验与广州现代物流中心建设

本文根据实地调研成果,介绍了成都、重庆和郑州在建立健全物流管理体制机制、强化物流枢纽及通道功能、创新物流运输组织模式、物流标准化信息化、物流市场主体及产业培育等方面的先进经验,从加强政府顶层设计、完善物流枢纽和节点体系、促进物流枢纽互联互通、研究物流运输组织服务的新模式、打造“交通+物流+产业”的产业集群、提升物流标准化发展水平、出台促进物流降本增效的政策措施等七个方面总结了强化物流创新要素集聚,促进广州现代物流中心建设的经验和启示。     

Fuel burn and environmental implications of airline hub networks

Hubs act as switching points for interactions and so are places through which flows are concentrated. This research uses the interactions between a system of cities as an experimental context for understanding selected environmental costs and benefits of concentrated flow. Whether hub based networks create additional environmental costs has been debated in the literature. In this paper, fuel burn is used as an indicator of environmental cost. The essential ideas are: (1) to examine fuel costs associated with larger aircraft; (2) to determine implications of higher loads on dense routes; and (3) to model the resulting implications for hub and gateway location. Variants of these questions apply to passenger and freight flows, and the paper will initially concentrate on passenger models.The paper shows that by modeling fuel burn and introducing a fixed charge (like a set up cost), a multiple allocation hub and spoke model can be adjusted to direct more or less flow onto the inter-facility connector. In other words, usage of multiple connections and direct links can be controlled and modeled as a function of the fixed charge. The resulting networks are characterized by quite different levels of passenger miles, aggregate fuel burn and fixed charges. The preferred network in terms of minimal fuel burn is found by subtracting the fixed set up charge, thereby focusing attention on the modeled fuel burn. The lowest cost set up is a network with a high degree of connectivity, and a pure single assignment hub network has the highest fuel cost (as a result of larger passenger miles needed by connecting paths). The data also allow a tabulation of total passenger miles, which, not surprisingly, track very closely with the fuel burn. In an interesting application of the ideas, it is shown that a fuel efficient network may require a large number of smaller regional jets, and in the interests of avoiding noise and congestion from so many extra airport operations, the carriers may choose to substitute a smaller number of larger planes, thereby slightly increasing fuel needs. This paper also provides a key ingredient for models of an international network where it is impossible to serve many long distance market pairs without consolidation.     

Achieving transport modal split targets at intermodal freight hubs using a model predictive approach

The increase of international freight commerce is creating pressure on the existing transport network. Cooperation between the different transport parties (e.g., terminal managers, forwarders and transport providers) is required to increase the network throughput using the same infrastructure. The intermodal hubs are locations where cargo is stored and can switch transport modality while approaching the final destination. Decisions regarding cargo assignment are based on cargo properties. Cargo properties can be fixed (e.g., destination, volume, weight) or time varying (remaining time until due time or goods expiration date). The intermodal hub manager, with access to certain cargo information, can promote cooperation with and among different transport providers that pick up and deliver cargo at the hub. In this paper, cargo evolution at intermodal hubs is modeled based on a mass balance, taking into account hub cargo inflows and outflows, plus an update of the remaining time until cargo due time. Using this model, written in a state-space representation, we propose a model predictive approach to address the Modal Split Aware – Cargo Assignment Problem (MSA–CAP). The MSA–CAP concerns the cargo assignment to the available transport capacity such that the final destination can be reached on time while taking into consideration the transport modality used. The model predictive approach can anticipate cargo peaks at the hub and assigns cargo in advance, following a push of cargo towards the final destination approach. Through the addition of a modal split constraint it is possible to guide the daily cargo assignment to achieve a transport modal split target over a defined period of time. Numerical experiments illustrate the validity of these statements.     

The environmental cost implication of hub–hub versus hub by-pass flight networks

Increasing congestion at major hubs and the advantage to passengers of non-stop flights and faster journey times has intensified the debate on patterns of air service. At the same time the economics of highly focused networks has been challenged by the availability of very economic smaller capacity long-haul aircraft. The purpose of this research is to value the environmental costs of these two patterns of service: hub-to-hub and hub by-pass. Five long-haul markets were evaluated both on a hub to hub and hub by-pass basis. These involved both transatlantic and Europe/Asia flights. It was found that the noise and emissions social cost impact of the hub by-pass networks was significantly lower than the hub to hub in all cases. Differences in environmental costs per passenger depend on the concentration of population around the airports and the degree to which the hub routing involves extra mileage.     

枢纽机场航线网络优化研究

枢纽机场航线网络优化主要解决由于航线网络结构与功能定位不匹配而导致的机场连通性低、航线网络同质化竞争严重、运行效率低下的问题。通过改进引力模型对城市对间的客流量进行预测,以此为预测的客流量为依据之一,以提高机场连通性为目的,构建航线网络优化模型,并进行求解。实现提高枢纽机场连通性、构建符合功能定位的层级网络的目标。并以位于我国中部,具有"连接南北,贯穿东西"地理优势的西安咸阳国际机场为例进行分析。由于国际航线受客观因素较多,本文主要研究国内客运航线,国际及货运不在本文研究之列。     

Airline network choice and market coverage under high-speed rail competition

While the existing literature has focused on the short-term impacts, this paper investigates the long-term impacts of high-speed rail (HSR) competition on airlines. An analytical model is developed to study how an airline may change its network and market coverage when facing HSR competition on trunk routes. We show that prior to HSR competition, an airline is more likely to adopt a fully-connected network and cover fewer fringe markets if the trunk market is large. Under HSR competition, the airline will, for a given network structure, have a greater incentive to cover more fringe (regional or foreign) markets if the trunk market is large, or the airline network is close to hub-and-spoke. Further, the airline will, for any given market coverage, move towards a hub-and-spoke network when the trunk market is large, or the number of fringe markets covered by the airline network is large. Both effects are more prominent when the decreasing rate of airline density economies is large. We further show that HSR competition can induce the airline to adopt network structure and market coverage that are closer to the socially optimal ones, thereby suggesting a new source of welfare gain from HSR based on its long-term impacts on airlines. Implications for operators, policy makers and specific countries (such as China) are also discussed.     

Factors affecting the operational success of strategic airline alliances

With increased liberalisation in major air transport markets, the intensity of competition has increased amongst air carriers. Airlines have responded to the competitive pressures in many ways, one of which has been the formation of alliances. These alliances are linkages between the firms at various operational levels. They go beyond the common interlining agreement to encompass certain marketing and cost-reducing features. However, the question is how the success of these alliances can be ensured? While companies' culture compatibility is important and much has been written in that area, this paper focuses on factors that affect operational success of airline alliances. The operational success is measured by the change in the level of partners' inter-hub traffic due to formation of the alliance. This research has developed a methodology which could be used as a management tool to measure alliances' operational success before embarking on such agreements. The analysis of recent major alliances covering 52 inter-hub routes suggests that the main factors ensuring the alliances' operational success are: the partners' network size and their compatibility, the frequency of service between the hubs of the partners, the flight connection time at the hub and the level of competition on their network.

     

Dispatching control at transfer stations in multi‐hub transit networks

Among dispatching control approaches, the holding option has attracted the most attention in bus control. However, holding a vehicle at a transfer station may exacerbate the delays because more passengers might accumulate at downstream stations and may also affect other connecting routes at other transfer stations. Our problem is to minimize the total costs of dispatching ready vehicles at each transfer station along coordinated routes in a multi‐hub transit network. The total costs include the waiting cost for on‐board passengers, the missed connection costs for late arrival passengers at the subject transfer station and possible transfer costs at downstream transfer stations. We develop a heuristic algorithm to optimize the holding times based on real time information about late vehicles. The results show that ready vehicles should be held longer when the arrival variances of late vehicles are small or when many late connecting passengers are expected.