Hub-and-spoke airline network analysis for mainland China


Student thesis: Master's Thesis

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  • King Shuen LO

Related Research Unit(s)


Awarding Institution
  • Yer Van HUI (Supervisor)
Award date14 Jul 2006


Hub-and-spoke networks that coordinate shipment flows from origins to destinations through identified hubs play a crucial role in the transport of passengers and cargo in civil aviation. With shipment service criteria on cost, time, and risk, this thesis presents a modified hub-and-spoke air route network model for the air cargo transport in mainland China. There has been a rapid growth in China air cargo transport in the last two decades. It is with the continuous development of the Chinese economy and the accession of China into the WTO that import/export quotas and foreign investment restrictions gradually relax. Hence, a high demand in air cargo shipment service is expected in the coming years. The growth rate of Chinese air shipment flow is much higher than the world average. According to the news report from People’s Daily Online on 22 September 2005, the total turnover for 2004 and the cargo/post turnover have risen to the world's third ranking, which are at a growth rate of 35% and 24%, respectively, as compared to those of the previous year. Takungpao on 20 September 2005 reported that as the total air transport turnover rose to the third rank worldwide in 2004, some hubs and interhub links in the Chinese network are facing the problem of saturation. In order to raise the efficiency and productivity of the Chinese air shipment service, it is worthwhile to examine the route network to strengthen the connectivity among airports and investigate the existing capabilities. In our thesis, we design a cost-efficient route network that satisfies China air cargo demands and adheres to the local aviation restructuring policy. Sensitivity analyses that examine changes in the route design and capital investment planning under different scenarios are also presented. The Civil Aviation Administration of China (CAAC) restructured the Chinese aviation industry in 2002 by partitioning the mainland into six aviation regions and identifying international and regional hubs. We estimate the potential demand of air cargo throughput between two airports from the demographic, economic, and geographical profiles of the two cities. The total transport cost of a specific route depends on the route setup costs, air transport costs, transshipment cost, integration, and consolidation savings. As more cargo throughputs are integrated and consolidated at the hubs, the economy of scales that leads to deduction on total transport costs is realized. A tabu search algorithm is proposed to solve a mixed 0-1 integer programming problem. Using Chinese data in 2001, the air cargo network solution attains significant improvement with a deduction of RMB 1 billion on the total transport cost. As compared to the existing network, the solution network recommends that more cargo shipments be transshipped via hubs and consolidated in links so that the economy of scales is benefited through hub transshipment and shipment flow consolidation. Results from the sensitivity analysis also suggest that the route connection shipment service cost, the economy of scales on shipment flow consolidation, and the scale effects on hub integration are key factors that affect the total transport cost, the network design, and the overall importance of hubs.

    Research areas

  • China, Planning, Airlines, Aeronautics, Commercial, Freight