Hub-and-spoke airline network design under competitive market

Abstract

This study proposed a hub-and-spoke network design model with the uncertainty of a competitor's information in a duopolistic airline market. The market share is affected by the prices of both players in the market and the prices are assumed to be proportional to their transportation costs. The source of uncertainty in the problem is due to the imperfect information on the competitor's price setting. The stochastic programming was applied to formulate the system randomness. An illustrative example from air freight data was used to test the proposed model. The sensitivity analysis was used to investigate the interactions between the stochastic factors.