Environmental Impact and External Costs Associated with Hub-and-Spoke Network in Air Transport

Abstract

Under the background of economic globalization, the air transport industry developed rapidly. It turns out that the city-to-city network has not been able to adapt well to the development of the society, and the hub-and-spoke network came into being. The hub-and-spoke network demonstrates the advantages of reducing the operating costs of airlines to keep a competitive advantage, and by maintaining the interests of airlines in the rapidly developing context. However, during the operation of aircrafts, they consume fuel and spew a great deal of harmful pollutants into the air, which has an adverse impact on the living environment. This paper explores the impact and external costs associated with hub-and-spoke network in air transport from an environmental perspective. With some mathematical models, we construct a hub-and-spoke network and take a quantitative study on the environmental impact of air transport. For calculating pollutant emissions, meteorological conditions were considered to revise the pollutant emission factors of the Engine Emissions Data Base (EEDB) published by International Civil Aviation Organization (ICAO). The environmental external costs measurement model is employed to calculate the externality of toxic gas and greenhouse gas (GHG). In order to make the study more convincing, two alternative networks are computed: hub-and-spoke network and city-to-city network. It is found that the hub-and-spoke network is associated with poorer environmental impact and environmental external costs because of the different network characteristics and the scale of the fleets. Therefore, under the general trend of green aviation, the environmental impact and environmental external costs associated with hub-and-spoke network in air transport provides a certain reference for airlines’ strategic decision-making.