Using revenue management technique to allocate the capacity in reliable hub network design under uncertain air passenger traffic

Abstract

This paper introduces a two stage stochastic programming to address strategic hub location decisions and tactical flight routes decisions for various customer classes considering uncertainty in demands. We considered the airline network with the arc capacitated single hub location problem based on complete–star p-hub network. In fact, the flight routes are allowed to stop at most two different hubs. The first stage of the model (strategic level) determines the network configuration, which does not change in a short space of time. The second stage is dedicated to specify a service network consists of determining the flight routes and providing booking limits for all itineraries and fare classes after realization of uncertain scenarios. To deal with the demands uncertainty, a stochastic variations caused by seasonally passengers’ demands through a number of scenarios is considered. Since airline transportation networks may face different disruptions in both airport hubs and communication links (for example due to the severe weather), proposed model controls the minimum reliability for the network structure. Due to the computational complexity of the resulted model, a hybrid algorithm improved by a caching technique based on genetic operators is provided to find a near optimal solution for the problem. Numerical experiments are carried out on the Turkish network data set. The performance of the solutions obtained by the proposed algorithm is compared with the pure GA and Particle Swarm Optimization (PSO) in terms of the computational time requirements and solution quality.