A masters thesis submitted in partial fulfillment of the requirements for the degree in Master of Engineering, School of Engineering and Technology

Thesis (M.Eng.) - Asian Institute of Technology, 1991

The increasing demand for air transportation in Southeast Asia (SEA) could influence the present operations and marketing schemes of airline operators in this region in general and the air network structure in particular. It is therefore important to study the air network of an airline as to how it can efficiently meet the growing demand. In this study, emphasis was given to the Philippine domestic air network. A hub-and- spoke network model was developed using a simplified approach which searches for the best location of hub airports (i.e., two-hub and three-hub system ) from among the existing airports. The model starts by defining the territory of every hub airport . Two simplified techniques were used when choosing which hub airport should the non- hub airport be attached , such as introducing the economy of scale factor to alternative routes and a multiplier to the passenger demand of a flight route. The model used the passenger-kilometer of every chosen route as the objective function to be minimized, which was then applied to the Philippine domestic air transportation network using the actual and estimated passenger matrix. The estimated passenger matrix was obtained using an Entropy model of General Hymann's method. The results showed that the passenger multiplier has no significant effect in the choice of a hub while the economy of scale factor has more influence in the choice of a hub. It also showed that a three-hub network is more efficient and economical than a two-hub network for the Philippine domestic air network under the operation of Philippine Airlines.