The hierarchical‐hub model for airline networks

Since the airline deregulation of 1978, major airlines in the United States have experienced rising competition and consequently placed greater emphasis on hub‐and‐spoke operation. The locations of hub facilities thus are becoming increasingly important to determining the cost‐effectiveness of major carriers. Previous models of multiple‐hub location are limited in empirical applicability. This paper presents a model named the Hierhub model which is based on the hierarchical structure of hub‐and‐spoke networks. An important advantage of this model is that it does not require an exogenous number of hub facilities. The optimal number is derived endogenously. A modified version, the capacitated Hierhub model, can be used to expand hierarchical hub‐and‐spoke networks into more realistic multiple‐hub systems.