Airline Hub-Median Network Design by an Extended Two-Stage Stochastic Programming Method: A Case Study

The hub location decision is a long term investment and any changes in it take considerable time and money. In real situations, some parameters are uncertain hence, deterministic models cannot be more efficient. The ability of two-stage stochastic programming is to make a long-term decision by considering effects of it in short term decisions simultaneously. In the twostage stochastic programming for hub location problems, the location is decided in the first stage and optimal flow allocations are determined in the second stage. In this paper, the two-stage stochastic programming is described and then a practical stochastic model is employed for determining hub locations in the Iranian aviation. Also, a survey of the model under fuel subsidy omission is conducted using extended two-stage stochastic programming. Demand and the cost of resources (fuel) are considered uncertain in this study. The results show Tehran, Mashhad, Isfahan, Shiraz and Yazd can be hubs in the air network of Iran.