THE INTEGRATION OF TAIWANESE AND CHINESE AIR NETWORKS FOR DIRECT AIR CARGO SERVICES

Trade between Taiwan and China has grown significantly over the past decade, despite the absence of direct air links across the Taiwan Strait. This research develops a methodology to determine the most cost-effective integrated air freight network for a Taiwan-China air link. Trade statistics were first tabulated to determine the value of direct air freight links. Government and airline officials were interviewed to understand the current air freight routes and airports servicing this market. The airport-to-airport air cargo demand was then estimated and international and domestic freight tariffs were calibrated. A connectivity measurement was used to classify Chinese airports into national, regional and local classes in a hub-and-spoke air cargo network. The authors develop a mathematical model and a branch-and-bound algorithm to determine the most cost-effective integrated air freight network for a Taiwan-China air link. The results show that at least two transit airports are economically necessary for a Taiwan-China air link. Shanghai and Xiamen were always the top two transit airports. Changsha was a distant third if three air-links are chosen. The direct air freight network is different from the passenger network, even though the cost savings is small. Future research should analyze a potential integrated passenger and air freight network for the Taiwan-China air link