Promoting Australian regional airports with subsidy schemes: Optimised downstream logistics using vehicle routing problem

The major metropolitan airports in Australia have become increasingly congested, resulting in substantial increases in operational costs and waiting time at these airports. This paper assesses the effectiveness of subsidy programs in shifting airfreight from metropolitan airports to regional airports assuming the vehicle routing problem approach is used to optimise the downstream (i.e., road) logistics. We analyse the freight distribution network structure and logistics decisions under two (government) subsidy scenarios. We develop a mixed integer linear programming model incorporating the time-window and release-time constraints. A case study in Australia is used to illustrate the application of the proposed framework. The results show that introducing subsidies can effectively reduce the total costs from the prospective of industries involved in the airfreight distribution. The subsidy program under a non-linear subsidy provides a better performance from the economic and delivery time perspectives. However, if the primary goal is to reduce the volume of cargo traffic at the metropolitan airport, a linear subsidy program is preferred.