Airline hub

Passengers flying on Lufthansa and its Star Alliance partners may connect through Frankfurt Airport, Lufthansa's main hub

Airline hubs or hub airports are used by one or more airliners to concentrate passenger traffic and flight operations at a given airport. They serve as transfer (or stop-over) points to get passengers to their final destination.[lower-alpha 1][lower-alpha 2] It is part of the hub-and-spoke system. An airline operates flights from several non-hub (spoke) cities to the hub airport, and passengers traveling between spoke cities need to connect through the hub. This paradigm creates economies of scale that allow an airline to serve (via an intermediate connection) city-pairs that could otherwise not be economically served on a non-stop basis. This system contrasts with the point-to-point model, in which there are no hubs and nonstop flights are instead offered between spoke cities. Hub airports also serve origin and destination (O&D) traffic.

Analysis

The hub-and-spoke system allows an airline to serve fewer routes, so fewer aircraft are needed.[3] The system also increases passenger loads; a flight from a hub to a spoke carries not just passengers originating at the hub, but also passengers originating at multiple spoke cities.[4] However, the system is costly. Additional employees and facilities are needed to cater to connecting passengers. To serve spoke cities of varying populations and demand, an airline requires several aircraft types, and specific training and equipment are necessary for each type.[3] In addition, airlines may experience capacity constraints as they expand at their hub airports.[4][5]

For the passenger, the hub-and-spoke system offers one-stop air service to a wide array of destinations.[3][6] However, having to regularly make connections en route to their final destination increases travel time.[6] Additionally, airlines can come to monopolise their hubs, allowing them to freely increase fares.[4]

Banking

Airlines may operate banks of flights at their hubs, in which several flights arrive and depart within short periods of time. The banks may be known as "peaks" of activity at the hubs and the non-banks as "valleys". Banking allows for short connection times for passengers.[7] However, an airline must assemble a large number of resources to cater to the influx of flights during a bank, and having several aircraft on the ground at the same time can lead to congestion and delays.[8] In addition, banking could result in inefficient aircraft utilisation, with aircraft waiting at spoke cities for the next bank.[8][9]

Instead, some airlines have debanked their hubs, introducing a "rolling hub" in which flight arrivals and departures are spread throughout the day. This phenomenon is also known as "depeaking".[9] While costs may decrease, connection times are longer at a rolling hub.[8] American Airlines was the first to depeak its hubs,[8] trying to improve profitability following the September 11 attacks.[7] It rebanked its hubs in 2015, however, feeling the gain in connecting passengers would outweigh the rise in costs.[7]

Types of hubs

FedEx Express aircraft at Memphis International Airport
The primary hub of British Airways is Heathrow Airport in London

Cargo hub

The hub-and-spoke system is also used by some cargo airlines. FedEx Express established its main hub in Memphis in 1973, prior to the deregulation of the air cargo industry in the United States. The system has created an efficient delivery system for the airline.[10] Other airlines that use this system include UPS, TNT Airways and DHL Aviation, which operate their primary hubs at Louisville, Liège and Leipzig respectively.[11]

Focus city

Main article: Focus city

Although the term focus city used to mainly refer to an airport from which an airline operates several point-to-point routes, its usage has expanded to refer to a small-scale hub as well.[12] For example, JetBlue's New York–JFK focus city, which is the airline's busiest operation, functions like a hub.[8]

Fortress hub

A fortress hub exists when an airline controls a significant majority of the market at one of its hubs. Competition is particularly difficult at fortress hubs.[13] Examples include American Airlines' hub at Charlotte[14] and United Airlines' hub at Houston–Intercontinental, where 83% of passengers flew United in 2011.[15]

Primary and secondary hubs

A primary hub is the main hub for an airline. However, as an airline expands operations at its primary hub to the point that it experiences capacity limitations, it may elect to open secondary hubs. Examples of such hubs are Turkish Airlines' Istanbul–Sabiha Gökçen hub and Lufthansa's hub at Munich. By operating multiple hubs, airlines can expand their geographic reach.[16] They can also better serve spoke–spoke markets, providing more itineraries with connections at different hubs.[1]

Reliever hub

A given hub's capacity may become exhausted or capacity shortages may occur during peak periods of the day, at which point airlines may be compelled to shift traffic to a reliever hub. A reliever hub has the potential to serve several functions for an airline: it can bypass the congested hub, it can absorb excess demand for flights that could otherwise not be scheduled at the congested hub, and it can schedule new O&D city pairs for connecting traffic.

Scissor hub

A scissor hub occurs when an airline operates multiple flights to an airport that arrive at the same time, swap passengers, and then continue to their final destination.[17] Jet Airways has a scissors hub in Amsterdam, where passengers fly in from Delhi and Mumbai to connect onto the flight to Toronto and vice versa.[18] Air India briefly operated a scissors hub at Frankfurt until 2010.[19][20] An international scissor hub could be used for third and fourth freedom flights or it could be used for fifth freedom flights, for which a precursor is a bilateral treaty between two country pairs.

Westjet Airlines uses St. John's as a scissor hub during its summer schedule for flights inbound from Ottawa and Toronto and outbound to Dublin and London Gatwick.

Moonlight hub

In past history, carriers have maintained niche, time-of-day operations at hubs. The most notable is America West's use of McCarran International Airport in Las Vegas as a primary night-flight hub to increase aircraft utilization rates far beyond those of competing carriers.

History

Middle East

Emirates aircraft at Dubai International Airport

In 1974, the governments of Bahrain, Oman, Qatar and the United Arab Emirates took control of Gulf Air from the British Overseas Airways Corporation (BOAC). Gulf Air became the flag carrier of the four Middle Eastern nations. It linked Oman, Qatar and the UAE to its Bahrain hub, from which it offered flights to destinations throughout Europe and Asia. In the UAE, Gulf Air focused on Abu Dhabi rather than Dubai, contrary to the aspirations of UAE Prime Minister Mohammed bin Rashid Al Maktoum to transform the latter into a world-class metropolis. Sheikh Mohammed proceeded to establish a new airline based in Dubai, Emirates, which launched operations in 1985.[21]

Observing the success of Emirates, Qatar and Oman decided to create their own airlines as well. Qatar Airways and Oman Air were both founded in 1993, with hubs at Doha and Muscat respectively. As the new airlines grew, their home nations relied less on Gulf Air to provide air service. Qatar withdrew its share in Gulf Air in 2002. In 2003, the UAE formed another national airline, Etihad Airways, which is based in Abu Dhabi. The country exited Gulf Air in 2006, and Oman followed in 2007.[21]

Emirates, Qatar Airways and Etihad Airways have since established large hubs at their respective home airports. The hubs, which benefit from their proximity to large population centres,[21] have become popular stopover points on trips between Europe and Asia, for example.[22] Their rapid growth has impacted the development of traditional hubs, such as London and Paris.[23]

United States

Before the US airline industry was deregulated in 1978, most airlines operated under the point-to-point system.[4] The Civil Aeronautics Board dictated which routes an airline could fly. At the same time, however, some airlines began to experiment with the hub-and-spoke system. Delta Air Lines was the first to implement such a system, providing service to remote spoke cities from its Atlanta hub.[6] After deregulation, many airlines quickly established hub-and-spoke route networks of their own.[3]

See also

Notes

  1. ↑ Colloquially, an airline hub may be defined as an airport that receives a large number of passengers or as an airport that serves as the operating base of an airline, whether or not the airline allows for connecting traffic.[1]
  2. ↑ The Federal Aviation Administration of the United States defines a hub in terms of passenger enplanements. Specifically, a hub is an airport that handles 0.05% or more of the nation's annual passenger boardings.[1][2]

References

  1. 1 2 3 Holloway, Stephen (2008). Straight and Level: Practical Airline Economics (3rd ed.). Ashgate Publishing. pp. 376, 378. ISBN 9780754672562.
  2. ↑ "Airport Categories". Federal Aviation Administration. 2016-03-03. Retrieved 2016-05-30.
  3. 1 2 3 4 Cook, Gerald; Goodwin, Jeremy (2008). "Airline Networks: A Comparison of Hub-and-Spoke and Point-to-Point Systems". Journal of Aviation/Aerospace Education & Research. Embry–Riddle Aeronautical University. 17 (2): 52–54. Archived from the original on 2015-09-23. Retrieved 2016-05-28.
  4. 1 2 3 4 "Airline Deregulation and Hub-and-Spoke Networks". The Geography of Transport Systems. Hofstra University. Archived from the original on 2016-04-05. Retrieved 2016-05-28.
  5. ↑ Schmidt, William (1985-11-14). "Deregulation Challenges Atlanta Airline Hub". The New York Times. Archived from the original on 2015-05-24. Retrieved 2016-05-28.
  6. 1 2 3 Lawrence, Harry (2004). Aviation and the Role of Government. Kendall Hunt. pp. 227–228. ISBN 9780757509445.
  7. 1 2 3 Maxon, Terry (2015-03-27). "American Airlines banking on tighter connections". The Dallas Morning News. Retrieved 2016-05-30.
  8. 1 2 3 4 5 Belobaba, Peter; Odoni, Amedeo; Barnhart, Cynthia, eds. (2016). The Global Airline Industry. Chichester, England: John Wiley & Sons. pp. 142, 172–174. ISBN 9781118881170.
  9. 1 2 Reed, Dan (2002-08-08). "American Airlines to try rolling hubs". USA Today. Retrieved 2016-05-30.
  10. ↑ Scholes, Kevan (2004). Federal Express – delivering the goods (PDF) (Report). Pearson PLC. Archived from the original (PDF) on 2014-06-11. Retrieved 2016-05-29.
  11. ↑ "Hubs of Major Air Freight Integrators". The Geography of Transport Systems. Hofstra University. Archived from the original on 2016-04-12. Retrieved 2016-05-29.
  12. ↑ Mammarella, James (2014). "Airport Hubs". In Garrett, Mark. Encyclopedia of Transportation: Social Science and Policy. SAGE Publications. ISBN 9781452267791.
  13. ↑ Rose, Mark; Seely, Bruce; Barrett, Paul (2006). The Best Transportation System in the World: Railroads, Trucks, Airlines, and American Public Policy in the Twentieth Century. Columbus, Ohio: The Ohio State University. p. 233. ISBN 9780812221169.
  14. ↑ Reed, Ted (2015-06-09). "American Air's Charlotte Hub Looks to 3.5% Annual Growth, More Local Traffic and Asia Flights". Forbes. Archived from the original on 2016-02-02. Retrieved 2016-05-28.
  15. ↑ Credeur, Mary; Schlangenstein, Mary (2012-05-03). "United Fights Southwest in Texas to Keep Grip on Busy Hub". Bloomberg L.P. Archived from the original on 2016-05-29. Retrieved 2016-05-28.
  16. ↑ Thompson, David; Perkins, Stephen; van Dender, Kurt; Zupan, Jeffrey; Forsyth, Peter; Yamaguchi, Katsuhiro; Niemeier, Hans-Martin; Burghouwt, Guillaume (2014). "Expanding Airport Capacity in Large Urban Areas". ITF Round Tables. OECD Publishing (153): 151–152. doi:10.1787/2074336x. Retrieved 2016-05-29.
  17. ↑ McWhirter, Alex (2015-11-27). "Jet Airways to axe Brussels hub". Business Traveller. Archived from the original on 2015-12-12. Retrieved 2016-05-29.
  18. ↑ "Jet Airways drops Brussels scissors hub for Amsterdam". Ch-aviation. 2015-12-17. Archived from the original on 2016-01-12. Retrieved 2016-05-29.
  19. ↑ "Air India cuts Frankfurt scissor hub from end of October". Anna.aero. 2010-09-15. Archived from the original on 2011-04-16. Retrieved 2016-05-29.
  20. ↑ Bhattacharya, Sindhu (2010-10-25). "Air India to wind up Frankfurt hub, take Alliance regional". Daily News and Analysis. Archived from the original on 2016-01-30. Retrieved 2016-05-29.
  21. 1 2 3 Al-Sayeh, Karim (2014). The Rise of the Emerging Middle East Carriers: Outlook and Implications for the Global Airline Industry (PDF) (MSc thesis). Massachusetts Institute of Technology. pp. 25–26, 28. Archived from the original (PDF) on 2016-05-29. Retrieved 2016-05-28.
  22. ↑ Kindergan, Ashley (2015-01-02). "Revisiting: The Rise of the Gulf Carriers". The Financialist. Credit Suisse. Archived from the original on 2016-04-21. Retrieved 2016-05-28.
  23. ↑ Dewey, Caitlin (2013-03-05). "The changing geography of international air travel". The Washington Post. Retrieved 2016-05-28.
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