Network airlines, hubs, spokes, multi-hub, scissor-hub…. loads of words that you have probably heard if you work in an aviation or travel related business. In this article, I explain what a hub system is, what the benefits are, some big and interesting hub airports and future challenges for this model for airlines.
Let me start with a question; The picture above is the route map of Icelandair. a medium sized airline based in Reykjavik. Take a look. Do you think that there is enough demand to justify 24 (almost daily) routes to the USA and another 35 to Europe?
The answer is no. Icelandair has successfully executed a hub model in their hometown airport. I will tell you more about it now.
Hubs and spokes
The Icelandair network is a very good example of a hub system. Basically the hub system works as follows: “the hub is the centre of all operations where the airline makes sure they have sufficient spokes to ensure sufficient demand to and from all of their destinations”.
In the practical form of Icelandair, this means that somewhere between 11:30 and 12:30, all of their flights from Europe arrive. All the passengers leave the aircraft. Then between 13:30 and 14:30 all these planes fly west, to the United States and Canada. This allows passengers to make a 1 stop connection, using the airport of Keflavik as their connection. Icelandair uses the airport as their hub, the spot where all passenger streams come together.
The above story is the most simplistic explanation of a hub system. A system that is widely adopted by airlines worldwide. Why? Because if done well, an airline can grow far beyond the size of its home market and can offer their home market a wide range of destinations.
The opposite form of hubs is “point to point flying” where both ends of the route must have sufficient demand to fill the planes. Good examples of airlines solely flying point to point are Ryanair, Wizzair or Transavia.
These moments where planes arrive and passengers connect are called “banks”. For the Icelandair example, the flights between 11:00 and 14:00 are the westward bank where planes arrive from the east and passenger streams move west (to the US and Canada), while the next morning, these planes arrive early, between 05:00 and depart between 07:00 and 08:00. This is the eastbound bank.
The effect of this practice is that the Kevlavik airport is very busy at these banks but is basically deserted outside of these moments. The more complex and bigger the airline and its network is, the more banks can exist. Some airlines operate west and easbound banks at the same moment, and sometimes even four times a day.
Do airlines also combine both systems?
Yes! Take KLM for example who operate a pretty big hub in Amsterdam. Amsterdam is not thát of a big destination that it can support all those destinations if there would be no hub. However, KLM also flies quite a lot of people on point to point basis where the added passengers from connections are able to fill up the planes.
Pro’s of hubs
Having a hub has plenty of upsides:
- Airlines are able to grow far beyond the limits of their home market
- Airlines can offer a lot of destinations
- Airlines are able to ask a premium price on direct flights (as opposed to connecting flights)
- there are fewer flights required to connect all destinations (A system with 10 destinations requires only 9 routes to connect all. With point to point this would require 45 routes)
Con’s of hubs
There are also disadvantages for airlines and airports that function as a hub:
- Pressure on infrastructure only takes place during the banks (the moments that all planes arrive and depart, usually twice a day where the airport is really busy)
- Airlines have to ensure their schedules are matched to allow connections
- Aircraft utilisation is lower due to the connections, therefore increasing costs to operate this system
- Disruptions may have an effect on the whole network.
- Passengers fly more, therefore burning more fuel.
Examples airlines that operate a hub system
Basically, every airline operates a hub model but some of them are very special and are worth noting here:
Emirates: Emirates has used its geographic location, between Europe, Asia, Oceania and Africa to build a super hub in Dubai. with the use of the high capacity Double Decker A380 planes, they have built a huge network with over 140 connections. A good example of connecting different streams of demand; Europe to Asia, China to Africa, India to the USA and more).
Icelandair: This airline is not big but has a very efficient system with maximum plane utilisation. This results in a very profitable model with tightly operated schedules while offering a huge amount of destinations from a country with only 400.000 inhabitants!
The future of this concept
I do not have the feeling hubs will disappear soon to be replaced by point to point flying. Hubs will continue to grow and connect more destinations while the smaller hubs and airlines fail to compete and will disappear. Most of the remaining demand will then be absorbed by other airlines and the direct demand will be taken over by a local or global low-cost airline.
Planes such as the Boeing 787 allow airlines to operate long and thin routes while maintaining profitability, therefore I foresee strong point to point routes on the long haul while maintaining a hub system, funnelling shorter destinations onto the long thin route.