Hub-and-spoke, point-to-point, and ?

[ronaldl79]

Over the past few days, I've been thinking about the HAS and PTP models currently in place at the legacy and low cost carriers. The HAS model, once king, is now inefficient and outdated, thanks to the leaner, more efficient PTP model (I have kept in mind that neither are perfect).

There's no doubt that the PTP model has forever changed the airline landscape. However, is there room for yet another model? One which combines the advantages of both the HAS and PTP models, while introducing new methods of efficiency and profitability. I think so.

For years, I've had the privilege to interact with and learn from the executives and employees at several, multi-billion dollar transporation companies. I've closely watched their growth over the years as they've tried new systems, methods, etc. Let me tell you, I saw a lot!

Unlike most air travelers, I am always observing the operation of a carrier, because it's exciting to learn how things get done. And that's why I believe there's an opportunity to test a new model for the airline industry, one which could curb costs, increase efficiency, and boost overall productivity across the board.

Yet, how would this model function? What would it look like? What would it require to succeed? What has to go, stay, etc.? Let's theroize on the possibilities ... this should be fun.

 

[eolesen]

Uh, point-to-point isn't new -- it's basically how the industry ran prior to 1979 with the exception of DL at ATL. Deregulation led to the proliferation of hub and spoke networks, which are still cheaper to operate on a large scale than point to point.

The third model you suggest is already in place with Southwest and other carriers. To say that PHX, LAS, MDW, and HOU don't function as hubs is sheer ignorance. The only difference is that WN has always scheduled their non-hubs to maximize aircraft utilization, as opposed to maximizing the connecting opportunities. AA has been moving towards that scheduling model for a while now, and will take even bigger steps with the schedule that goes into effect next week.

 

[TIME FOR CHANGE]

Like anything else take care of the people who make it work and the rest will take care of itself.
Not the case anymore in corporate America. That is why we are destine to fail. The top takes care of the top and the people on the bottom could care less. 😉

 

[ronaldl79]

Well, I learned something new .. thinking PTP was a newer model. It'll be interesting to see the changes forthcoming at AA.

Uh, point-to-point isn't new -- it's basically how the industry ran prior to 1979 with the exception of DL at ATL. Deregulation led to the proliferation of hub and spoke networks, which are still cheaper to operate on a large scale than point to point.

The third model you suggest is already in place with Southwest and other carriers. To say that PHX, LAS, MDW, and HOU don't function as hubs is sheer ignorance. The only difference is that WN has always scheduled their non-hubs to maximize aircraft utilization, as opposed to maximizing the connecting opportunities. AA has been moving towards that scheduling model for a while now, and will take even bigger steps with the schedule that goes into effect next week.

 

[Kev3188]

Excellent topic...Should be fun to see where this goes.


I like the idea of a little bit of both. Echoing FM's earlier comments, anything that keeps A/C and facility utilization up is a good thing.

At NW, we're almost entirely a Hub and Spoke carrier, but have taken some small steps in the PTP direction as well. For instance, we have several midwest cities serving both the FL market and LAS. These aren't exactly high revenue markets, but do keep planes moving that would otherwise be sitting idle.

I think that this "hybrid" will be the new model. You will keep the connectivity of the fortress hub, while exploring new PTP markets. Just my .02.....

 

[eolesen]

Not the case anymore in corporate America. That is why we are destine to fail. The top takes care of the top and the people on the bottom could care less. 😉

What exactly does that statement have to do with the virtues of having a point-to-point or hub-n-spoke network?...

(just waiting to see how long it takes to hear that the downfall of the hub-n-spoke model is because of the TWU or TWA....)

 

[mga707]

Uh, point-to-point isn't new -- it's basically how the industry ran prior to 1979 with the exception of DL at ATL. Deregulation led to the proliferation of hub and spoke networks, which are still cheaper to operate on a large scale than point to point.

I would respectfully disagree with you somewhat. To me, the pre-deregulation route maps of the trunk carriers were organized along much more of a linear model than a true point-to-point model.
Due to the fact that the CAB had all power when it came to awarding routes, every carrier had points that they were not allowed to connect.
To use AA as an example: AA served both LAX and SFO, but could not fly between them.
Ditto for Dallas/Houston. Ditto again for Chicago/Cleveland, also Chicago/Pittsburgh, Philly, etc.
And then there were major airports where AA had no route authority whatsoever prior to the start of deregulation in December 1978: ATL, DEN, MIA, MSP, and SEA come immediately to mind.

The third model you suggest is already in place with Southwest and other carriers. To say that PHX, LAS, MDW, and HOU don't function as hubs is sheer ignorance.

Agree here. Also BWI is another WN "major hub".

 

[ronaldl79]

Kev,

Perhaps this "new" model will be a "hybrid" afterall ... we'll see.

Excellent topic...Should be fun to see where this goes.
I like the idea of a little bit of both. Echoing FM's earlier comments, anything that keeps A/C and facility utilization up is a good thing.

At NW, we're almost entirely a Hub and Spoke carrier, but have taken some small steps in the PTP direction as well. For instance, we have several midwest cities serving both the FL market and LAS. These aren't exactly high revenue markets, but do keep planes moving that would otherwise be sitting idle.

I think that this "hybrid" will be the new model. You will keep the connectivity of the fortress hub, while exploring new PTP markets. Just my .02.....

 

[eolesen]

I would respectfully disagree with you somewhat. To me, the pre-deregulation route maps of the trunk carriers were organized along much more of a linear model than a true point-to-point model.

For UA, AA, and TW, you're correct, but the other majors were almost pure point to point. DL and EA didn't really fly west of the Mississippi before deregulation, and neither did US Air's predecessors. Continental, Western and Frontier didn't really fly east of the Mississippi. NW was truly only in the northwest at the time.

I've got a book showing CAB route maps, which dates back to around 1965 if I recall. I'll see if I can scan a few of the maps in, so that the younger crowd can see just how protected deregulation networks were.

 

[Kev3188]

I've got a book showing CAB route maps, which dates back to around 1965 if I recall. I'll see if I can scan a few of the maps in, so that the younger crowd can see just how protected deregulation networks were.

Please do; I'd love to see it (them). 🙂

Back on topic, how much efficiency has AA gained from rolling ORD (and I think DFW???)? What if any gains came from "firewalling" the hubs (besides preventing delays from cascading across the system).

Also, if anyone from DL reads this, I'd like to know how the revamping of ATL is working and the efficiencies gained from that (There was great article in USA Today about it when they first started the program-loaded with stats and figures- but I can't find it.).

 

[formeraa]

For UA, AA, and TW, you're correct, but the other majors were almost pure point to point. DL and EA didn't really fly west of the Mississippi before deregulation, and neither did US Air's predecessors. Continental, Western and Frontier didn't really fly east of the Mississippi. NW was truly only in the northwest at the time.

I've got a book showing CAB route maps, which dates back to around 1965 if I recall. I'll see if I can scan a few of the maps in, so that the younger crowd can see just how protected deregulation networks were.

EA certainly did serve SEA and PDX before deregulation. Of course, they had to make two stops between SEA and ATL. I also recall DL flying to LAX as well as points in Texas well before deregulation.

NW served the entire Northern tier of the country from Alaska to the Pacific Northwest to the Northern Plains to the Midwest and finally the Northeast. I flew NW between SEA and PHL in the 70's.

However, your points are well taken. Airlines were MUCH smaller in those days and the number of routes served was tiny. Many trips required a change of airline to get to your final destination. On the other hand, there were flights to many airports which are no longer served at all.

 

[twaokc]

FM, you must be a young one. NW servered Atl in the 60's, DL on the west coast in the the 60's, CO on the east coast n the 60's. You really do need to get out those old maps and study them yourself.

For UA, AA, and TW, you're correct, but the other majors were almost pure point to point. DL and EA didn't really fly west of the Mississippi before deregulation, and neither did US Air's predecessors. Continental, Western and Frontier didn't really fly east of the Mississippi. NW was truly only in the northwest at the time.

I've got a book showing CAB route maps, which dates back to around 1965 if I recall. I'll see if I can scan a few of the maps in, so that the younger crowd can see just how protected deregulation networks were.

 

[Kev3188]

FM, you must be a young one. NW servered Atl in the 60's,

This "young one" has a question: Was it NW serving ATL, or Southern?

 

[twaokc]

NW

This "young one" has a question: Was it NW serving ATL, or Southern?

 

[kirkpatrick]

This "young one" has a question: Was it NW serving ATL, or Southern?

I recall flying NW nonstop between MKE and ATL in the late sixties when I was a student at Marquette.

MK