12/19/2016 Advantages and Disadvantages of HubandSpoke Operations AviationKnowledge
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(838 active topics) Additional to the general
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(17 articles published)
spoke operations (refer to Table of Contents
HubandSpoke Operations
Advantages of hubandspoke
Tools for more details) the Disadvantages of hubandspoke
following page explains the
How to edit pages advantages and
Methods & Statistics disadvantages hubandspoke operations might have for airports as well
as for airlines. Therewith it implies why the system is oppositional
discussed in the literature.
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Advantages of hubandspoke
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[6 active forums] The following two points are the major advantages that the huband
spoke system had initially brought to the airline business; however
some disadvantages had been developed later due to changes in
external environmental factors.
1. Encouraged the rapid growth in the airline business
The hubandspoke system since developed after deregulation, has
allowed a rapid growth in size, competition strategy and traffic demand
in the airline business. However, as suggested by Wells and Younger
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) this had resulted in operational inefficiencies at periods of slow
economy; with airlines resulting in very poor financial performances.
As a result of this, some airlines restructure their business model to
return to the pointtopoint system and move out of the constant need
for a large hub, and utilise hubs in a more uniform matter in terms of
arrivals and departures. This phenomenon is known as the rolling hubs.
2. Efficient use of scarce transportation resources.
The system has less number of routes connecting all spokes enabling a
more efficient use of scarce transportation resources. This however had
small airports and economies of smaller regions suffering as per the
reduced capacity. As a result this encouraged airports to agree with low
cost carriers to offer low airport fees and commissions from local
businesses to bring in traffic and passenger flow.
The passenger market favoured this type of airline business as lower
fares were rolled out to the market from these smaller hubs; which
caused great competition to full service carriers that were operating with
large amount of airport fees to use large hubs, and can no longer return
to these small hub markets as it is not cost efficient and are dominated
by low cost carriers.
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12/19/2016 Advantages and Disadvantages of HubandSpoke Operations AviationKnowledge
Disadvantages of hubandspoke
Besides the aforementioned advantages, the hub and spokes system
also holds risks for the airlines and the airports which are highlighted in
the following sections.
1. Congestion and delays at hub airports
To limit waiting times and provide a large variety of possible connections
for passengers at the hub airport, it is essential for the hub airline to
schedule as many incoming and outgoing flights as possible during a
short time frame. This results in high traffic peaks during these times
and often causes delays due to scarce airside facilities such as taxi or
runways.
At the same time the hubandspokessystem however allows hub
airlines to increase their benefit exponentially by adjoining an additional
destination to the network compared to pointtopointcarriers. This
implies for a hub airline that usually the tradeoff between the costs due
to congestion (refer to Airport Congestion for more details) and the
benefit of serving new markets is positive. Therefore the airline has an
incentive for adding more traffic despite a rising congestion level. The
pointtopoint carriers at the airport which cannot capitalize on such an
exponential benefit however suffer from the increasing number of flights
(Mayer & Sinai, 2003 2).
Another reason for congestion stems from the fact that many airports
do not limit the number of takeoffs and landings. One possibility for
airlines to prevent further congestion and coevally increasing the
passenger count is the use of larger (feeder) aircraft. However, doing so,
new challenges occur if these aircraft with more passengers are delayed.
More travelers will miss their connecting flights which would result in a
poor utilization rate of the hubhub connection and reduces the
profitability of a carrier. This problem is especially critical for the
operations of the A380 (Ruehle et al., 2006 3).
2. Discontinuous use of airport facilities
The merging of traffic in a hubandspokesystem implies a traffic
structure consisting of high peaks at certain times a day when airport
facilities are highly in use. At some airports, costly additional capacity
and infrastructure (e.g. runways) are required to cater for the demands
at these peaks. During offpeak hours, as traffic is less, terminal and
airside facilities are used inefficiently or even idle. The temporal
discrepancy between capacity and demand will continuously result in
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either congestion and delays or underutilization (Janic M., 2008 1).
3. Airport dependency
Hub airlines and the corresponding alliances (refer to Airline alliance for
more details) have selected a limited number of airports on each
continent through which they route their traffic. For these few hub
airports in turn, they represent a high share of their business. As airport
capacity is limited and usually not sufficient for other extensive
networks, and the necessary slots at attractive times are not available,
other airlines tend to chose alternative options.
For the airport, this dependency on one major hub airline has
advantages and disadvantages: as long as the airline is stable and
successful in the market the airport can be sure of a consistent
operation and therewith a steady income stream. As soon as the airline
however struggles, this will have negative repercussions on the airport
and might severely jeopardize (profitable) operations at the airport (Janic
M., 2008 1).
References
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12/19/2016 Advantages and Disadvantages of HubandSpoke Operations AviationKnowledge
1. JANIC M (2008). The Future Development of Airports: A
Multidimensional Examination. Transportation Planning and Technology.
Vol. 31, No. 1, February 2008.
2. MAYER C & SINAI T (2003). Network Effects, Congestion
Externalities , and Air Traffic Delays : Or Why not all Delays are Evil. The
American Economic Review.
Vol. 93, No. 4, September 2003.
3. RUEHLE J (2006). Consequences for feeder delays for the success
of A380 operations. Journal of Air Transportation. Vol. 11, No. 1, 2006.
4. WELLS A T & YOUNGS S B (2004). Airport planning and
management (5th Edition) McGrawHill (New York, USA), 2004.
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