Air Route Structures

Mrs.L.A.P.C.Perera
Lecturer
 Background
• An airline must provide a product that passengers value and are willing to purchase at
a price from which the airline can profit
• Among an airline’s most critical strategic choices are the destinations served and the
route structure connecting these cities.
• These decisions flow from even more fundamental strategic choices about the targeted
customer segments and how the airline intends to obtain a competitive advantage in
its product offering.
• An airline can choose among three generic route system architectures that vary in
complexity and cost of operation
1. point-to-point
2. linear
3. hub-and-spoke (H&S).
Generic Route Structures
• Route structure choice is the foundation of an airline’s product.
01. Point –To- Point
• A point-to-point network is a route where origin and destination traffic is only
focused upon by an airline.
• It means that the airline is only interested in transporting passengers from a city
of origin (X) to the city of destination (Y) and vice versa and is not interested in
connecting passengers between (Z) and (Y) via (X).
• The point-to-point system is the simplest means to connect the cities an airline
chooses to serve.
• Each origin and destination city, or city-pair, is served by non-stop flights.
• All passengers who board at the origin deplane at the destination.
• In a pure point-to-point system, passengers do not connect to any other flight.
 Why Point to Point?
• Fast, Cheap, and Independent
• Non-stop flights in a point-to-point system provide the shortest total travel time from origin to
destination.
• Passengers value non-stop service, a benefit for which business travelers will often pay a premium.
• Subject to air traffic control restraints, non-stop flights operate on a direct routing between the origin
and the destination, allowing the shortest flight distance and the most efficient and cost-effective
flight profile.
• Because connecting flights are not offered, flights operate independently, relieving the airline of the
burden of synchronizing the entire flight schedule.
• Moreover, irregular operations on one flight do not disrupt other flights.
• This independence also allows flights to be spread across the day and night.
• A range of frequencies can be scheduled depending on demand and type of market—business
versus leisure.
• High utilization of aircraft, gates, and personnel is attainable.
• The schedule is easily adjusted for seasonality without impacting other traffic.
• Limited to Large Markets
• The inability to consolidate traffic bound for many destinations severely limits the
number of city-pairs in which non-stop flights can be profitably operated.
• Most small and mid-sized cities have sufficient demand to support non-stop
flights to only a few destinations
02. Linear
• The linear route system is a simple extension of the point-to-point structure.
• Rather than terminating at the first stop, the flight continues to one or several
additional cities.
• This travel experience is familiar to anyone who has ridden a long-distance train
and most commuter rail lines as well.
• Airline passengers traveling on a linear system board at the origin or other cities
along the route and, likewise, deplane at their respective destinations.
• Some itineraries require several stops before reaching the destination.
• The linear system has several advantages.
• Like the point-to-point, each route operates independently of others.
• Scheduling and operational control are simplified; disruptions on one route do not
affect another.
• Also like the point-to-point system, a range of frequencies and high asset utilization
are feasible.
• However, because passengers traveling between several city-pairs are consolidated
on a single aircraft, the combined demand allows economical service to smaller
cities.
• Therefore, a larger aircraft with lower costs per seat mile can be utilized.
• The linear system is not without disadvantages.
• Multiple stops are required to accommodate passenger itineraries, which conflict
with the customer’s desire for quick and convenient flights.
• Distance between stops is often short, which increases the unit cost (cost per
available seat mile) because the aircraft doesn’t reach an economical cruising
altitude and each stop adds airport costs.
03. Hub and Spoke
• A hub-and-spoke network is a route where an airline not only transports
passengers between two points but also connects the passengers of distant
points via its hub.
• Such routes are used as spokes connecting other cities via its hub.
• This model was originated from the U.S. carrier American Airlines.
• Currently, Emirates Airlines uses it the most.
• This model primarily requires different banks of flight arrivals and departures
aiming to connect an arrival from the city (Z) with a departure to the city (Y,) at
the hub (X).
• Highly attractive transit traffic is established by this model.
• Some other airlines contribute to it by filing a flight plan for origin and destination traffic.
• No doubt there are some shortcomings in this model.
• Operating the tight schedule on time to provide the next connection is very challenging.
• As there are more advantages than shortcomings, more and more carriers are adopting
this model.
• Both time and money are saved for an airline by using this model.
• Passengers are also benefited by saving their time with this convenience by increased
connection opportunities.
• A number of these hubs throughout their system are operated by such large airlines.
• The H&S is optimized when providing air service to a wide geographical area and
many destinations
• Passengers departing from any spoke city who are bound for another spoke city
in the network are first flown to the hub airport, where they transfer to a second
flight to their destination.
• Thus, passengers can usually travel between any two cities in the route system
with one connecting stop at the hub, or, as one author described it, “from
anywhere to everywhere” While one connection is the norm, a large network
carriers often have several hubs, so some itineraries require two connections.
Advantages
• Minimizes Required Flight Segments- The H&S system serves network
destinations with the lowest number of flights. The H&S system combines
passengers bound for many destinations on a single flight to the hub airport
• City-pair expansion
• Consolidation of Demand- The fundamental advantage of H&S is the ability to
consolidate the demand from many city-pairs on each flight segment. Passengers
on each flight from a spoke city to the hub are destined for many cities across the
airline’s route system. This consolidation allows service to cities that would
otherwise not be profitable.
• Passenger Convenience- As destinations grow and more passengers funnel through the
hub, flight frequency can be increased. High frequency allows the passenger to match
flights with desired itinerary times. This choice of departure and arrival times is particularly
valued by business travelers. Passengers prefer to use a single airline for their entire
journey, so the ability to service many cities of varying sizes confers a competitive
advantage. As compared with a journey requiring a change of airline, passengers making a
single hub connection benefit from closely timed flights, single check-in, more convenient
gate and facility locations, and reduced risk of lost baggage. Knowing that an airline likely
serves a desired destination saves the passenger search and transaction costs. Familiarity
with the airline’s product lessens uncertainties and increases loyalty, particularly when
linked to loyalty programs
• Hub Dominance- As an airline’s hub system grows, the airline comes to dominate
its hub city(ies). With domination comes a degree of market power, enabling the
carrier to extract a fare premium on flights to and from the hub
• Competitive Strength- Hub airlines also exercise considerable influence over
airport operators, which can be used to delay competition through control of
airport facilities. When faced with a new entrant to its hub threatening an
existing market, the airline’s hub airport can be defended by adding flights with
more attractive service, offering greater frequency, and matching or undercutting
any new competitor’s fares. This competitive advantage results in the fortress
hub.
• Widespread Distribution- Advertising and distribution also benefit from the H&S
system. The H&S carrier can advertise many destinations served from any
metropolitan area, thus spreading the cost of the advertising over many daily
flights.
• Attractive FFPs- Finally, frequent flier programs (FFPs) that encourage passenger
loyalty are more effective when the airline serves many destinations, particularly
a variety of desirable vacation areas. Business passengers value their mileage
awards, which allow free travel
 Disadvantages
• Infrastructure and Labor- Extensive facilities and substantial personnel are needed
solely to accommodate connecting passengers. The passenger service agents,
gates, lounges, baggage facilities, and ramp and maintenance personnel dedicated
to passenger connections are not necessary in point-to-point flights.
• High Flight Operations Expense -More time spent at lower altitudes increase fuel
burn. Flight crew pay is based on block time, as are some maintenance costs Other
maintenance costs vary with the number of takeoffs and landings (cycles), so these
increase with the intermediate stop.
• Pacing Spokes and Circuitous Routing- Route system geography also drives higher
cost.
• Lengthy Complex Times- As an airline grows its network operations at a
hub, it can outgrow the hub’s capacity and cause rapidly escalating costs
The most obvious cause is flight schedule–imposed hub congestion. Flight
delays increase as the airport nears capacity. Arrivals and departures are
limited by the available taxiways and runways. Inclement weather
requires greater aircraft spacing, particularly for landing. Arrival rates are
halved at some airports when weather permits only instrument
approaches. Taxiways and gates become crowded. Terminal space,
especially in older terminals, is taxed. Essentially, the hub carrier creates
its own traffic congestion by scheduling ever more flights in each
complex. The corrective step is often to extend the complex time, which
further lowers aircraft and crew utilization.
• Susceptibility to Delays- H&S spoke systems are highly susceptible to delays. A
delay on one or a few inbound flights can spread as outbound flights are held for
connecting passengers. Disruptions that affect the entire hub, particularly
weather, but also radar or computer outages, often propagate rapidly through
the entire flight operation. Multiple hubs provide some opportunity for
mitigation.
Hub Airport Requisites
• Successful hub airports share 3 special characteristics
1. The city must have a large population and a strong economic base.
2. The hub must be centrally located so that routes can be efficiently developed to
and from the spoke cities, avoiding extensive circuitous routings.
3. Airport infrastructure and local transportation must be sufficient to support the
hub operations.
Attribute Point –to- point Hub and Spoke
Scope Each route serves a single Optimized by connecting service
city-pair. Routes may be to a wide geographical area and
widely dispersed many destinations

Connectivity No connections provided Most passengers, typically

(although some may arise connect at the hub
randomly as focus cities airport(s) for flights to their
develop). destinations.

Dependence Flights operate independently Flights are highly dependent in

order to provide passenger
connections.

Market Size Requires high-density markets Efficiently serves cities of varying

with at least one city of sizes, including cities with too
the pair being a high-traffic little demand to be profitably
destination. served by point-to-point routes
Demand Only varying frequency and Varying demand in one or more
pricing are available to city-pairs may be offset with
counter demand variations demand from other city-pairs.

Frequency Supports a large range of Generally high frequency, tied to

frequencies, from several the connecting hub complexes.
per day to only a few per
week.

Pricing Both business and leisure Dependent on business travelers at

pricing depend on high fares with excess capacity filled with discounted
the city-pair demand fares to leisure travelers.
characteristics.

Asset Utilization No network constraints on Limited by network geography,

utilization. timing of complexes, and capacity
of hub airports.

Cost of Operation Lowest cost per available seat Hub connections significantly
mile per city-pair. increase cost per available seat
mile, which is somewhat offset by
the use of larger aircraft

Fleet Requirement Suited to a single aircraft Range in city demand usually

type. requires a mixed fleet.