Doing Better in the Skies
According to AAA, an estimated 5.6 million Americans took to the skies this past year-end holiday season, defined as the 12-day period lasting December 22 through January 1. But unless you were flying into or out of a major hub, you probably weren’t rejoicing that you had a direct flight.
That’s because—with few exceptions—today’s air travel system operates on a hub-and-spoke model. Airlines concentrate their operations out of a handful of major hubs, and then rely on smaller, regional airplanes to make connections. For example, U.S. carrier Delta operates eight domestic hubs, the largest of which is Atlanta, with roughly 1,000 daily departures to some 200 destinations.
Such hub-and-spoke operation grew out of a number of factors, including the airline deregulation of the late 1970s. It promised a number of efficiencies: centralized operations (including aircraft maintenance), economies of scale, increased flight frequency, economies of density (“aggregating” travelers from myriad smaller origination locales to fly fuller airplanes to final destinations), etc. And for a while, those efficiencies paid off—air travel increased while airfares decreased.
But as airlines and passengers alike have discovered, hub-and-spoke aviation comes with its own set of costs and inefficiencies. To name a few: Busy hubs are rife with congestion; depending on the airline, up to a third of their flights are typically delayed. And how often have you missed a connection or had a lost piece of baggage, which didn’t make a connection when you did? Travel via hubs can add significant time to a trip, and hub-and-spoke systems are vulnerable to cascading, large-scale delays, as when a snowstorm closes a major hub.
Also, per mile flown, ascending, descending, and taxiing burn significantly more fuel than cruising at altitude, so making more connections means burning more fuel—airlines’ single greatest operational expense—for any given trip.
Then there is the way airport space is granted to airlines in a hub-and-spoke system. Slots, or rights to fly into or out of a particular airport, are assigned by an independent body or by the airports themselves in a “use it or lose it” policy. As long as airlines use their slots, the rights get grandfathered in year after year. The result? Wasted fuel: during travel lulls, airlines—reluctant to give up their slots—will go so far as to fly near-empty airplanes to retain access. Meanwhile, new entrants in the airline business face a formidable barrier via limited to no access to busy hubs, reducing competition that could ultimately increase efficiency and reduce fares. Even legacy carrier Delta—far from a new entrant—spent $360 million in December 2012 to acquire a 49 percent stake in Virgin Atlantic Airways to gain additional access to London Heathrow Airport, one of the world’s busiest hubs.
As a result, today we’re finding hints of a shifting perspective in aviation, between those that remain committed to the hub-and-spoke model, and those that see promise in the point-to-point paradigm, which foregoes hubs in favor of direct flights between destinations.
On the one hand, consider the Airbus A380-800. Since its service debut in 2007, it has come to epitomize the hub-and-spoke model. Capable of carrying more than 850 passengers at a time, it allows airlines to move as many customers as possible along major flight corridors into and out of major hubs.
On the other hand, consider Boeing, which as early as the late 1990s (and plenty of times since) was heralding the potential of point-to-point air travel. The company’s 787 Dreamliner—with a range sufficient to cover one third of the Earth’s circumference, 20 percent better fuel economy relative to any other plane its size, and a 250-passenger capacity that allows airlines to directly and economically cover more and less-traveled routes—is seen as a major enabler of point-to-point air travel.
And of course, there’s Southwest Airlines, the only enduringly profitable airline in the U.S. (boasting 39 straight years of profitability). Southwest uses a point-to-point model with more direct flights, better fuel efficiency, and higher customer satisfaction.
In fact, that trio—direct flights, fuel, and customer satisfaction—strikes at the core of a marked shift in the aviation industry from the 1990s through the mid-2000s and beyond. An increase in the price sensitivity of air travel demand, very strong passenger preference for direct flights, and changes in airlines’ marginal costs (especially high fuel prices, which are unlikely to significantly drop anytime soon) now comprise an air travel climate that’s increasingly favoring a point-to-point model, including from the perspectives of economic and environmental impacts.
Not that we’re faced with an either/or scenario. In select markets, hub-and-spoke may remain preferable, such as smaller airports not large enough to sustain point-to-point options (thus requiring a “detour” through a hub). And in practice, many airlines today have hybrid systems, with elements of both hub-and-spoke and point-to-point systems as parts of their network.
A shift toward point-to-point would probably take the form, at least initially, of more direct flights between larger airports, including more direct transoceanic connections. Southwest, a mostly domestic U.S. carrier, can operate point-to-point largely due to the characteristics of its aircraft: efficient, nimble single-aisle aircraft with high turnover, high throughput, and low maintenance. The advent of double-aisle, long-range aircraft with these same characteristics, such as the Boeing 787 and Airbus A350, may allow a Southwest-like point-to-point model to be taken international.
It’s time to ask ourselves: Why should air travel rely on the congested freeways of what amounts to an international air highway system? Can’t we do better in the skies?
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