Traditional hub-and-spoke carriers have high operating costs and cannot easily compete with lean-and-mean LCCs. It is time to refashion the hub-and-spoke model so as to continue functioning in harmony.

Regional aviation and the hub-and-spoke model, named after the bicycle wheel it graphically resembles, are made for each other. Before regional jets made regional aviation popular in the early 1990s, it was the use of hubs as efficient and convenient transit points about two decades earlier that set the regional ball rolling. And cargo aircraft rather than passenger planes were the first widespread users of the model. They established many of the principles of how to operate a hub harmoniously, some of which are observed even today.

Regional aviation is sometimes the only way of linking isolated communities with the rest of the world. In the United States and other countries, it begins with small jets picking up travellers from remote regional airports and bringing them to the nearest large city or regional hub. These regional jets and now increasingly turboprops, and usually belong to a small regional airline operating under a code-share agreement with a major carrier. The agreement guarantees the regional carrier a fixed profit on completion of each flight. For many passengers, the hub is simply a transit point. At the hub they are transferred to airliners that fly them over long distances, perhaps even across continents, to another hub from where they might need to catch another small regional plane to arrive at their ultimate destination.

Harmony prevails at hubs if the scheduling between the regional leg and the long-distance leg of the journey is right and travellers experience minimum delay. Each wave of regional flights must be smoothly and expeditiously received, processed and dispatched. Sometimes there’s a little breathing space before the arrival of the next lot, sometimes not. If the schedule is too slack, the hub airport may be overcrowded with passengers waiting for connecting flights. However, if planning is too tight, a small slip might trigger cascading delays and result in a slew of missed connections with hordes of disgruntled travellers to contend with. This is a situation that harried customer facilitation staff would surely not relish.

A Journey Back in Time

When commercial aviation began in the early 20th century, all aircraft were short-haul propeller-driven planes with meagre capacity. Most airlines too were small outfits and would only operate on short-distance point-to-point routes between their home base and any nearby airport with enough travellers. Even when long-haul airliners emerged around 1960, most journeys were point-to-point. The big jets would only fly between airports where there were enough passengers; so many smaller cities suffered a steady depletion or even abrupt termination of air service.

When Delta Airlines introduced the hub-and-spoke model in the US in 1955, it made operations more efficient by greatly simplifying a complex network of regional routes. However, hubs didn’t make waves till FedEx began to deploy a small fleet of Dassault Falcon 20s to convey packages from outlying airports to its hub at Memphis, Tennessee. Then major passenger airlines began to see the virtues of the hub-and-spoke arrangement as a way to streamline their regional operations. And regional airlines again had a crucial role to play, conveying passengers from surrounding airports to the nearest hub, thus increasing the hub’s market penetration. The advent of Bombardier’s and then Embraer’s 50-seat regional jets in the early 1990s accelerated the process. Lately, however, 50-seaters are out of fashion because their seat-mile costs are too high and soaring fuel prices have rendered them uneconomical. It is now accepted that the 90-seat regional aircraft is the smallest economically viable unit of production.

Only in India

In India, mainly the six metro airports qualify as potential regional hubs. They have the necessary size and facilities and are surrounded by smaller regional airports that are capable of generating a steady stream of domestic and overseas passengers. Delhi, for instance, is now the hub for Air India’s global operations, leading to a surge in the airport’s transit passengers. The proposed joint venture airline between Tata Sons and Singapore Airlines (Tata-SIA) has also announced that its operations will be based out of Delhi. However, hub-and-spoke routeing may not become popular in this country so long as short-haul operations remain expensive. Besides, multiple rail and road options are often available between the hub and the potential spoke points. If the journey is not too long and fare difference substantial, travellers will cheerfully accept the discomfort and delay of surface travel to avail the monetary savings.

Hubs to The Fore

Hubs add prestige to a city. They mean more jobs, more tourism and higher tax revenues. But they prosper only if the economics are right. They require, first of all, a steady stream of traffic from regional airports and footfalls preferably by the million. Although meticulous hub planning generally goes into ensuring that regional flights are closely dovetailed with long-haul flights, as at Paris or Frankfurt, this may not always be necessary. If an airport has a continuous stream of traffic, as at London’s Heathrow Airport, many convenient connections might materialise by coincidence at the hub.

A hub-and-spoke system fosters centralised operations and maintenance, higher flight frequency, economies of scale and more efficient use of scarce resources, especially aircraft and crew. Passenger load factors are higher and the same aircraft can fly the same route more than once a day. The model is most efficient from the airlines’ point of view because it enables the least number of aircraft to link the greatest number of airports. For instance, in a system with 10 destinations, the hub-andspoke model requires just nine routes to connect all points, while a point-to-point network needs 45 routes (each airport connecting the other nine). Hubs aim to be models of efficiency where all services and utilities work in harmony, where flights and baggage are handled expeditiously, and where passengers are treated courteously.

However, hubs are expensive to operate and they cannot tolerate delay or inefficiency. Hub-and-spoke operations can be a logistical nightmare with dozens of incoming and outgoing flights needing to be closely scheduled to avert unnecessary conflict. And which passenger would willingly choose a detour via a hub if a direct flight were available? Customers obviously prefer point-to-point travel, which is quicker, cheaper and more comfortable. On direct flights, they are neither exposed to missed connections nor lost baggage.

However, regional passengers do realise that it’s in their own interest to get to the nearest hub from where they can conveniently access many more city pairs and schedules. The switch from one airline’s regional jets to another airliner can be made seamless by code share agreements. Through code shares, the major carriers competitively outsource their short-haul flying requirements to regional carriers while maintaining their brand identity. This has the additional advantage of allowing a carrier to specialise in one type of aircraft.

The Future of Regional Hubs

In many parts of the world, hubs may have had their heyday. In the US, Southwest Airlines with its pointto-point paradigm has mainly direct flights, better fuel efficiency and records higher customer satisfaction than hub-and-spokeoperators. Southwest incidentally is the only consistently successful American airline, having achieved 39 consecutive years of profitability. Now that’s a record to die for.

Regional aviation itself is under stress in many parts of the world. This is a period when low-cost carriers (LCC) are spreading their tentacles everywhere. LCCs prefer to shun major hubs with their congestion, delays and high charges, and operate in splendid isolation from one low-cost airport to another. In Europe, where the regional industry has been shrinking for some years, regional carriers are trying to develop a new model. One way is to occupy niche point-to-point markets that are too small to attract LCCs or mainline carriers. In the US, the financial crisis exacerbated by high fuel costs is chipping away at regional aviation and some analysts feel that the regional airline model may already be broken. Unless the trend is reversed, within ten years as many as 100 small communities may lose scheduled service altogether. Ultimately regional carriers and hubs need to take determined steps to remain viable. Chicago-based United Airlines, for instance, plans to install a thinner seat design on about 5,00 CRJ700 regional jets so as to add four seats per plane.

Hubs are a wonderful way of serving many more destinations, especially the smallest ones, but they are also expensive and wasteful. Environmental and economic factors favour direct flights that involve just one fuel-guzzling take-off and climb to cruise and one landing. Climbing, descending and taxiing, all burn more fuel per mile than flying at cruising altitude. And fuel accounts for a major portion of an airline’s operating expense. More stops and more connections mean more fuel burnt and more harmful emissions. Additionally, any detours or increased stops raise the outgo on navigation and airport charges.

Air travel demand is likely to remain extremely pricesensitive in the foreseeable future and there’s strong passenger preference for direct flights. LCCs have exploited these two factors to offer numerous non-stop flights at comparatively low fares. Their thrifty operating model and quick turnaround time makes this possible. Traditional hub-and-spoke carriers have high operating costs and cannot easily compete with lean-andmean LCCs. It is time to refashion the hub-and-spoke model so as to continue functioning in harmony.