What's your strategy for choosing between hub-and-spoke and point-to-point models in airline network design?

1 Hub-and-spoke model

The hub-and-spoke model is based on the idea of concentrating most of your flights in one or a few major airports, called hubs, and connecting them to smaller airports, called spokes. This way, you can offer more destinations and frequencies with fewer aircraft and crews, and benefit from economies of scale and scope. However, the hub-and-spoke model also has some drawbacks, such as higher congestion, delays, and operating costs at the hubs, lower flexibility and responsiveness to demand changes, and higher passenger dissatisfaction due to longer travel times and more connections.

2 Point-to-point model

The point-to-point model is based on the idea of flying directly between two airports, without stopping at a hub. This way, you can save time and fuel, avoid congestion and delays at the hubs, and offer more convenience and comfort to your passengers. However, the point-to-point model also has some challenges, such as higher fixed costs per flight, lower load factors and revenues per seat, and higher exposure to competition and price wars.

3 Strategic criteria

When it comes to deciding which model is the best for your airline, there is no one-size-fits-all answer. However, strategic criteria can be used to guide your choice. For instance, market size and demand should be taken into consideration. If you serve large and dense markets with high and stable demand, the point-to-point model may be preferred as it allows for higher fares. On the other hand, if you serve small and dispersed markets with low and seasonal demand, the hub-and-spoke model may be more suitable as it allows for more options. Additionally, competition and differentiation should be taken into account. If there is strong competition from other airlines or modes of transport, the point-to-point model may be better as it can provide faster and more convenient service. Furthermore, cost structure and efficiency should also be evaluated; if you have a low-cost structure and high operational efficiency, the point-to-point model may be preferable as it can offer lower fares. Finally, fleet composition and flexibility should also be considered; if you have a homogeneous and flexible fleet of small and medium-sized aircraft, the point-to-point model may be better as you can adjust capacity and frequency to match demand.

4 Hybrid model

Of course, you don't have to stick to one model or the other. You can also adopt a hybrid model, where you combine elements of both models to suit your needs and goals. For example, you can have a hub-and-spoke model for your long-haul and international flights, and a point-to-point model for your short-haul and domestic flights. Or, you can have a point-to-point model for your core markets, and a hub-and-spoke model for your secondary markets. The hybrid model can give you more flexibility, diversity, and resilience, but it can also increase your complexity, coordination, and risk.

5 Best practices

Whatever model you choose, you should follow some best practices to make it work for your airline. For example, analyzing your market and customer segments and tailoring your network design to their needs and preferences is essential. Additionally, it is important to monitor your performance and adjust your network design according to changing market conditions and customer expectations. Balancing supply and demand, optimizing pricing and revenue management strategies, managing resources and operations, improving quality and reliability standards, collaborating with partners and stakeholders, and leveraging alliances and agreements are all necessary for enhancing your network and value proposition.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?