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STRATEGIES IN AVIATION
Development of network strategies in Aviation
Abstract
The commercial aviation industry revolves around three fundamental pillars: political, economic and technological developments. Since the start of the jet age,
these three pillars have affected the route system architecture that carriers fly. This paper investigates the shift in these three fundamental pillars over the past
decade, comparing the operational characteristics of the point-to-point and hub-and-spoke route systems. It also emphasises the importance of recent
developments in the commercial aviation industry, resulting in new opportunities for carriers to impact the route system architecture. In addition, a case study
has been performed to display the new patterns of air service on long-haul networks known as hub-bypassing. By applying this route strategy, carriers are
able to operate a significant number of additional city-pairs that have been enabled by developments in the three fundamental pillars. This poses a threat to
traditional hub-and-spoke carriers, which offer the same city-pairs, including an intermediate stop for connecting flights. However, hub-bypassing can also
decrease congested airports and offer passengers faster and more non-stop flights between unique city-pairs.
Introduction
Since the liberalisation of air transport the skies have transformed into one single market, increasing city-pair connections. Airports and regional planners focus
on primary airports (major hubs) associated with large cities (e.g. Schiphol/Amsterdam, Heathrow/London and Narita/Tokyo). Traditionally, carriers have
concentrated all of their traffic into large markets, flying towards these primary airports where new flights connect passengers to their various destinations.
This is known as the hub-and-spoke system. However, recent developments now mean that carriers are flying new routes, bypassing traditional hubs and
stepping away from their traditional route architecture. The market has changed, and the industry is adjusting through three fundamental pillars that affect the
development of network strategies: economic, political, and technological developments. As airlines connect cities, they are establishing new, highly profitable
city-pairs that were first regarded as secondary markets. The importance of a liberal aviation industry is also now widely recognized, resulting in multilateral
liberalisation. Correspondingly, new technological advancements have enabled manufacturers to build aircraft that allow carriers to open new long-haul routes
and offer passengers the advantage of flying non-stop to their final destination rather than transferring via a major hub airport. To explore this new network
strategy, a case study was performed comparing the route network of so-called hub-bypass systems and traditional hub-and-spoke networks, in order to gain
insight into the differences.
Figure 4: Aircraft fuel efficiency
As investigated by AirInsight (2012), the Boeing 787 brings advantages in
terms of fuel cost per Available Seat Mile (ASM). This creates further
Figure 6: The three pillars of Aviation during the 1970s.
Development of network strategies in Aviation
This new route architecture allows carriers to feed passengers from
secondary airports into a single airport (the hub). From this hub, new
flights connect passengers to their various destinations (along the spokes).
The goal of a hub-and-spoke route system is to capture the passenger
from origin to destination at a high profitably rate (Cook, 2008).
Figure 8: Current pillars of Aviation
Figure 7: Route network illustrated
Hub-bypass Case study
Traditional European legacy carriers rely on the hub-and-spoke network For this case study, a comparison of hub-bypass systems and traditional
model, because it offers advantages in terms of demand stimulation by hub-and-spoke networks has been created in order to gain insight into their
providing a large variety of Origin & Destination (O&D) city pairs, including differences.
routes that could never be viable under direct operation (Bailey et al., 1986;
Maertens, 2010). While these hubs have become essential to enable Carriers use primary and secondary airports in both network types. A
carriers to build a dominant market, the congestion that comes with the primary airport is defined as an airport that carries 20% or more of the total
hubs sizes have encouraged carriers to grow their business through hub- passengers in that region. Secondary airports serve up to 20% of the
bypass strategies. These hub-bypass strategies emerged from the passengers in their region (Bonnefoy; Neufville; & Hansman, 2008). The
development of jets with enough range to link a substantial number of Boeing 787 Dreamliner was marketed as a hub-buster, enabling carriers to
smaller city-pairs, enabling airlines to operate from and to niche markets open new routes that would operate in thinner markets. It has been
(Clark, 2007). However, as depicted in Figure 8, non-European carriers concluded that 20% of the routes operated by this aircraft are new routes.
operating flights to European cities can fly to secondary European airports, This does not mean that these routes could not have been opened with
applying hub-bypass strategies (Maertens, 2010). other aircraft types, but there are indications that the lower cost and
smaller capacity are conducive for these routes (CAPA, 2014).
Development of network strategies in Aviation
The routes used for this case study are listed in Table 1 as either a hub-and- 2015; SFO Airport, 2015; OAK Airport, 2015). This percentage indicates that
spoke route or a hub-bypass route. These routes are not solely operated by San Jos airport is a secondary airport in the region (Table 2).
Boeing 787s (Table 4).
Airport Annual pax Share (%)
O&D Hub-bypass route Hub-and-spoke network (2014)
ADD-PVG ADD-PVG (ET) ADD-DOH-PVG (QR)
SJC 9,600,000 14.5%
788 320 77W
BHX-JFK BHX-JFK (AA)
OAK 10,336,788 15.6%
BHX-AMS-JFK (KL)
752 F70 744 SFO 46,191,454 69.9%
DUS-HND DUS-HND (NH) DUS-CDG-HND Total: 66,128,242 100%
Table 2: Airport passenger numbers
788 RJ85 777
HND-BOS HND-BOS (JL) HND-SFO-BOS (UA)
San Jose has two daily connections between Beijing (PEK) and San Francisco
788 777 738
(SFO) by Air China (CA) and United Airlines (UA) and is also connected by
HND-SJC HND-SJC (NH) HND-LAX-SJC (DL)
Hainan Airways (HU). San Jos accounts for 14% of all available seats on
788 777 E175
flights between the Bay Area and Beijing (Table 3) (Flightmap Analytics,
LAS-PEK LAS-PEK (AA) LAS-YVR-PEK (AC)
2015).
788 319 77W
LHR-AUS LHR-AUS (BA) LHR DFW AUS (BA AA)
Route: Seats/month Share
788 744 MD80
PEK-BOS PEK-BOS (HU) PEK-DTW-BOS (DL) SFO-PEK 23,000 86%
788 744 320 SJC-PEK 3,834 14%
PEK-SJC PEK-SJC (HU) PEK-SEA-SJC (DL) Total: 26,834 100%
788 763 CRJ900 Table 3: Route seat numbers (July 2015).
Table 1: Hub-bypass and hub-and-spoke routes
For this case study, the route provided by Hainan Airways (HU) from Beijing
(PEK) to San Jos (SJC) is operated by a Boeing 787-8, and has been selected
as an example (Figure 6).
San Jos Airport is located within the Bay Area, in which San Francisco
International Airport (SFO) and Oakland International Airport (OAK) are
located (Ishii, Jun, van Dender, 2009). In terms of passenger numbers, San
Jos airport accounts for 14.5% of all traffic within the region (SJC Airport,
Development of network strategies in Aviation
O&D Hub-bypass (airline) Traditional hub-and-spoke
aircraft type network aircraft type
EDI-HKT EDI-DOH-HKT (QR) EDI-LHR-BKK-HKT(BA PG)
788 788 763 77W 320
ZRH-BNE ZRH-AUH-BNE (EY) ZRH-LHR-SIN-BNE (BA QF)
789 789 321 77E 332
Table 4: Hub-bypass and hub-and-spoke network hybrid
The routes in the table above are examples of connections that passengers
can make due to hub-bypass strategy routes, with only one transfer
compared to two transfers in the traditional hub-and-spoke network flights
(Figure 10).
Figure 9: Route comparison from PEK-SJC
Mayor Liccardo of San Jos has indicated that because San Jos lies in the
heart of Silicon Valley and is the home of the worlds high-tech industry, it
can facilitate business travel for the areas multi-national companies (PR
Newswire, 2015).
These routes have either their origin or destination at a hub or primary
airport (Maertens, 2010). This hub airport at either side of the connection
provides connectivity to more destinations, and therefore more city-pairs.
These pairs enable more connections for passengers with fewer transfers
Figure 10: Route comparison
(Table 4). This type of routing creates a hybrid version of the hub-and-
spoke network and the hub-bypass network (Maertens, 2010).
This figure shows that Qatar Airways operates directly to both Edinburgh,
UK (EDI) and Phuket, TH (HKT). This bypassing of the main hubs of London
The three fundamental pillars of the aviation industry are developed in
Heathrow and Bangkok enables passengers to travel between EDI and HKT
such a way that enables Hainan Airways to operate between Beijing (PEK)
via Doha, Qatar (DOH).
and San Jose (SJC). Political bilateral agreements between the Peoples
Republic of China and the US enable flight operation between the two
countries. The economy has developed in both Beijing and San Jose. And
technological advances in aircraft operating costs have enabled a viable
operation between the two markets.
Development of network strategies in Aviation
Conclusion Airbus (2013, winter). Airbus global market forecast no author[Journal].
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The aviation industry has been characterized by its fundamental pillars
benefits-of-aviation.html
which have been thriving since the 1970s: political, economic, and
technological developments. Developments in all three of these areas have
AirFrance. (2015). Fleet information. Retrieved 12/1, 2015, from
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ort%20English%2005--%20Neufville.pdf Luchtvaartfeiten.nl (2016), Development of Network Strategies in Aviation
Fact sheet, www.luchtvaartfeiten.nl
Image references (top to bottom, left to right)
Luchtvaartfeiten.nl is an initiative by the Aviation Academy at the
1 Cover Jeffrey Schfer
Amsterdam University of Applied Sciences (HvA). Students and teachers
2 Boeing Fuel efficiency of aircraft share knowledge with politicians and the general public to ensure that
discussions are based on facts
3 Gert Meijer Fundamentals of Aviation
Dutch Summary May 2016
De luchtvaartindustrie draait om drie fundamentele elementen: politieke,
economische en technologische ontwikkelingen. Deze ontwikkelingen
benvloeden het routesysteem dat luchtvaartmaatschappijen vliegen. Na
deregulatie waren luchtvaartmaatschappijen in staat om actief de
concurrentie met elkaar aan te gaan en meer markten te penetreren met
minder restricties. Een grote invloed hierop heeft de introductie van Next-
Generation vliegtuigen die de operationele en reikwijdte van
luchtvaartmaatschappijen verbeterden. In 2011 introduceerde Boeing de
787 als een hub-buster die het mogelijk maakte om non-stop routes te