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Monday, January 7, 2019

Hub and Spoke vs Free Market

The old hub and spoke model used to dominate the landscape. Briefly, the theory is to bring 1,000's of passengers to a huge hub like LAX and then redistribute its customers on an appropriately sized aircraft to a second location found on a passengers' itinerary. 

LAX Hub And Spoke Commercial Aviation Model
Image result for lax airline hub

The direct flight model eliminates the hub found in New York, London, or Frankfurt. It can fly from a "second-tier airport "Oslo Norway to Hawaii if a market need is determined. Thus the freedom of destination is not confined to a hub. Airbus was left with only one competitive thought, bigger is better. Boeing went with the better is a better model and it sold almost 1,500 787's by 2019 when counting reliable commitments in the order pit.

It's a two to one market impact over Airbus. The hub is not a panacea for airline travel as the Euro maker was left to hope for, it is better is better open free market only using a hub when efficient, or just flying directly when the market allowed. The Boeing gamble paid off as there was a vast flight market segment untapped until the 787 moved in during 2012. 

Seven years later, the paradigm has shifted away from the A380 and B747's into direct flying into the Caribbean from anywhere. The Carribean was a place the A380 was not allowed due to its immense size. Smaller countries and smaller airlines now have a dog in the fight after buying the 787's in numbers, and it did just that, a new free market emerged without flying indirectly through a conforming hub.

The market saw this opportunity of going anywhere directly rather than having passengers sit for hours in a super hub waiting for a cramped single-aisle flight. 

However, single-aisle have a place as well and it is the main profit maker in the airplane manufacturing business. The market freedom concept has space remaining for new concepts unless counting the emergence of the 797 closes that "gap". 

Hub marketing has a place and is not the total answer. Airbus did not look at the air travel market wisely, it just wanted its pride to reflect what it could build and the A380 is dying an inglorious death. Even though the 1,500 747 production models earned a wonderful title, "Queen of the sky's", the A380 may earn the inglorious "Elefante Blanco" title.

The A-350 is just not good enough and too big for airline sensibility for the passenger buck even though passengers may enjoy the extra 5 inches spread across nine seats and two aisles. Giving the 1/2 inch advantage per item if ever utilized. The 777X is a culmination of this airplane story as it will outdo the A-350 1000, effectively, and put reasoning in boardrooms at a premium.

1 comment:

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