Lecture 9: Hub-and-Spoke Operations

1. Lecture 9: Hub-and-Spoke Operations By: Zuliana Ismail

2. Question Bank • a) Describe about Hub and Spoke operation b) Discuss the advantages of Hub and Spoke operation. 2. a) Explain why do some airports aim to become a Hub b) Describe the strategies to be a Hub airport.

3. Introduction The hub-and-spokes system works in comparison to the point-to-point system Point-to-point system: Point-to-point system • Hub-and-spoke systems: A system of air transportation in which local airports offer air transportation to a central airport where long-distance flights are available Hub-and-spoke

4. DEFINITION OF A HUB • A hub for air travel is a major airport which has direct service to many other airports, but not necessarily by the same airline. • Also refer to an airport where a specific airline maintains large operations. Hub airport: It is very big in size and handles international and domestic flight.

5. SPOKE • Definition They are smaller compare to the hubs and handles domestic flights only. Mostly it is located in every state in the country. • Spoke - serving the small markets, profit and getting people from this market to big market (hub)

6. General Idea of Hub & Spoke system Flights depart from smaller airport (spoke) in the area Converge on the Hub airport at approximately the same time Passengers disembark from their flight and are shuttled to another aircraft When all passengers boarded the main aircraft, airliners depart

7. Kuala Terengganu (S1) Hub-arrival a/c Example: KLIA as hub Ipoh, Perak (S5) Hub-departured a/c KLIA (HUB) Hub-departured a/c Kuantan, Pahang (S2) Melaka (S4) Johor Baru (S3)

8. Types of Hub • Networking hub • International hub • Regional hub • Domestic hub

9. Atlanta Airport • Hartsfield-Jackson Atlanta International Airport is considered to be the world's busiest airport, handling over 90 million travellers and 700,000t of cargo each year

10. Changi Airport • Singapore Changi Airport is a major aviation hub in Asia

11. Heathrow Airport • Heathrow: Airport Hub Of The UK • London Heathrow airport is used by over 90 AIRLINES that connect to over 180 international destinations. • Nearly 46% of the airport's passengers choose Heathrow as an intermediary for their long-haul flights. • Heathrow handles over 469,000 air transport movements a year, carrying nearly 68 million passengers around the world.

12. KLIA • KLIA is the regional hub

13. ADVANTAGES of HUB to Passenger • More choices of route from hub, • More choices of route, flight combination (for passengers): passengers can make a choice to continue their destination from hub airport • Concentrate traffic: • Only Hub have sufficient volume of traffic to offer passengers and cargo the wide variety of destinations • Moving large numbers of people • Moving large numbers of people to many cities many time a day by funneling passengers through a central location (hub), where they can pick up connecting flight

14. ADVANTAGES of HUB to Airlines • Airlines can better use their aircraft: • Passenger with many more flight combinations, although these combination almost always transfer at the hub, • Flights from hubs are non-stop using larger and more comfortable aircraft while flights to spoke airports are often use smaller aircraft. • Airlines can increase fare: • because as they develop a hub, their products become more attractive; more direct flights, more frequent flights, more connection and with these, they gain ability to mark up prices because according to data, customers are willing to pay for those product qualities. • Decrease the cost of airlines • The more intense the hub-and-spoke system, the lower the unit cost should be.

16. Disadvantages of HUB & SPOKE • HUB AIRPORT BECOMING VERY BUSY • difficult to handle • AMPLIFIES DELAY • Stop, change aircraft, Almost always require transfer at hub • LONGER TIME OF FLIGHT • relate to the changes of flight • CREATE PROBLEM FOR ATC • scheduled of flights

17. Goal: To Become a Hub • Many main airports in the world have set their goal to become a hub. • Especially in the Far East, India and Middle East. • There is intense competition amongst these countries to achieve this goal. • This intense competition has made it more challenging for airport managers and operators. • It has become a government effort, no more just the airport owners or operators. • Professionals and consultants are being recruited to manage these airports and provide advice.

18. Why to become a hub. • Good image and name for the nation. • Better economy for the nation. • More revenues for the airport operators/owners • Faster and attractive return on the airport project investments. • More tourism for the nation.

19. Steps to become HUB • Provide Excellent Services (both Airside and Terminal) • Provide Adequate Facilities • Build Attractive and Effective Terminal. • Heavy Promotions. • Suitable charge fees.

20. Steps 1 – Provide Excellent Services • There are four examples of services to make the airport as a major hub: Ground handling MRO

21. Steps 1 – Provide Excellent Services Baggage loading Toilet service

22. Steps 1 – Provide Excellent Services Food service • These are the ‘four pillars of strength’ that features an aircraft taking off smoothly and successfully. Refueling service

23. Step 2 – Provide Adequate Facilities • Multiple and long runways for efficient an safe landings • Apron large enough for many aircrafts to park • Navigation aids for safe and easy landings • Availability of fuel • Warehousing • Hangar • Maintenance Repair & Overhaul (MRO)

24. London Heathrow x 3 runways O’Hare Airport Chicago x 7 runways

25. Step 3 – Build Attractive and Effective Terminal • Ambiance and unique architectural • Passengers friendly • Good and adequate signage • Less walking for passengers • Many activities for passengers • Efficient public transportation • Hotels and rest rooms walking distance • Excellent retail stores • Becoming complexes/ mini township • Branded stores

26. Dubai Airport Retail Shops Ambiance Singapore Changi Ambiance Singapore Changi Dubai Airport Retail Shops

27. Step 4 –Heavy Promotions • Advertisement • Public Relations • Tax holidays, discounts, incentives • Special events

28. Step 5 – Suitable charge fees. • Reduction in fees during the startup (landing fees, terminal fees, etc) • Improvements (renovations to terminal/offices, etc to accommodate airline operations)