Hub-and-spoke travel has been a main-stay of the aviation world for most of the past 30 years. Sure, there were the upstart carriers which had more point-to-point operations, but hub-and-spoke facilitated more destinations served and, generally speaking, access to better long-haul travel opportunities thanks to regional feed into the hub. Even within the LCC market there hasn’t been much development in the way of long-haul, point-to-point service. We have LCCs running long-haul routes (mostly in Asia, but the European and trans-Atlantic markets are seeing growth, too) and even driving the upgrade of medium-range aircraft (AirAsiaX is the launch customer for the A330neo). So, is the mega-hub dead?
In an investor briefing earlier this month the Lufthansa Group seemed to suggest that, while it might not be dead, it is likely that the significance is being reduced. The group has always offered long-haul services from their core hubs but that focus will be reduced in the coming years. The hubs will remain with mainline service but, at the same time, the “Wings long-haul” brand will be launched at the end of next year to provide a low-frills, point-to-point intercontinental carrier.
Oh, and this is on top of the growth in their Eurowings operation which will mimic the Germanwings model but on international routes in Germany, Austria, Switzerland and Belgium.
The company cites stats like 79% of travel within Europe is for personal reasons rather than business and that the personal segment is growing more quickly. In that sense it seems reasonable to expand more in the leisure/personal travel market, especially considering that these customers are generally more price-sensitive. At the same time, cutting the feed into the hubs erodes their efficiency. Without the feed many of the routes are no longer sustainable. United Airlines used a similar justification when choosing to drop multiple international routes out of Houston (though the timing of those cuts was questionable given other factors of the claims there) and other airlines are facing similar challenges.
Most of the LCCs flying long-haul point-to-point are doing so by cherry-picking routes and depending on local feed more than connections. And they’re cannibalizing competition, not their own route infrastructure. It will be very interesting to watch a legacy airline attempt to convert to a similar model and still keep the full-service portion viable. It is a difficult transition and one fraught with potential failure points.
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