Is the mega-hub dead in Europe?


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?

image

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.

image

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.

Never miss another post: Sign up for email alerts and get only the content you want direct to your inbox.


Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, LinkedIn and .

4 Comments

  1. Ignoring population for a moment, does it really make sense to have giant connecting hubs so close together in one alliance? I did a quick application in Great Circle Mapper (http://bit.ly/1jYmtek) and MUC-ZRH is 189 miles. I can see easy comparisons to Boston, NYC, PHL, and DC, but you get different alliances.

    From an *A award travel standpoint, I see them ranked (easy to hard for EU to US) as VIE, FRA, MUC, BRU, ZRH. Otherwise, they are all so close, back tracking from the UK or Spain doesn’t really matter.

    But looking further in to things, can we see data that shows how much each contribute from an O&D vs. connecting standpoint? I suspect my easy to hard would be most connection to least connections.

  2. 45-55% of MUC traffic is originating in the region, BRU, ZRH and VIE is higher, so the hubs are not competing like say ORD competes with IAH or DFW&CLT.

  3. Hubs in Europe are more based on political boundaries than any other factor. While it might make sense strategically to combine, let’s say, BRU and MUC, neither of the carriers operating those hubs will move to the other country.

    This dynamic is very different than the US. While ATL and MEM are also very close, matters of national pride are not involved in such a closer discussion.

    As to hubs going away, even over there, it’s a long time before we might see a meaningful reduction in hubs. There won’t be any PITs or CVGs (with closed concourses/terminals), except if a carrier goes bust.

  4. Just looking at some of the specifics of the Lufthansa Group, I would surmise that the WINGS strategy is similar to the Tyrolean Air (http://bit.ly/WqbWy3) strategy after the Austrian Air purchase. Also the Edelweis Air piece of SWISS. Doesn’t that give them some good experience operating a sub-fleet?

Comments are closed.

BoardingArea