Hub-and-Spoke System in Airlines Industry

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The hub-and-spoke system refers to a system which comprises one or more “hubs” and numerous “spokes” surrounding the hubs, in order to simplify routes, and thus, operating costs. In aviation industry, the hub-and-spoke system is like a wire wheel, in which passengers can travel from a smaller city to another smaller city via a hub, or even more. A hub refers to a central airport that most flights are routed through, while spokes are connected to a hub. The system is opposite to point-to-point system, as airlines have to transfer their passengers from one place to another via a hub, instead of directly send them to their destinations.

From airlines perspective, the hub-and-spoke system enables them to cut costs by reducing the number of routes. Through making use of hubs. airlines can also serve the same number of cities as when adopting the point-to-point system. It can contribute to a higher load factor because hubs can gather different passengers from different origins and to different destinations. Compared with point-to-point system, the hub-and-spoke can maximize passengers loads by grouping the passengers together, and then sending them to the spokes through separated flights. As a result, airlines can achieve higher efficiency.

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From customers perspective, they can enjoy a lower fare when travelling from a small city to another small city. But on the other hand, they may need to spend more time to reach their destinations.

[Source: http://www.workhardtravelwell.com/2016/02/08/spirit-airlines/]

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Learning Reflection

Hub-and-spoke system is beneficial to both airlines companies and passengers. After adopting the hub-and-spoke system, airlines no longer need to establish a lot of flight lanes. As a result, they can reach many destinations by establishing the hub-and-spoke system. From passengers perspective, they can enjoy lower fares even if their destinations are not so popular. So, the hub-and-spoke system not only helps airlines save costs, but also helps passengers save fares.

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Reference

[1] Bonsor, K. (2001, June 14). How Airlines Work. Retrieved October 2, 2017, from https://science.howstuffworks.com/transport/flight/modern/airline3.htm

[2] Spoke–hub distribution paradigm. Retrieved October 2, 2017, from https://en.wikipedia.org/wiki/Spoke%E2%80%93hub_distribution_paradigm

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