Why Airlines Create Hubs?

Academically, managing the operations of an airline is a very complex task which require the best of operations research (OR). The OR considers hundreds of factors, and incorporates theories such as Queuing Theory at airport counters, which help in ensuring that all operations take place without any hassles.

 This goes a long way in ensuring smooth and punctual flight operations. When it comes to flight operations, there are two basic models which the global airlines have adopted. These are hub-and-spoke model and point-to-point flight models. This also takes into account the fact that hubs shall be able to provide cheap domestic flights to the passengers.

The Hub and Spoke model is generally the most accepted one by the legacy carriers and the Point to Point system works well for the low cost carriers. The Hub and Spoke model is to be discussed here. It shall be noted that there could be many points of origin and destination for an airline.

 Now, in order to operate it will require to provide many services for the passengers as well as for the airplanes, such as fueling, maintenance and repair and others. This requires stationing of certain airplanes in one airport along with all resources which are required to ensure smooth operations for those planes.

While all airports do have certain basic services available for all planes, such as fueling, some others might be concentrated with more resources for a particular plane type. This higher order service airport is the hub. So, the question before the airlines is which city shall be chosen for making a hub.

 A number of factors play a role in deciding this. All of these factors shall lead to the desired objective of getting the maximum passengers from the hubs and, at the same time, maximizing revenue generation.

Spokes, on the other hand, are cities of different populations. These could be origin or destination cities. Even hubs can be origin cities. However, what is important to know is that all flights must touch down on hubs for varying periods of time before reaching the destinations, if origin is not the hub.  Hubs allow airlines to connect passengers to their destinations.

For example, if passengers have to reach Miami and from different cities, say New York, Chicago, Los Angeles or any number of other cities, then it is cost-effective for them to converge at a hub and take the flights from that hub to Miami.

It is worth noting that the connecting destination need not always be a hub. So, an airline might fly from a hub city, touch down in another city and then fly on to final destination. Therefore, airlines create hubs in order to organize their operations in the most optimal way that generate maximum revenues and cause least possible inconvenience to customers.

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