The Airline Deregulation Act was signed into law in 1978 and allowed the airline industry to be deregulated which lifted restrictions on where they were allowed to fly (Smithsonian National Air and Space Museum, 2007). This also allowed the airline carriers to be competitive so they needed new ways to operate in order to provide services that travelers were searching for when choosing an airline. One innovation that was pioneered by the major airline carriers in the early 1980s that collectively represented a radical change from the era of regulation was the hub-and-spoke system (Wensveen, 2007). This paper will discuss what the airline hub-and-spoke system is and how it operates. It will also discuss the advantages and disadvantages as well as the economic effects it has on the airline carriers.
The Hub-and-Spoke System Explained
The hub-and-spoke system or network is a system that feeds air traffic from small communities through larger communities to the traveler’s destination via connections at the larger community (Wensveen, 2007). The airline will do most of its operations in the larger communities which the airline will call it its hub. The small communities are the spokes of the network and are connected to the hub by non-stop flights between the different spokes (Aguirregabiria & Ho, 2010). For example, a person wants to travel from Louis Armstrong New Orleans International Airport which is considered a “spoke” city to San Antonio International Airport on United Airlines will have to travel to Houston George Bush Intercontinental Airport and change planes as due to Houston being a hub for United Airlines. Many travelers would wonder why it would not be a direct flight to their destinations but there are many advantages to the hub-and-spoke system.
Advantages of the Hub-and-Spoke System
There are many benefits to the airlines that have implemented the hub-and-spoke system. First, it provides an enormous “multiplier” effect as to the number of city-pairs an airline can serve with a given amount of flight mileage (Wensveen, 2007). It enhances international services to the hubs and to the many airports serving as the spokes, bypassing traditional international gateways (Ashford, Mumayiz, & Wright, 2011). It also enhances domestic services to small cities that as spokes to the airline hubs provide far improved service over the previous point-to-point system (Ashford, Mumayiz, & Wright, 2011). The hub-and-spoke operation permits competition between the airlines and gives smaller communities a wider choice of carriers, more service frequency with convenient connections and more reasonable airfares (Ashford, Mumayiz, & Wright, 2011).
Some disadvantages to the hub-and-spoke system include aircraft arriving in spurts creating congestion and longer turnovers for aircraft and crews between flights. Baggage can also be a problem when a hub gets congested due to short time scheduling connections and...