introduction to airline networks

INTRODUCTION TO AIRLINE

NETWORKS

Prateek Garodia

Network Introduction

� This presentation is an introduction to and a

comparison of the two of the most common

networks in the airline industry

� Direct Network (aka Point-to-Point Network) and � Direct Network (aka Point-to-Point Network) and

� Hub & Spoke Network

� A network is required to manage all the

routes that an airline has opened to service its

customers

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Direct Network

� A Direct Network is one where there is a

direct service from one airport to another

without a stop in a third airport

� It is optimally used under the following � It is optimally used under the following

circumstances

� Distance between two cities is small

� Demand between two cities is high

� Total number of cities served by the airline is small

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Direct Network Advantages

� Schedule reliability (aka on time performance) is high� The direct flight does not have an

interdependency on other flightsinterdependency on other flights

� This minimizes the “domino effect” where one delay can multiply into other delays elsewhere in the network

� Aircraft utilization is high� Flights from one airport do not have to feed into

downstream flights at the destination so schedule can be optimized for maximum aircraft utilization

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Direct Network Disadvantages

� Schedule frequency (number of flights per

day) is low

� Due to the actual flight times, there are only so

many flights you can have in a day when going many flights you can have in a day when going

from A to B

� But when you schedule flights to stop at other

cities before going to B from A, then you can have

a lot more options

� Number of routes required to cover all cities

as you introduce more cities in the network

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Direct Network – Route

Addition

� When you start off with Direct Network, it

will grow as demonstrated below

� If you fly only between 2 cities, you will need � If you fly only between 2 cities, you will need

only 1 route

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A B


Addition

� If you now fly between 3 cities, you will need 3

routes (1 existing route + 2 new routes)

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A B

C


Addition

� If you now fly between 4 cities, you will need

6 routes (3 existing routes + 3 new routes)

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A B

CD


Addition



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A B

CD

E


Addition



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A B

CD

EF

Direct Network Disadvantages

� As you can see the number of routes needed

to cover all the cities in Direct Network

increases very quickly

� In this network, if there are n cities, there will � In this network, if there are n cities, there will

be ((n * (n-1)) / 2) routes

� This will get very hard to manage very quickly

� This will also be very expensive for the airline

as it will need a lot of aircrafts and personnel

to cover this

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Hub & Spoke Network

� A hub is an airport that an airline uses as a

transfer point to get passengers to their

intended destination

� Spokes are airports that usually do not have � Spokes are airports that usually do not have

major traffic for the airline

� A hub & spoke network is one where traffic

from spoke cities are routed to their intended

destination via the hubs

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Hub & Spoke Network

� It is optimally used under the following

circumstances

� Distance between two cities is large

� Demand between two cities is low� Demand between two cities is low

� Total number of cities served by the airline is large

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Hub & Spoke Network

Advantages

� Schedule frequency (number of flights per day) is high� By creating routes through hubs, there can be � By creating routes through hubs, there can be

more flights scheduled for a route giving more options to passengers

� Due to the nature of how hub & spoke networks work, addition of a new city does not need too many routes for complete coverage

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Hub & Spoke Network – Route

Addition

� When you start off with hub & spoke

network, it will grow as demonstrated below

� If you fly only between 2 cities, you will need � If you fly only between 2 cities, you will need

only 1 route

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A B


Addition

� If you fly between 3 cities, you will need 2

routes (1 existing route + 1 new route)

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A

CB


Addition


routes (2 existing routes + 1 new route)

C

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A

CB

D


Addition


routes (3 existing routes + 1 new route)CB

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A

CB

D

E


Addition


routes (4 existing routes + 1 new route)CB

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A

CB

D

E F

Hub & Spoke Network

Advantages

� As you can see, the number of routes

required with hub & spoke network are

greatly reducedgreatly reduced

� In this network, if there are n cities, there will

be (n-1) routes

� This reduces costs for the airline as the

number of aircrafts and personnel required

are reduced

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Hub & Spoke Network

Disadvantages

� Schedule reliability (aka on time

performance) is low

� This type of a network suffers from � This type of a network suffers from

interdependencies on other flights

� This leads to the “domino effect” where one delay

can multiply into other delays elsewhere in the

network

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Hub & Spoke Network

Disadvantages

� Aircraft utilization is low

� Flights from one airport usually have to feed into

downstream flights so schedules have to match so downstream flights so schedules have to match so

there are no missed connections

� This restriction leads to lower flight utilization

� Additional delays arise when the traffic at the

hub city has exceeded its limits

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Improving on Hub & Spoke

Network

� One way to deal with increased traffic is to try to reduce traffic by increasing the fare

� Another way is to start diagnosing the traffic patterns to see which spoke cities do the patterns to see which spoke cities do the travelers go most to and from which spoke city

� It may be wise to create a direct route between these cities to ease the traffic at the hub city

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Network

� Lets take the example of our 6 city network

described earlierCB

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A

CB

D

E F


Network

� As you can see, there is a significant amount

of traffic going from E to B via A. In this case,

it makes sense to create a separate route it makes sense to create a separate route

from E to B. This will ease the traffic on A.

� This does not mean that we close the existing

routes of E to A and B to A. They are still

required to go to A and other cities connected

from A.

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Network

� Here, a direct route has been added from E to

B CB

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A

D

E F


Network� Another way of dealing with congestion in

the hub may be to create another hub

� This depends on a number of things

� Is the infrastructure at the potential new hub � Is the infrastructure at the potential new hub

capable of handling the additional traffic?

� Are there enough spoke cities whose traffic can be

diverted to this new hub without rendering the

existing hub unproductive?

� How will the two hubs be connected?

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Summary - Network Comparison

Points Direct Network Hub & Spoke Network

Distance between two

cities

Small Large

Demand between two

cities

High Low

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Number of cities served Small Large

Schedule frequency

(number of flights per

day)

Low High

Schedule reliability (on

time performance)

High Low

Cost to airlines as routes

grow

High Low

Aircraft Utilization High Low

References

� Handbook of Airline Economics, Second Edition, Executive Editor - Darryl Jenkins, published by Aviation Week, ISBN 007-982394-7, http://www.amazon.com/Handbook-Airline-982394-7, http://www.amazon.com/Handbook-Airline-Economics-Darryl-Jenkins/dp/0079823947/ref=sr_1_1?s=books&ie=UTF8&qid=1325406665&sr=1-1

� http://en.wikipedia.org/wiki/Point-to-point_transit

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References

� Airline Network Design by Phillip J. Lederer &

Ramakrishnan S. Nambimadom,

http://www.simon.rochester.edu/fac/lederer/

SimonFacultyWeb/LedererPapers/AirlineNetSimonFacultyWeb/LedererPapers/AirlineNet

workDesign.pdf

� http://en.wikipedia.org/wiki/Spoke-

hub_distribution_paradigm

� http://en.wikipedia.org/wiki/Airline_hub

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introduction to airline networks

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