Operations in hubs:
The concept of hub operations has been developed more with the passage of time. With advancement and development, a concept of multi-networks have been put into practice. One of the major benefits of a multi - network system is a productive mixture of decreased dependency, globalization of hub economies and free spacing because of the large number of hubs everywhere. In the case of any emergency, if an airline has to close its hub at one point, passengers have the option to use another hub without having any problem in reaching their desired destinations.
In addition to this, passengers also have the option to select routes and flights that match their plans because of multi-hubs. However, centralization has become a major constraint in the process and thus one way to reduce this is through decentralization. By serving all key routes on an hourly premise, long sitting time for exchanges and different components connected to conventional hubbings can be evaded. Travelers simply land at a certain time at the air terminal, continue to the door where their joining flight should leave from and hold up for the following accessible flight. Thusly, problems and confusions in the process can be lessened. Notwithstanding this, it will likewise help in making enhancements in timeliness alongside the adjustment for travellers (Redondi et al, 2012).
Experience of American Airlines and Southwest Airlines. Why did they move to continuous hubbing in the first place? Why is the practice being abandoned by American Airlines?
Movement from hubbing to de-hubbing:
Since after the deregulation of United States airline companies, the concept of the hub and spoke model has become a primary route model. Under this framework, a legacy airline moves traveller activity between spoke air terminals through one of its centre point airplane terminals so as to achieve economies of scales. Each of these carriers has a few centre point airplane terminals deliberately spotted in distinctive districts of the United States. Then again, the percentage of the legacy airlines have de-hubbed an air terminal by stopping their hub operations at that air terminal, which essentially resulted in decreased capacity. Example of the airline that was engaged in de-hubbing include American Airlines, who has recently de-hubbed its operations in Raleigh Durham International Airport, Nashville International Airport and Lambert-St International Airport.
In addition to this, there is an acute shortage on the researches on the topics related to de-hubbing, and thus the effects of de-hubbing are significantly unknown. However, a study has been done by Malighetti, Redoondi and Paleari in 2012 which revealed that the primary reason of companies doing de-hubbing include weak strategic focus of a company to focus on hub airports, low demand that in turn decrease the demand for scheduled flights (Cooper,1999).
Hubbing and de-hubbing at American Airlines:
American Airlines were following the concept of continuous hubbing for long. In the late 90s, the company was engaged in adding various hubs like it opened three major hubs for north south traffic. However, the company has moved from continuous hubbing to conventional hubs and spoke system because of making its operations smooth, enhancing its utilization of aircrafts and to reduce the cost associated with it. However, costs related to hub and spoke network is more than continuous hubbing but, the potential for an increase in revenue will balance the cost associated with it.
The chief financial officer at American Airlines explained that the concept of continuous hubbing is not feasible as it is failing to connect passengers as done with a traditional hubbing activity that in turn leave revenue of the company on the table. In continuous hubbing, ground time allowed is 45 minutes that is not very large as there should be at least one hour to take full advantage of connections. In the United States Aviation industry, de-hubbing has become a more common phenomena over the time period of the last two decades. Most of the airlines including American Airlines has been engaged in the activity of de-hubbing since 90s. Over the time of 20 years, the number of hub airports that have been closed increases significantly (Dennis, 2005).
De-hubbing occurs when an airline is partly or completely withdrawn from an airport. Major reasons behind de-hubbing might include bankruptcy and decline in traffic instantly. In addition to this, there are many airports that have failed to reach the desired traffic levels and thus encounters with severe financial issues and their consequences. In addition to this, three hubs have been dumped by American Airlines in the 90s as San Jose facilities has been given to Reno Air and to Raleigh Durham Airlines. In Feb 1999, the American Airlines acquired Reno Air and started its operations in 1999. However, the company did not continue its airline operations in San Jose. With the passage of time, American......................................
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