Airline network types: Strategic choices shaping aviation’s future

Co-founder and Principal of Air52 Aviation Consultants, Koen Karsbergen brings over two decades of experience in airline management and strategy to his columns.     

Through Air52, Koen assists airlines, airports and industry stakeholders with practical solutions for complex challenges, drawing on his extensive background in feasibility studies, fleet and network planning, and airline startups. He also contributes to IATA training courses and serves as faculty for Aviation MBA programs.    

The views and opinions expressed in this column are solely those of the author and do not necessarily reflect the official policy or position of AeroTime.   

Picture yourself as an airline CEO facing a crucial decision: your airline is planning to expand operations across Asia. Should you build a powerful hub operation, focusing traffic through a major airport? Or would a network focusing on point-to-point connections better serve your markets? This choice – determining your airline’s network type – may fundamentally shape the future fortunes of your carrier. 

Let’s explore the key network types, their strategic implications, and the critical factors to their success. 

Evolution of airline networks 

In aviation’s early days, technological limitations, aircraft range and size forced airlines into point-to-point and line operations. However, as aircraft capabilities evolved and deregulation took hold, carriers developed more sophisticated network strategies. The U.S. Airline Deregulation Act of 1978 sparked a revolution in network thinking, leading to the emergence of hub-and-spoke as the dominant model for most legacy carriers. 

Understanding network types 

In aviation, we identify three distinct network types: the line network, the grid network and the hub-and-spoke network. 

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Line Network: Connecting cities in a line, with most city pairings served by at least one stop. Despite the name, the line network may actually look like a circle, triangle or any other geometrical shape. Early Pan Am routes across the Pacific exemplified this approach, though this network type is rarely the base of modern passenger networks. 

Hub-and-Spoke Network: Creating city pairings by connecting the cities (the spokes) via a centralized airport (the hub), akin to the hub and spokes of a wheel. These networks provide direct flights between the hub and the spokes and connect spokes to each other with a connection in the hub. Examples of hub-and-spoke networks can be found across the globe, such as Emirates’ global network connecting through Dubai and Lufthansa’s dual-hub network using Frankfurt and Munich, facilitating efficient connections. 

Grid Network: Connecting cities with direct flights. Despite the name, the network does not necessarily look like a grid, with each city connected to multiple other cities. On a map, a grid network may look very similar, even identical, to a hub-and-spoke network. However, in a grid network, connections are not prioritized and may not be offered at all. In this case, the centralized airport is not referred to as a hub, but rather as a focus city.  

Southwest Airlines demonstrates this model effectively across its U.S. network. In Europe, Ryanair, the continent’s largest (low-cost) carrier, employs a point-to-point model, focusing on direct flights between city pairings without relying on connecting traffic. 

As is so often the case in aviation, combinations may offer the best solution. Hybrid airline networks are those which combine two or even all three of the above network types. And even though many airlines have a hybrid network in the purest sense of the word – for example, combining a line network as part of a hub-and-spoke network – the use of hybrid network is usually reserved for airlines where each of the network types make up a significant share of their operations.  

In other cases, we usually refer to the airlines’ most dominant network. As an example, British Airways has a large hub-and-spoke network using London Heathrow as its hub, but also grid network operation from Gatwick, focusing mostly on point-to-point leisure routes. 

The power of hub-and-spoke networks 

The mathematics of hub-and-spoke networks reveal their powerful connectivity advantages. Consider this simple example: by operating just four routes from its hub, an airline can serve four city pairings with direct flights and another six city pairings with a connection, so 10 city pairings in total. 

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This ‘network effect’ multiplies exponentially as the hub grows. Flying to 20 destinations from the hub allows a hub-and-spoke airline to offer up to 210 different city pairings! 

There is one caveat, however. To create these 210 city pairings, the airline needs to ensure a schedule which allows connectivity between all of the different routes. This is why airlines with a hub-and-spoke network operate schedules with ‘banks’ or ‘waves’. This ‘bank’ / ‘wave’ system coordinates flight arrivals and departures to optimize connections.  

During a wave at a typical hub, arriving flights are scheduled to land within a tight window (often 15-30 minutes), followed by sufficient ground time for passengers and their bags to connect to their next flight. This ground time varies by hub and type of connection – typically 30-45 minutes for domestic connections and longer for international transfers due to immigration requirements. Departures are then similarly grouped to maximize onward connection options.  

The number and size of banks varies significantly by hub. Large hubs might see more than seven daily banks, while smaller hubs might have just one or two daily banks.  

Hub-and-spoke in action: the Emirates example 

Besides offering an exponential growth in city pairings, connectivity also means expanding options by combining passenger flows. Have you ever wondered why Emirates is able to operate multiple daily A380 flights to relatively small cities? Is there such a high demand to and from Dubai? No, it is because Emirates not only takes passengers to Dubai but also offers connections to many other destinations via their Dubai hub. Combining all these passengers, this route now becomes economically viable, and what’s more, it allows Emirates to offer multiple daily flights with a large aircraft.  

This gives Emirates two distinct advantages: a larger aircraft usually means lower unit cost and offering more frequencies makes a more attractive product to passengers. 

The hub-and-spoke challenge 

The advantages of hub-and-spoke networks are clear: they allow airlines to serve more destinations at higher frequencies and with larger aircraft, enhancing the product for the passenger and lowering the unit cost. However, this network model also has several drawbacks: 

– Operational complexity 

– Peak period infrastructure and ground staff requirements 

– Limited scheduling flexibility, resulting in lower aircraft utilization 

– Complex baggage handling requirements 

– Lost connections in case of delays 

All these drawbacks result in increased costs for the airline. Mitigating these higher costs and capitalizing on combining passenger flows are therefore essential for airlines in their quest for profitability. 

Hub-and-spoke and its impact on passenger experience 

From the passenger’s perspective, we can identify many advantages and disadvantages of a hub-and-spoke network: 

Advantages: 

– Access to more destinations and city pairs 

– Generally lower fares than direct flights 

– Higher frequency options via different connecting paths 

– Better service to smaller communities 

– Often better Loyalty Program earning opportunities 

– More upgrade opportunities through multiple flight segments 

– Greater recovery options during disruptions 

– Access to better ground services at major hubs 

Disadvantages: 

– Longer total journey times 

– Connection stress and complexity 

– Risk of missed connections 

– Baggage transfer concerns 

– More complex rebooking during disruptions 

Many passengers are enticed to book connecting flights for their journey, indicating that the advantages of this system, especially the lower cost of tickets, far outweigh the disadvantages.  

Grid networks: the direct service alternative 

Grid networks, also known as point-to-point networks, focus on direct services between cities. When it comes to advantages and disadvantages, these are pretty much the exact opposite of the hub-and-spoke model, both for airlines and passengers. 

This system offers a shorter journey time with less stress but usually comes at the expense of higher prices for passengers. For the airlines, it reduces planning and operational complexity, but the advantage of combining passenger flows is lost. 

Therefore, the grid model thrives when there is strong demand between two cities. While most legacy airlines moved towards a hub-and-spoke model, Southwest Airlines showed how the advantages of the grid model could be exploited efficiently, using the scheduling freedom and limited complexity to lower the cost of operations far below those of the competitors. This was the birth of the low-cost carriers as we know them today. 

The future of airline networks 

The choice of network type remains one of aviation’s most crucial strategic decisions. Success requires careful analysis of market opportunities, operational constraints and competitive dynamics. The ideal network is dependent on the market and the airline, but one thing is sure, flexibility and adaptation to changing market conditions will be key to sustainable growth. 

For airlines, the future likely lies in sophisticated hybrid models that combine the efficiency of grid networks operations with the market coverage of hub-and-spoke systems, all enhanced by new partnership and technology capabilities such as virtual interlining. 

So, next time you are looking for a flight, you’ll have a better understanding of why there are so many different options to get from A to B, each with their own advantages and disadvantages, both for you and for the airline. The post Airline network types: Strategic choices shaping aviation’s future appeared first on AeroTime.

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