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Asia's Future Travel Pattern: Hub Or Ptp?  
User currently offlineCruising From Canada, joined Jan 2001, 258 posts, RR: 0
Posted (12 years 6 months 4 weeks 5 hours ago) and read 1449 times:

Place your bets on the future of flying
- How will people be flying to and from Asia in future? A lot rides on the answer

The Economist (UK) 03/28/02



The fate of Airbus and Boeing, the world's two biggest aircraft makers, may be decided in the Asia-Pacific region. Why? Because, for Boeing to succeed, Pacific air-traffic patterns have to start following Atlantic trends. For Airbus to thrive, Asia has to stay different.


The difference between Asia and the rest of the world goes to the heart of one of the great schisms in the industry: will airlines in future bring passengers to their final destinations directly, by flying "point-to-point", or indirectly, by flying them first to a hub and then out to the spoke airport? The outcome is crucial for both the airlines and the aircraft makers. Point-to-point flying requires long-range but relatively small planes, and Boeing is concentrating on building these. The hub model requires gigantic "super jumbos", and Airbus is largely staking its future on these.


In the United States, thanks in large part to liberalisation, the hub model has been losing out to non-stop connections over the past two decades. In the 1980s, passengers flying from, say, Berlin to Washington, DC, had to switch planes at least once. These days they can fly direct. So whereas most flights across the Atlantic in the 1980s were in Boeing 747 jumbos, nowadays most are in smaller planes.


By contrast, air traffic to, from, and within Asiaa market that both Airbus and Boeing expect to triple within 20 years, overtaking North America as the world's largestis still centred on hubs. Some 80% of flights from America to Asia stop in Tokyo, for instance, even though two out of three passengers on these flights are destined for other Asian cities. Flights within Asia also tend to rely on hubs, such as Hong Kong and Singapore.


There are good reasons for this, not least geography. For many years, Japan was the only part of Asia that an aircraft could reach in a non-stop flight from the American west coast. As the range of aircraft grew, it became possible to fly non-stop to places such as Seoul and Taipei. But some big airports, notably Singapore, remain out of reach. Moreover, population centres in Asia are more concentrated than those in Europe and North America.


Airbus has concluded from all this that Asia will retain the hub model, and it envisions a shortage of landing slots at big airports in the region. This is why Airbus is betting heavily on the A380 super jumbo, a 555-seat double-decker, 97 of which have already been ordered. Adam Brown, an Airbus director, thinks that eight of the top ten routes to be operated by such huge aircraft in 2019 will be in Asia, and that Asian airlines will take over 40% of the world's super jumbos.


Singapore Airlines has already ordered several A380s and will be the first to operate one, in 2006. Stuck in a city-state whose fate is tied to its hub status, the carrier is praying that non-stop flights will not lead to Singapore being passed by. Although travellers will seek greater convenience by using point-to-point services, claims Michael Tan, a director, this will not in itself threaten hub operations.


Hong Kong's incumbent carrier, Cathay Pacific, is more honest and more cautious. Says Tony Tyler, in charge of corporate development: "We both [Singapore and Cathay] have to hope that Airbus has it more right than Boeing, so that we can continue to hub traffic, and it won't all go on direct flights like Vancouver/Bangkok or San Francisco/Kuala Lumpur." But those hopes might yet be dashed, so Cathay has delayed ordering the A380, opting instead for smaller long-range aircraft to connect to more spoke cities.


Most other Asian airlines, meanwhile, and certainly those not based in obvious hubs, are taking for granted growth in point-to-point flying. China Southern, which is about to be restructured into one of China's three dominant carriers, recently started a service from Guangzhou to Los Angeles, and is considering flights to Las Vegas as well. Last year, other airlines linked Taipei to San Jose, and Beijing to Chicago.


Two other developments are helping point-to-point. One is liberalisation. America, for instance, has in recent years signed open-skies agreements with New Zealand, Malaysia, Brunei, South Korea, Taiwan and Singapore. Several of these destinations are currently out of direct reach, but not for long, thanks to advances in aircraft technology. The greatest growth market is in non-stop flights between new city pairs in Asia and America, says Jim Eckes of Indoswiss, an aviation consultancy. If he's right, that spells trouble for super jumbos, and for Airbus.



2 replies: All unread, jump to last
 
User currently offlineCruising From Canada, joined Jan 2001, 258 posts, RR: 0
Reply 1, posted (12 years 6 months 4 weeks 5 hours ago) and read 1435 times:

I just saw Travel man already put this article. Sorry guys..

User currently offlineRogueTrader From , joined Dec 1969, posts, RR:
Reply 2, posted (12 years 6 months 4 weeks 5 hours ago) and read 1439 times:

Outstanding unbiased review of the situation by the Economist. All the A v. B wars that go on shouldn't spend all their time talking about the aircraft performance stuff, they should talk about the subject in this article: namely hub and spoke v. point to point.

Ask anyone on the street, if all things including price are equal:

"Do you want to fly through a hub or fly point to point"

And of course the answer will be point to point. The airlines and manufacturers who get closer to offering a perfect version of this will be more successful than Hub and Spoke diehards.

I think the history of commercial aviation shows that eventually the rest of the world will follow the US lead. I think this will happen again: point to point will increase in Asia. The question is: to what degree and does this automatically hurt the hub and spokes?

kind regards,

RogueTrader



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