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KLM: No Hub & Spoke

Thu May 30, 2002 2:21 pm

KLM's management has said that it is looking towards a future that will bypass the mega-hubs and move toward point to point service. This is something I feel strongly about: as technology allows smaller jets to fly for an economical cost, we can gradually see a de-emphasis of the hub and spoke model.

As noted in the article, customers don't like flying through hubs, although it does say that they prefer more frequencies. The hub model is for the monopoly minded airline: it forces people to do what the don't want to do. I don't think the hub is ending soon, but I'm gratified to see a major airline that sanctions my anti-hub beliefs.

RE: KLM: No Hub & Spoke

Thu May 30, 2002 2:51 pm

And how is KLM supposed to do that please whent here's only Amsterdam as a major airport in Holland ?
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RE: KLM: No Hub & Spoke

Thu May 30, 2002 3:00 pm

I think you are not getting the point of the article. KLM is committed to a hub-and-spoke system at AMS to ensure service to their markets in Europe because there is no other way to serve them appropriately. However, they are able to reduce their need for a superjumbo on their longhaul route network by developing a more flexible routing system through their alliances and international gateways that allow a substantial portion of their traffic to be routed to non-hub structured international gateways rather than forcing traffic through a gateway hub-to-gateway hub airbridge structure using superjumbos.
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RE: KLM: No Hub & Spoke

Thu May 30, 2002 4:35 pm

I would be inclined to also agree that KLM has to draw a "strategy to survive". H&S will drive them straight to collapse.
Operating high-frequencies with smaller aircraft will in itself create lots of connecting opportunities without the extra costs it would normally imply.
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RE: KLM: No Hub & Spoke

Thu May 30, 2002 4:55 pm

IMO it is no about H&S or point to point but having aircraft to bypass a hub when demand is good enough to do so.

AMS-Duluth (Minnesota) will always be via a hub.

Although ...
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RE: KLM: No Hub & Spoke

Thu May 30, 2002 11:45 pm

Since AMS is the hub for KLM, they are in fact running a hub-and-spoke network, no matter how many small destinations they serve! KLM is the very *definition* of a hub-and-spoke carrier...  Smile *Everything* flies in and out of AMS in their network.

If and when KLM starts intercontinental and other routes that *don't* originate in AMS, then one could argue otherwise. But not before.
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RE: KLM: No Hub & Spoke

Fri May 31, 2002 2:20 am

Rogue, I don't think the hub has ended. I think Europe & North America have simply been saturated with hubs. The hub is now mature. Hub growth was massive in the 80's with some consolidation in the 90's. Now, any further hub development (generally) is unlikely to generate incrementally MORE traffic since there are enough hubs around.

So, the next market development/market share growth tool is the point-to-point starting with CRJ's as you mentioned. Sometime in the the next 10 years, this addl 'thin' market ptp concept will also probably mature, as the hub concept has now.

So I don't see a reduction in hubs, just not much more hub growth, but with focus instead on non-hub growth as you mentioned. I don't see a collapsing of hubs, maybe a little more rationalization.

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RE: KLM: No Hub & Spoke

Fri May 31, 2002 3:08 am

As to whether there will be a decline in the hub model, or whether it will stay the same while point to point grows - I think largely depends on the growth of air traffic. If air traffic grows substantially, I think the hubs will certainly decline, at least on one side of a transatlantic journey.

For example, BA currently serves 21 Gateways in North America, a few of which are not major hubs, like TPA, BWI, SAN. This means that a lot of people can get to any BA destination in Europe with only one connection. As more and more cities get service to Europe, more and more people will be able to reduce connections on a transatlantic journey. Furthermore, as these secondary cities in the US get service to London (in this example) the larger US cities will see increased service to secondary European cities: like Manchester.

Because the top 20 or so cities in the US are already hubs, and most of the major cities in Europe are hubs, to some extent I think the hub and spoke model will always be important. However, the web connecting individual cities is gradually increasing due to smaller aircraft performing economically.

RogueTrader's Timeline for transAtlantic movement away from hub and spoke:

1935 to 1975: all N. American traffic changes planes in New York, then changes planes again in London, Paris, Amsterdam, or Frankfurt if going on further

1975 to 2000: the rise of the hubs in N. America. During this period, JFK declines in importance and loses traffic (which it has) as other hub cities gain their own nonstop service to Europe

2000 to ???: The rise of non-hub N. American cities seeing service to Europe, some secondary European cities see service to N. America

??? to ???: secondary cities on both sides of the Atlantic see service to other secondary cities on the other side of the Atlantic

Yes, the hub and spoke will always be required for service from Duluth to Lille, but more and more medium to larger size cities will see a decrease in the central importance of hubs.

Southwest, Ryanair and the other non-hub carriers are the way of the future. People do not enjoy going through hubs.

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RE: KLM: No Hub & Spoke

Fri May 31, 2002 11:12 pm

Funny how Americans consider a direct flight from a non-hub US city to Europe a point-to-point flight, and not a hubflight...

The fact is that only a very small amount of trans atlantic traffic is point-to-point. The vast majority is hub-to-point, point-to-hub and hub-to-hub.
The hub is here to stay forever. I do agree with RogueTrader that as traffic grows over the years, the number of profitible routes will also grow, meaning more point-to-hub and hub-to point flights [and also more oddball point-to-point]. The hub will stay: growing traffic only means that even more routes can now be connected to the hub in a profitable way, thereby adding to the hubs popularity. Point-to-hub and hub-to-point traffic will grow as well.
Point to proove: Low Cost Carriers. Although they have massively attacked the hubbing airlines, they did not eat away the hub pax. Moreover, they created a new market.

Take a look at the regional jets that are now becoming so massively popular in the States. These aircraft are just made for long point-to-point routes. But the fact is that they are mainly used to increase the number of routes that connect at anyone hub. The regional jet even created its own type of hub: look at SLC, look at . . . Cincinatti [sorry forgot the code. Hold on, got it now, I think its CVG...].
I think the same will happen on the transatlantic runs, allbeit to a different scale offcourse. Look at BRU. Just how many transatlantic routes can it sustain without the hub function at BRU? Now look at AMS; how many transatlantic routes does it sustain as a hub? And argubly O&D traffic from BRU is at least at par to AMS!

KLM management saying that traffic is moving more towards point-to-point from H&S... Well never would have thought that KLM was considering all their AMS routes as point-to-point. And I always thought that KLM was the textbook example for an H&S orientated stupid of me!

The real choice that KLM face is not H&S. No, its indeed about frequencies. Are they better off doing double daily or even tripple daily to for instance LAX or JFK with 777/SC, or should they go for single daily on 380. Judging the linked article, it seems that KLM have made their mind up, and are going for frequencies.

BTW I would think that by the time the 380 hits the market, KLM and NW would have no problem in filling up several daylies of them between AMS and DTW/MSP...but nor KLM nor NW are known for being launching customers. They usually sit out and just wait and see how the market develops.

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RE: KLM: No Hub & Spoke

Fri May 31, 2002 11:26 pm

"...but nor KLM nor NW are known for being launching customers. They usually sit out and just wait and see how the market develops."

Wasn't NWA launch customer (together with KLM) for the B747-400? And what about the DC-10? Didn't Douglas have KLM as a launch customer? And maybe ther are more (SUD version of the B747-200?, combi's?).

As for DTW. If consider NWA's desire to serve more European destinations I don't think KLM will be able to fill those A380s.


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