In the early days of deregulation, the airlines that were not able to create strong hubs were the ones that disappeared. The US is now over hubbed, a result of having too many airlines. There is probably room for only two legacy carriers, providing international flights, first class, lounges, hub and spoke "business flights" and service to smaller towns. The two airlines could operate out of six to eight hubs nationally.
Of course, the LCCs use hubs too, as has been pointed out. Even WN
routes passengers through a handful of its busiest airports. For most airlines, hub and spoke is a necessity. Of the airlines the serve more than a small region of the country, which ones do not have hubs?
The primary reason for hubs is business travel. It would be more efficient to have only one or two planes per day fly between city pairs, the larger the pairs getting larger planes. That would have the lowest cost. However, business travelers demand convenient flights, so airlines have to offer several flights per day between destinations and particularly to serve smaller cities, hubs are necessary to have multiple flights per day between locations that might not have enough traffic to fill even one plane.
Additionally, hub operations can be made large enough to consume most of an airport, creating a so called "fortress" hub, where the airline can dictate fares. US survived for all these years, despite being the most inefficient airline in the country with only a handful of widebody jets because it had a fortress hub at PHL
and was able to stick anyone who wanted to fly there. It also had space at slot restricted airports, notably LGA
, which was another reason.
The early days of commercial aviation faced a similar problem of a chaotic systems with too many airlines. To resolve this, the CAB illegally handed out mail contracts to selected airlines, strengthening a few airlines and killing off the rest. The airlines need to be allowed to consolidate or liquidate. There is reluctance to do this as hundreds of thousands will loose their jobs, flights will decrease and fares will rise.