FL370
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How Does An Airline Establish A HUB

Wed Jan 17, 2007 1:34 am

when an airline is started up, they have to have a headquaters in most cases the HUB is near the headquaters. for example UA has a hub in SFO, LAX, DEN, ORD, IAD. how do they get all those gates? and if the airport denies them, what would they do next? for UA in ORD and DEN, they have an entire terminal to themselves, wouldn''t that anger other airlines trying to get gates at that airport?

what are some key steps in finding an airport and than clasify that aiport as their hub?




fl370
 
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Stitch
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 1:38 am

I imagine hubs build over time, as more and more traffic is concentrated to that airport and the airline expands it's operations to accomodate them. That being said, hubs are not accidental. Airlines deliberately choose "focus cities" where they concentrate their connecting operations in and these eventually can grow into hubs.

The airport authorities most likely are in favor of hubs, because it is a guaranteed and stable source of income for them. As such, the airports are more willing to dedicate large numbers of gates - and even entire concourses and terminals - to airlines wishing to hub there.
 
SkyexRamper
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 2:14 am

Find a bunch of gates, airplanes and people then create a bunch of flights that are routed through that airport.
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PanAm747
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 2:16 am

For the "legacy" airlines, the modern hub structure came about where there were already significant routes.

http://www.airchive.com

If you look here and see some of the older route maps, you will see for example that United has always had significant operations in California (especially the central valley), Denver, and Chicago. American, Continental, and Braniff all were big in Texas, and Northwest in the former "Northwest Territories" of the United States, meaning west of the Appalachians, north of the Ohio River, and east of the Mississippi.

The hub system didn't really start, however, until after the airline deregulation act of 1978. Braniff is considered to have started it by way of concentrating all of their services at the new DFW airport. Other airlines followed suit, and very quickly everybody signed long-term agreements at specific airports in which to funnel all their traffic.

JetBlue is an airline that took over domestic services from PA and TW when they scaled back from JFK - they determined there was a market, and went with it.

This may be a bit of an oversimplification on my part - each airline has its own unique story - but it's a start. Best of luck in your research!!
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steeler83
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 3:02 am

Quoting PanAm747 (Reply 3):
http://www.airchive.com

It says "forbidden access???"
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dtwclipper
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 3:11 am

Quoting PanAm747 (Reply 3):
If you look here and see some of the older route maps, you will see for example that United has always had significant operations in California (especially the central valley), Denver, and Chicago. American, Continental, and Braniff all were big in Texas, and Northwest in the former "Northwest Territories" of the United States, meaning west of the Appalachians, north of the Ohio River, and east of the Mississippi.

CO's Texas operation is the result of them being taken over by Texas International (Texas Air Corporation). Prior to that, CO was HQ'd in LA and Denver.

Quoting PanAm747 (Reply 3):
JetBlue is an airline that took over domestic services from PA and TW

This is a bit of a stretch. Neither PA or TW really had a domestic hub at JFK. Both airlines fed their respective international operations, and really did not serve the domestic market out of JFK save for their NY-CA flights.
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PanAm747
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 4:53 am

Quote:
This is a bit of a stretch. Neither PA or TW really had a domestic hub at JFK. Both airlines fed their respective international operations, and really did not serve the domestic market out of JFK save for their NY-CA flights.

True, but it was the main way to get a non-stop or one-stop to New York. I should have said, "JetBlue determined that in the late 1990's/early 2000's a market DEVELOPED for O&D travel to JFK".
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AADC10
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 5:32 am

According to an old UA employee handbook, UA's largest hubs were established by default under the regulation era, including ORD (MDW), DEN and SFO. The old mail carrier routes that they had established passed through those cities. LAX (BUR) was only labeled a hub in the 1990s but has been a key destination for UA since the 1930s. Only at IAD did UA deliberately set out to establish a hub. Even then UA had some history there, after the acquisition of Washington D.C. based Capital Airlines in 1961.

IAD was a real backwater airport until UA started building their hub. Zone restrictions forced transcons to use the the remote IAD but most shorter O&D flights favored DCA.

Quoting FL370 (Thread starter):
how do they get all those gates?

Airports are financed by airline and passenger fees and leases. Every time an airport or major terminal addition is built, they are constructed with prospective tenants in mind. At every one of UA's hubs, they were a major carrier in that city before the airport or major terminal addition was built. Even at IAD, "temporary" Terminal C/D was built in part to accommodate UA's buildup there. The same is true of most other hubs. Only a few have been created after deregulation and they tend to be the smallest hubs.
 
isitsafenow
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 5:43 am

To establish a hub, I would say you need...
1. a market(pax)
2. geographic local
3. parallel runways
4. a bunch of unused gates or cut a deal with the city to add gates
safe
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airzim
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 6:10 am

Quoting AADC10 (Reply 7):
IAD was a real backwater airport until UA started building their hub. Zone restrictions forced transcons to use the the remote IAD but most shorter O&D flights favored DCA.

True but New York Air did have a hub at Dulles prior to United establishing one there. If memory serves, United and Continental had an agreement that Continental would pull New York Air out of Dulles, while at the same time United scaled back their Cleveland hub. Resulting in a swap since UA needed an East Coast hub, and CO was looking for a Midwest one. Not sure if it's true though.

Interestingly enough, Southwest doesn't have any 'hubs' in the traditional sense. They do have large focus cities, where many point-to-point markets converge. And while they may act as a hub, it certainly isn't called one.

I still beg to differ about JFK being a hub for jetBlue. How many pax really connect through JFK on B6?
 
Viscount724
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 8:27 am

Quoting Steeler83 (Reply 4):
Quoting PanAm747 (Reply 3):
http://www.airchive.com

It says "forbidden access???"

Same problem here. I hope it's a temporary glitch as airchive.com is an excellent site if you're interested in airline trivia, old timetables, brochures, advertising etc. I just sent an e-mail to the person who maintains the site as have communicated with him a few times in the past when I have occasionally spotted errors etc. He has always responded promptly.
 
flyibaby
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 8:35 am

Quoting Airzim (Reply 9):
I still beg to differ about JFK being a hub for jetBlue. How many pax really connect through JFK on B6?

It frankly doesn't matter how many passengers connect, in fact airlines actually want around 65-70% of the passengers to be O&D as it is more profitable. Fact is, that passengers are able to connect to other flights thru JFK thus making use of the hub/spoke system. Do you think all the passengers from BUF, ROC, BVT all want to go to JFK? Chances are no...alot probably are headed down to FLL.
 
JRadier
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 8:57 am

Quoting Isitsafenow (Reply 8):
To establish a hub, I would say you need...
1. a market(pax)

Not really, look at KL/AMS but even more so EK/DXB and SQ/SIN who are relying on transfer passengers.
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gunsontheroof
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 9:05 am

Quoting JRadier (Reply 12):

Not really, look at KL/AMS but even more so EK/DXB and SQ/SIN who are relying on transfer passengers.

You're saying that AMS, DXB and SIN aren't lucrative markets for airlines? I'd disagree...Of course they'd have much less service without hub ops, but that's true of any hub in the world.
 
JRadier
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 9:11 am

Quoting Gunsontheroof (Reply 13):

You're saying that AMS, DXB and SIN aren't lucrative markets for airlines? I'd disagree...Of course they'd have much less service without hub ops, but that's true of any hub in the world.

Not especially, no. Without hubs there, there would be a lot less traffic. For example, a recent North America bound KLM flight I was on. 10 people booked in business class, 228 in economy. Of those people only 1/19 got on in AMS, the rest was all connecting traffic.
For once you have tasted flight you will walk the earth with your eyes turned skywards, for there you have been and ther
 
steeler83
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 9:14 am

Quoting Isitsafenow (Reply 8):
4. a bunch of unused gates or cut a deal with the city to add gates

Or whoever is in charge of that given airport. It's not always the cities themselves that run airports. But I think you know that. I didn't know that before joining here though  Smile

Quoting Flyibaby (Reply 11):
Do you think all the passengers from BUF, ROC, BVT all want to go to JFK? Chances are no...alot probably are headed down to FLL.

And how about if they want to connect out west like travel to LAS, BUR, OAK... Although I believe WN could offer just as good a connection opportunity through LAS, MDW, BWI or other airports of the type... I know that WN serves Buffalo, not sure about the other markets though...
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2travel2know
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 9:55 am

Quoting Isitsafenow (Reply 8):
To establish a hub, I would say you need...
1. a market(pax)
2. geographic local
3. parallel runways
4. a bunch of unused gates or cut a deal with the city to add gates
safe

PTY is a hub, but PTY O/D pax in most of their routes are very low. So depending on #2 and adding "progressive airline management" one doesn't necesarily needs lots of pax.
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jcavinato
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 11:00 am

In the mid-70s I was teaching transportation economics and management at the University of Georgia. I invited some Delta execs to come speak to my classes and student club. Their presentation was about how Delta has a hub in Atlanta. Passengers can go from Dallas to New York through their hub in Atlanta. They talked about how they marketed end-to-end point markets in local newspapers and judiciously scheduled inbound and outbound flights at Atlanta to make it all work.

This was before the 1978 first steps into deregulation, but they had it figured out ahead of many other carriers.

In the back of my mind I always thought their use of the term hub became the industry wide term later on.
 
planespotting
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 11:12 am

You just have to remember that airlines and the current system of airlines didn't start up just over night...there was no "airline-big-bang" where one day there were no airlines and no hubs and then the next there were airlines and hubs, which seems to be the way you're interpreting it.
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jcavinato
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RE: How Does An Airline Establish A HUB

Wed Jan 17, 2007 11:28 am

Planespotting, you're right. It was an evolution and incremental moves. In the mid and late 70s Eastern had what everyone today would call a hub in Atlanta as well. I'm not sure who copied whom, but in today's world they would be called hubs.

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