TABLE OF CONTENTS To begin with, what effect does hubbing have on airline operating costs? Compared with direct flights, hubbing involves additional passenger handling, places greater peak-load pressure on the hub airport, and may have the effect of reducing the average sector distance flown. Passengers routed via a hub are involved in two boardings and disembarkations; and their baggage has to be transferred from one aircraft to another. The concentration of flight activity means that this has to be accomplished within a short interval of time which in turn means that extra staff and more sophisticated handling equipment are needed to cope with sharp surges in the flow of traffic. To a certain extent some of these costs are a burden, not just on the airline, but on the airport authority as well. But if hubbing reduces sector lengths, then the cost penalties from this fall on the airline alone, given that such a high proportion of its direct operating cost is incurred in take-off, landing, climb and descent. All these points are prima facie indications of a positive relationship between hubbing and unit cost but that is far too simplistic a view.
One of the main determinants of unit cost is route traffic density. In this context density can be measured as the ratio of traffic to network size, for example passenger-miles divided by unduplicated route mileage, or passenger-miles divided by the number of cities served. It is well known that there are some significant economies in...
