TABLE OF CONTENTS The success of a hub and spokes system depends crucially on the airline s ability to control its traffic flows (and revenue yields) via the connecting bank of flights at the hub. Quite simply, hubbing will not work effectively without a major element of concentration.
The problem with concentration at hubs is that it tends to create a number of local monopolies, conferring upon the hub-based airline the ability to raise fares on routes to and from the hub itself. For passengers whose origin or destination is the hub city, there is often little competition. But the dominance of the hub-based carrier is often overstated, especially when comparisons of concentration are drawn in terms of enplanement data. The latter refers to the number of passengers boarding aircraft; and the hub-based carrier s share of total enplanements does of course include all connecting passengers. The dominant airline s share of total enplanements at its hub in many cases between 60 and 90 per cent (see Table 5.9) is often very much greater than its share of local originating/terminating traffic. Jensen (1990) cites the example of American Airlines at Raleigh Durham in 1988: American s share of total enplanements was 69 per cent, but when connecting passengers are removed from the comparison, its share of originating/terminating traffic was just 39 per cent. Shares of total enplanements can be very misleading as indicators of the intensity of competition. The hub-based airline s share can go up simply when it adds new services (or spokes) to its existing...
