TABLE OF CONTENTS The success of some airlines that do not operate hub and spokes networks but concentrate on supplying low-cost, low-fare, no frills service on direct point-to-point services has led some people to question the overall efficiency of hubs. In the United States the only major airline not operating a traditional hub and spokes network is Southwest Airlines, an airline which has made healthy profits in a period when other hub-based majors have sustained heavy losses. Southwest s unit costs are often as much as 50 to 70 per cent below those of many of the majors. Because it has less need to synchronize flights or bank them into complexes, Southwest achieves much higher utilization rates, of both aircraft and crews. Its strategy is to specialize in very high density short haul markets served at high frequencies. It operates an average of between six and seven daily departures on each of its 100-plus routes. With such high frequencies it attains some very high market shares: it is the dominant airline in over 90 of its top 100 city pair markets and enjoys a market share of 67 per cent or more in over 50 of these markets. In many markets competition from Southwest has persuaded airlines previously operating to withdraw, leaving Southwest with a number of monopolies or near monopolies (e.g. at Albuquerque in New Mexico, where seven of Southwest s twelve routes are monopolies). Less than 20 per cent of Southwest s traffic comes from passengers making transfer connections...
