Jean-Paul Rodrigue (2013), New York:
Routledge, 416 pages.
Authors: Dr. John Bowen and Dr. Jean-Paul Rodrigue
1. The Rise of Air Transportation
Air transportation was slow to take off after the
Wright Brothers breakthrough
at Kitty Hawk in 1903. More than ten years passed before first faltering
efforts to launch scheduled passenger services. On January 1, 1914,
the world’s first scheduled flight with a paying passenger hopped across
the bay separating Tampa and St. Petersburg, Florida for a fare that
eventually stabilized at $10 per person, round-trip (about $200 in 2006
dollars). By comparison, Low-Cost Carrier (LCC) Southwest Airlines could
carry a passenger from Tampa to Seattle and back, more than a hundred
times farther for only slightly more than $200 in 2007.
World War I, which began just months after that first flight from
Tampa, provided the first real spur to the development of commercial
aviation as air power began to be used and better aircraft were quickly
designed. The war left a legacy of thousands of unemployed pilots and
surplus aircraft along with an appreciation for the future significance
of this new technology. However, air transport still suffered from limitations
in terms of capacity and range. 1919 marked the first commercial international
air transport service between England and France. It was also the same
year that with the Paris Convention that each country controlled the
airspace over its territory. Governments played a crucial role in the
next phase of aviation history. In Europe, governments established new
passenger airlines while on the other side of the Atlantic, the American
government heavily subsidized airmail.
Airmail was one of the
earliest avenues via which air transportation became commercially
relevant because it helped to accelerate the velocity of the money supply
and helped to better tie together far-flung enterprises, facilitating
the emergence of continental and intercontinental enterprises. US airmail
also subsidized the emergence of the first major US passenger airlines.
By the eve of World War II, air travel was quite literally taking
off, borne aloft by important advances in technology. Particularly important
was the Douglas DC-3, the first airliner that could fly profitably without
government subsidies (air mail routes). The 21-seat DC-3 was a long-range
aircraft for its time, able to
fly across the US stopping
just three times. By 1941, 80% of all commercial aircraft in the US
were DC-3s. The DC-3 was a landplane; but on longer-haul,
intercontinental routes, flying boats remained common through World
War II. Flying boats, like the double-deck Boeing 314, were the largest
commercial aircraft until the building of the 747. They could fly very
long distances but their slow speeds undercut their profitability. And
the market for long-haul travel was very small, partly because of the
extraordinarily high cost. Many of the long-haul air services were to
colonies and dependencies. Only the elite or government officials was able to afford air travel.
War again encouraged the rapid growth of air transportation. Indeed,
it was only after World War II that air transportation became the dominant
mode of long-haul passenger travel in developed country markets. In
1956, more people traveled on intercity routes by air than by Pullman
car (sleeper) and coach class trains combined in the US. In 1958, airlines
carried more passengers than ocean liners across the Atlantic for the
first time. Even more momentous, in October 1958, the
Boeing 707 took its maiden
commercial flight. The 707 was not the first jetliner, but it was the
first successful one. The 707 and other early jets, especially the Douglas
DC-8, doubled the speed of air transportation
and radically increased the productivity of airlines
which enabled fares to fall. Just
a few years after the 707’s debut, jet service had been extended to
most major world markets.
Jet transportation facilitated the extension of the linkages between
people and places, which is supported by ample evidence. A classic example
concerns American major league baseball. Through the mid-1950s, all
major league teams were located in the Manufacturing Belt, situated
no more than an overnight rail journey apart from one another to permit
closely packed schedules. The speed and ultimately lower cost of air
transportation freed teams to move to the untapped markets of the Sunbelt
so that by the mid-1960s, half a dozen teams were strung out across
the South and West.
In the years since the beginning of the Jet Age, commercial aircraft
have advanced markedly in capacity and range. Just 12 years after the
debut of the 707, the 747
made its maiden flight. Not coincidentally, it too premiered on a transatlantic
route from New York City. The entry of dozens of 747s into the market
around the same time that the Arab Oil Embargo triggered a worldwide
recession led to a torrent of red ink for early Jumbo enthusiasts like
Pan Am; but the longer term effect was to push real airfares ever
downward, thereby democratizing aviation beyond the so-called "Jet
Set". The 747, particularly the longer-range 747-400 version introduced
in the late 1980s, has been nicknamed the “Pacific Airliner” because
of its singular significance in drawing Asia closer to the rest of the
world and because Asia-Pacific airlines have been
major 747 customers.
Since their introduction in the late 1950s, commercial jets have
not improved in terms of speed.
The fastest airliners in regular use today are about as fast as the
707. The Anglo-French
Concorde which cruised at twice the speed of sound was hamstrung
by very poor economics – it weighed half as much as a first-generation
747 but could carry only a quarter as many passengers and had a range
more than 3,000 kilometers shorter. Moreover, the Concorde was an early
target of the nascent environmental movement, and restrictions on overland
supersonic flights severely limited the market for the airliner. The
only carriers to regularly operate it were British Airways and Air France,
and although many cities had Concorde services in the first halcyon
years of its early use, by the time the supersonic transport (SST) was
finally grounded in 2003, only London, Paris, New York, and Washington
had scheduled year-round services.
Three major categories of passenger jet planes may be
2. Economic and Spatial Impacts
It is through increasingly long-haul nonstop services among
an ever wider set of city-pairs rather than through increased aircraft
speeds that air transportation continues to "shrink the world". After
World War II aircraft were just beginning to be capable of crossing
the Atlantic without stopping at intermediate places such as Newfoundland.
In the mid-1950s, the Israeli carrier El Al advertised its transatlantic
services with the slogan "No Goose, No Gander" to cleverly let travelers
know that its turboprop services had to stop at neither Goose Bay nor
Gander in Newfoundland to refuel. Today, commercial aircraft
are now capable of making trips of
up to 18 hours in duration. Such
ultra-long-range flights servicing the world's metropolises are both
a response and a driver for globalization.
The same capacity of air transportation to dramatically lower the
cost (friction) of distance has, of course, been instrumental in fostering
economic globalization, albeit in a highly uneven fashion. Manufacturers,
especially those producing high-value microelectronics, are heavily
reliant upon air transport to tie together spatially disaggregated operations.
Intel, the world’s foremost computer chip manufacturer is an example
of a firm that relies heavily on air transportation, both passenger
and cargo, to tie together its global production network. The firm’s Philippine operations, for instance, receive their
main inputs and export their output almost exclusively by air.
Relatively inexpensive air transport has also been crucial
to the growth of tourism. It is no coincidence, for instance,
that the five major Disney theme parks are all located near one of the
world’s thirty busiest airports: Disneyworld near Orlando International
Airport, Disneyland near Los Angeles International Airport, Euro Disney
near Paris-Charles de Gaulle, Tokyo Disneyland near Tokyo-Haneda, and
the newest park in Hong Kong which shares Lantau island with the most
Microelectronics and tourists comprise only two of the many kinds
of airborne traffic. Since the dawn of the Jet Age, air transport has
ascended to astonishing heights. It is overwhelmingly dominant in transcontinental
and intercontinental travel and is becoming more competitive for shorter
and shorter trips. In the US, for instance, air travel is the most important
mode for trips more than about 1,100 kilometers in one-way length. In developing countries, too, LCCs are proliferating, which is
bring air fares down and propelling air traffic higher.
Through the Jet Age, both passenger and cargo traffic
have grown rapidly. Both types of
traffic have outpaced the growth of
the broader global economy. By 2003, approximately 900,000 people
were airborne on scheduled flights somewhere in the world at any one
time; and worldwide, 1.6 billion passengers traveled by air transport
in the centenary of the Wright Brothers’ first flight, representing
the equivalent of 25% of the global population. In 2010, this
figures reached 2.4 billion passengers, underlining the enduring
growth of air travel. Yet the propensity to
fly is highly uneven. Alone, North America and Europe accounted for
70.4% of all passenger movements in 2000, but this share is
declining. At any given time, there are more then 5,000 planes in
the air over North America.
Air transportation’s share of world trade in goods is only 2%
measured by weight but more than 40% by value. For the international
operations, freight can account to 45% of the revenue of a regular airline.
Typically, air cargo relates to time sensitive, valuable or
perishable freight carried over long distances. This is particularly
suitable in supporting "just-in-time" production and distribution
strategies with low inventory levels. Air cargo has also a niche
market for emergency situations where the fast delivery of supplies
(e.g. medical, food) prevails over cost issues. The air freight
market is serviced by five types of operations:
- Short range aircraft. Bombardier’s CRJ series and
Embraer’s ERJs are examples of planes with relatively small
capacities (30-100 passengers) that travel over relatively short
distances. They are usually referred to as regional jets that
serve smaller markets and feed hub airports. They also provide
high frequency point to point services between large city pairs.
- Medium range
aircraft. The airbus A320, with a range of 3,700 km, and its
Boeing equivalent, the B-737, are designed to service
destinations within a continent. From New York, most of North
America can be reached. This range can be applied to the
European continent, South America, East Asia and Africa. This
type of aircraft is also used for high demand regional services
where low cost air carriers compete.
- Long range aircraft. There are a variety of aircraft capable of
crossing the oceans and linking together the continents. Early
variants such as the B-707 have evolved into planes offering
high capacity, such as the B-747 series, or long range
abilities, such as B-777 series or the A350 series which have ranges of
up to 17,400 km.
Efficient and affordable air freight has contributed to changes in diet
by making available new products or products in seasons during which
they would not be available, to changes in retailing and correspondingly
to changes in manufacturing. Examples abound, such as fresh produces
growth on the southern hemisphere available in the northern hemisphere
during winter, or merchandises purchased online and shipped promptly
by air transport or a computer manufacturer depending of the global
shipment of various components in the manufacturing and assembly processes.
The increased importance of time-based competition ensures that
air cargo augurs well for the future growth of air transportation.
3. The Geography of Airline Networks
Theoretically, air transport enjoys greater freedom of route choice
than most other modes. Yet while it is true that the mode is less restricted
than land transport to specific rights of way, it is nevertheless much
more constrained than what might be supposed. Early in the history of
aviation, physical obstacles such as the Rocky Mountains and the great
gap of the North Atlantic limited the articulation of air transport
networks. While those limitations have fallen, physical geography still
affects the geography of intercity air transportation. Aircraft seek,
for instance, to exploit (or avoid) upper atmospheric winds, in particular
the jet stream, to enhance speed and reduce fuel consumption.
Volcanic eruptions may also impede air travel by releasing ash in
the atmosphere, which can damage and even shot down turbofan
engines. Such occurrences are however rare and punctual, with the
exception of April 2010 when a
eruption in Iceland forced the closing down of airports in most
of Europe as well as several North Atlantic routes. This represented
the largest natural disruption of air travel in history.
Yet the limitations that structure air transportation are mainly
human creations. First, in the interest of air safety, air traffic
is channeled along specific corridors so that only a relatively small
portion of the sky is in use. Jetway 554, for example, which passes
from high over the Michigan-Indiana state line towards Jamestown, New
York via Southern Ontario, accommodates flights from many different
cities in the West and Midwest bound for the Northeast, with nonstop
city-pairs such as San Diego-Boston, Chicago-Albany, Phoenix-Providence,
and Los Angeles-Hartford.
Strategic and political factors have also influenced route
choice. For example, the flights of South African Airways were not allowed
to over-fly many African nations during the apartheid period, and Cubana
Airlines has been routinely prohibited from over-flying the US. Even
more significant was the opening up of
Siberian airspace to Western airlines after the Cold War. The new
freedom permitted more direct routes not only between cities like London
and Tokyo or New York and Hong Kong but also between transpacific city
pairs like Vancouver-Beijing. Few large areas of airspace forbidden to carriers on political grounds
remain. However, the intervention of the state in airline networks remains
pervasive. From its infancy, air transport was then seen as a public
service and as an industry that should be regulated and protected. In
many parts of the world, government intervention in the industry took
the form of state-owned airlines. As recently as the early 1970s, Air
Canada, Air France, British Airways, Japan Airlines, Qantas, and most
other flag carriers throughout the world were fully state-owned. In
the US, the government did not own any airlines but it did strongly
affect the industry’s development via regulation of fares, in-flight
service, routes, and mergers.
Beginning in the 1970s, the relationship between the airline industry
and the state changed, although the timing of liberalization (a term
which refers to both deregulation and privatization) and its extent
has varied among the world’s main
markets. Across the globe, dozens of airlines have been at least
partially privatized, and many airline markets have been deregulated.
In the United States, the Air Deregulation Act of 1978 opened the industry
to competition. The results, seen from the vantage point of more than
25 years later, have been dramatic. Once hallowed names, like TWA, Pan
Am, and Braniff sank into bankruptcy (though Pan Am has been reborn
as a much smaller carrier along the Atlantic coast) and many new players
emerged. Most lasted only a short time, but some have had a profound,
enduring effect on the industry and air transportation more generally.
Geographically, a key outcome of airline deregulation has been the emergence
of hub-and-spoke networks centered
on major airport where a single carrier is often dominant. Such networks
existed before deregulation to some degree, but the Civil Aeronautics
Board hampered the expansion of airlines and the rationalization of
networks. United Airlines, for instance, was allowed to add only one
city to its network between 1961 and 1978. Hub-and-spoke systems
rely on the usage of an intermediate airport hub. They can either
connect a domestic (or regional) air
system if the market is large enough (e.g. United States, China,
European Union) or international systems through
longitudinal (e.g. Dubai,
An important aspect of an intermediate hub concerns maintaining schedule integrity since the majority of passengers are using connecting
flights. Airports that are prone to delays due to congestion are not
effective hubs since they compromise the schedule integrity.
4. Deregulation and its Consequences
After deregulation, most of the surviving major carriers tended to
construct nationwide hub-and-spoke networks with several hubs to facilitate
travel between different regions of the country. The traffic feed through
hubs like Atlanta enables Delta and other carriers to offer
higher frequency service at higher load
factors which in turn lowers the per passenger-kilometer cost. The
advantages of large airlines were further deepened when nationwide hub-and-spoke
networks were coupled to computer reservations systems and frequent
flyer programs. Yet by the late 1990s, large carriers like Delta were
on the run. Low cost carriers, especially Southwest Airlines in
North American and Ryanair in Europe, cut into
the market share of the "legacy"
carriers. LCCs are distinguished by several
Dedicated cargo operators maintaining a fleet
or cargo-only aircrafts and offering regular scheduled services
between the airports they service. They also offer charter
operations to cater to specific needs.
Combination services where an airline company
will maintain a fleet of both specialized and passenger
aircrafts able to carry freight in their bellyhold. Most of the
cargo operations involve long haul services.
Passenger operators that will offer the freight
capacity in the bellyhold of their aircrafts. For these
operators, freight services are rather secondary and represent a
source of additional income. However, low cost airlines usually
do not offer air cargo services.
Air freight integrators commonly operating
hub and spoke freight
services that reconcile short and long haul flights. They
offer comprehensive services that are usually door-to-door and
can support the logistics requirements of their customers.
Specialized operators fulfilling niche services
that cater to specific cargo requirements (e.g. heavy loads)
that do not fit the capabilities of standard cargo aircrafts.
Although Southwest Airlines is commonly regarded as the pioneer LCC
and is the only LCC to rank among the world’s
20 largest airlines, the phenomenon
has now taken off in Europe and to a lesser extent in
other parts of the world. In general,
the propensity to travel is highly correlated with incomes, but the
LCCs are important in broadening the air transportation market beyond
the relatively small affluent population in countries like Indonesia.
Southwest Airlines is exceptional in that its network is purely domestic
(International flights are operationally more complex and would erode
the carrier’s enviable turnaround time.) Most large and medium-sized
airlines have at least some international routes. Nevertheless, about
90% of the air traffic generated by countries such as the United States,
Canada, Russia, Japan, Brazil and Australia is domestic. The United
States generates alone 70% of the global domestic air traffic.
Under threat by LCCs in shorter-haul markets, legacy carriers are
becoming more dependent on longer-haul international markets. International
markets, too, have been opened up by deregulation, though not to the
same degree as the US domestic market. The Chicago Convention of 1944
established the basic geopolitical guidelines of international air operations,
which became known as the air freedom rights.
First and second freedom rights are almost automatically exchanged among
countries. The US, which emerged from World War II with by far the strongest
airline industry in the world, had wanted third and fourth freedom rights
to be freely exchanged as well. Instead, these and the other rights
have been the subject of hundreds of carefully negotiated bilateral
air services agreements (ASAs). In an ASA, each side can specify which
airlines can serve which cities with what size equipment and at what
frequencies. ASAs often include provisions that also regulate fares
and the sharing of revenue among the airlines serving a particular international
Yet even in international markets, the extent and degree of state
intervention has diminished. An important trend in the past decade
has been the proliferation of Open Skies agreements. Open Skies agreements
remove most restrictions on the number of carriers and the routes that
they may fly between two countries. This is irrespective of the size
of the size of the respective air markets as long as national carriers
are granted equal rights. By the end of 2006, the US, for
instance, had such agreements with nearly 80 countries. Open Skies agreements can be viewed as a roundabout
way for the US to gain what it could not get at the 1944 Chicago Conference
– relatively unfettered access for American carriers to foreign markets.
Indeed, the US has pursued a beachhead strategy playing one country
in a region against another, putting pressure on Japan to liberalize
its markets for instance by inaugurating Open Skies agreements with
Singapore, Taiwan, South Korea and other Asian economies. Potentially
the most important Open Skies agreement would be between the US and
European Union, which began in 1992 with an Open Skies agreement
with the Netherlands, an important hub in the European air network. This
also incites the setting of alliance agreements between carriers. Moves in that direction have been stymied by US unwillingness
to relax restrictions on foreign ownership of American carriers, among
Nevertheless, many more airlines now operate internationally than
before the liberalization of the airline industry began in the 1970s.
The proliferation of international carriers has fostered the
fragmentation of intercontinental
and transcontinental markets. As a result, on intercontinental and
transcontinental routes, the former dominance of the 747 has been challenged
by longer-range, widebody twinjet (two-engine jetliners) like the Boeing
767, Boeing 777, and Airbus A330. The triumph of widebody twinjets is
most evident in the transatlantic market.
The transpacific market is more concentrated
among a smaller number of gateway cities, and the 747 is still dominant;
but there is a clear trend towards fragmentation and displacement of
the 747 by smaller aircraft, including ultra-long-range ones like the
An important aspect of international airline networks is the recent
formation of alliances. Alliances are
voluntary agreements to enhance the competitive positions of the partners,
particularly where the persistence of restrictive bilateral ASAs make
it difficult for an airline to expand on its own. Members benefit from
greater scale economies, a lowering of transaction costs, and a sharing
of risks, while remaining commercially independent. The first major
alliance was established in 1989 between KLM and Northwest Airlines.
Today, the largest alliance is the Star Alliance, which was initiated
in 1993 by Lufthansa and United Airlines. In 1996 British Airlines and
American Airlines formed the oneworld alliance. Members of airline
alliances cooperate on scheduling, frequent flyer programs, and
equipment maintenance, and schedule integration. Most importantly,
they permit carriers to tap markets that would otherwise be beyond
their reach. Indeed, each of the major alliances encompasses almost
every significant market across the globe, although each is dominated
by US and European carriers.
A final important aspect of airline networks is the emergence of
separate air cargo services. Traditionally, cargo was carried in the
bellyhold of passenger airplanes, and provided supplementary income
for airline companies. However, since passengers always had the priority
when a plane was overloaded, such air freight services tended to
be unreliable. Moreover, passenger aircraft are operated on routes
that make sense for passengers, but may not attract much cargo. Today,
about half of all air cargo is carried in dedicated freighters, aircraft
in which goods are carried both on the maindeck and in the bellyhold.
FedEx and UPS operate the largest freighter fleets in the world, operating
338 and 243 freighters respectively (by comparison, the largest passenger
airline fleet is that of American Airlines with nearly 700 aircraft).
Each deploys its aircraft worldwide. Yet many freighters are flown by
so-called combination carriers like Northwest that carry both passengers
and cargo. Northwest deploys its freighters primarily on transpacific
routes where too little bellyhold capacity is available to accommodate
the burgeoning trade between
the US and Asia. Interestingly, one of the primary freighter hubs
is Anchorage, a city which passenger aircraft on transpacific and transpolar
routes (between Europe and Asia) regularly overfly now; but because
freighters have shorter ranges than passenger aircraft and because freight
is less sensitive to intermediate refueling stops than passengers, many
freighters refuel in Alaska in order to maximize their payload. Still,
cargo operations are ripe with inefficiencies. About 70% of the transit
time for a payload carried by air is spent on the ground, mostly at
congested major airport terminals. This tends to mitigate the major
speed advantage air freight is known for.
Although the past century witnessed the dramatic growth of air transportation,
important challenges cloud its future. First, the airline industry may
not be financially healthy enough to pay for commercial advances
that have benefited to the continuing growth of air transportation in
the past. The development costs
of new jetliners, even after adjusting for inflation, are unprecedented,
partly because the latest generation of aircraft incorporate so many
interfacing systems (e.g. in-seat inflight entertainment consoles).
Meanwhile, the rise of the LCCs has put great pressure on the bottom
lines at legacy carriers, and overall the airline industry has
not been especially profitable.
The financial woes of the industry have implications for the future
of air transportation for it is the great carriers that have provided
the launch orders for new airliners in the past. Pan Am, for instance,
launched the 707 and 747; United launched the 767 and 777; and Air France
and Lufthansa provide the launch orders for most of Airbus' airliners.
By contrast, the LCCs’ focus on a handful of smaller, relatively short-haul
aircraft limits their capacity to serve as catalysts for technological
breakthroughs in aviation.
It should be quickly noted, however, that not all legacy carriers
are struggling. Singapore Airlines, in particular, has emerged as one
of the industry’s most consistently
profitable legacy carriers and one of the aircraft industry’s most
important customers. SIA is a launch
customer for the 555-seat Airbus A380 which ended the 747’s long
reign as the largest regularly used commercial aircraft when the "Superjumbo"
finally took paying passengers in 2007. Asian carriers more
generally are key players in the airline and aircraft industries today.
Boeing has bet that Asian markets will be fragmented like those over
the Pacific and has tailored its
newest offering, the 787 Dreamliner, for that purpose. Interestingly,
both the A380 and 787 are very long-range aircraft.
Both Boeing and Airbus promise that their newest jetliners will offer
unparalleled fuel efficiency. That is important because a second basic
threat to the future of the airline industry is the
price and availability
of fuel. In 2006, fuel accounted for about 30% of the operating costs
of US airlines, up
sharply from a few years earlier. For air transportation, finding
a substitute for oil-based fuels is much more difficult than in ground
transportation because the economic viability of flight depends on the
use of a concentrated form of explosive energy. There is no easy substitute
for fossil fuels in this regard. Still, the
fuel efficiency of air transport
has substantially improved in recent decades, as high as 70% between
1960 and 2000, and possible future reductions are expected to take place
at a rate of 1 to 2% per year.
A third threat is terrorism and security. The rise of the airline
industry was facilitated in part by the steady advance in the safety
and predictability of air travel from the early post-WW I days of "Flying
Coffins". Terrorism directed against civil aviation threatens the confidence
of ordinary travelers in addition to impose additional security constraints
taxing passengers in terms of delays. The September 11 attacks caused
a two-year dip in traffic levels. The attacks of that day were unprecedented
not only in their scale but also in their geography. Although American
carriers had been targeted before, no major terrorism incident against
the airline industry had occurred in the US previously. Instead, earlier
attacks against aircraft and airports and airlines had been concentrated
in Europe and the Middle East. Last, with the growth of air traffic,
airports are facing capacity pressures and congestion which in some
cases has resulted in changes in the
scheduling of flights. In 2003, the centenary of the Wright
Brothers’ first flight, the number air passengers worldwide had reached
a new high. The will to fly seems irrepressible, and aviation is now
inextricably entwined in the fabric of 21st century everyday life across
much of the world.
- Fleet simplicity. Legacy carriers operate diverse fleets
because they serve many kinds of routes, from long hauls to feeders.
LCCs emphasize on relatively short-haul routes. The minimal number
of aircraft types (Southwest and Ryanair only flies 737s, though several different
models) lowers costs.
- Fast turnaround times. LCCs operate their networks in
ways that keep their aircraft in the air earning money for a higher
number of hours on average compared to legacy carriers. Minimal
inflight service, for instance, reduces the time needed to clean
and cater flights.
- Rapid growth. This is not just a product of the LCCs’
success but an element in it. Fast growth enables the LCCs to continue
to add aircraft and staff at a steady pace which keeps the average
fleet age and average years of employee service low – both of which
help to keep operations costs low.
- Emphasis on secondary airports. Secondary airports, such
as Houston-Hobby instead of George Bush Houston Intercontinental
or Charleroi instead of Brussels National,
typically have lower landing and parking fees for airlines as well
as a more entrepreneurial approach to recruiting new airline service.
However, LCCs have also directly challenged established carriers
in major hubs.
- Reduced importance of hubs. Most LCCs do have hubs, but
for some carriers hubs are substantially less important than they
are for legacy carriers. Southwest Airlines, for instance, distributes
air traffic more evenly among a ten or so top “focus cities” in
its network than is true of any traditional hub-and-spoke airline.
- Aggressive use of the Internet. Internet booking has
partially neutralized the one-time advantage that legacy carriers
enjoyed through their proprietary computer reservations systems.
The Internet is an additional way of reducing costs.