1. Minot, N. Dakota, USA, is served over one Hub
This shows the diversity of destinations a hub can serve
This is data from 2q03 US tickets for MOT
The air service was seat seat jet departures to Minneapolis hub, per day.
These are one-way passengers
Fares have tax added back in, estimated. Some fares are from trend of fares vs. distance, as sample was too small for actual in that market.

2. Minot Feeds to Minneapolis Hub
MOT
MSP

3. 18:00 Bank Gives Minot 38 Destinations Inbound Bank Outbound Bank
This is the MSP (Minneapolis) hub of NW airlines. It shows only one of 8 banks throughout the day. Some hubs have as many as 12 banks. Some as few as 3. Minot has three inbound flights: at 6:27 in the morning, 12:30 midday, and this one, at 18:00 in the evening. Connections for Minot also happen to the first outbound bank, roughly 1 hour after arrival. Connections can also be made for the next later bank, about 2 ½ hours after arrival. Because Minot is a small station with no other competition, even these slower connections are valuable. Most US cities connect to more than one hub. Competition means that the slower connections only collect traffic diverted to them by lower fares.
This bank has 41 inbound flights connecting to 38 outbound flights with connecting times from 30 to 94 minutes. Many of the connecting city-pairs will only see one passenger a week. However, there are 1596 connecting pairs, with every flight having over 30 places to connect to. So even those small flows add up.
Without such connecting banks, the small flows end up taking perhaps two connections and over a whole day to get where they want. The hub’s banks coordinate flights to provide the most valuable to the most people. The key to success is creating lots of value—and then charging people a fair price for it.

4. Minot Connects to the World

5. This is world O&D data, including US

6. Half of Travel is in Connecting Markets
Hubs are not likely to disappear. Measured in RPKs, near half the travel is in connecting markets. (46% of the RPKs are in connect-only markets. On top of this, markets with only one or two nonstops have 25-50% connecting traffic.)

7. Short trips are usually nonstops
Short trips are usually nonstops. Longer trips often require one or more connections. This data is for non-US travel. The US domestic network has lots of medium and large hubs, so most trips can be made with only one connection.

8. Half the Trips are Connecting
This is world data, with US domestic trips not included. The blue area are miles traveled nonstop. The dark red are miles traveled using a connection, almost always at a hub and almost always on one carrier or one alliance. The yellow area are mile traveled using two connections—from an feeder city to a hub, to a second hub, and beyond to another small feeder city. The long haul has many of these double-connects, although the number is reduced as developing secondary hubs increase single-connect services.

9. Connecting Share of Loads Averages about 50%
For most flights into a hub, less than half the onboard load is local and half is connecting to or from some other hub flight. Only isolated short markets have high local loads.

10. Long-Haul Flights are from Hubs, and carry mostly connecting traffic
The few highly-local markets are not hub flights. They are tourist destinations like Honolulu, Hawaii. They are like charter vacation flights.

11. Hub Concepts Hub city should be a major regional center
Connect-only hubs have not succeeded
Early hubs are centers of regional commerce
Early Gateway Hubs get Bypassed
Early International hubs form at coastlines
Interior hubs have regional cities on 2 sides
Later hubs duplicate and compete with early hubs
Many of the same cities served
Which medium cities become hubs is arbitrary
Often better-run airport or airline determines success
Also the hub that starts first stays ahead
There are really three kinds of hubs. The most natural is the large city that is the center of business and government for a region. Flights to this city form connections that allow any city in a region to connect to any other city in the region, and connect to major long-haul destinations. When one airline organizes these connections so they work easily, a hub is formed.
The other natural evolution of a hub is at a major gateway city. In early days when airplanes could barely make it across larger oceans, major coastal cities were the starting points for long-haul international trips. A concentration of such flights made the long-haul part of a hub, and feeder flights naturally develop.
However, as networks develop the emphasis changes. Early networks are sparse. Only the most obvious natural hubs work. But soon a second tier of hubs develops at medium-sized interior cities. These hubs provide nonstop service bypassing the early hubs. And they also divert traffic from connections at the early hubs to their own connections. This is the reason you see smaller cities like Cincinnati in the US or Amsterdam in Europe with hub operations. Which city gets a hub is a matter of either chance or planning. It is not driven by the size of the city, or even its location within reason. There are always several reasonable choices. The reason there is a hub in Cincinnati instead of near-by Dayton or Columbus is that Delta built a good operation there. Piedmont in Dayton failed. The airport in Columbus did not try as hard to attract an airline. So Cincinnati got it. Something similar probably happened in Amsterdam. Brussels might have worked instead. These secondary hubs become a focus of growth, each in their own time period. They add both nonstops to the hub city, and competitive connections. Often a developing hub will ‘steal’ all the growth for a time from the existing hubs. For instance the Air France hub in Paris was one of the more recent to get fully functioning. It has been growing briskly while London, Amsterdam, and Frankfort have stood comparatively still.

12. Regional and Gateway Hubs in US
JFK
ORD
SFO
DEN
LAX
ATL
DFW
MIA

13. Three Kinds of Hubs International hubs driven by long-haul
Gateway cities
Many European hubs: CDG, LHR, AMS, FRA
Some evolving interior hubs, such as Chicago
Typically one bank of connections per day
Regional hubs connecting smaller cities
Most US hubs, with at least 3 banks per day
Some European hubs, with 1 or 2 banks per day
High-Density hubs without banking
Continuous connections from continuous arrivals and departures
American Airlines at Chicago and Dallas
Southwest at many of its focus cities
International hubs have a high proportion of international flights. They suffer less from competition with low-cost regional airlines. Much of the traffic connects to places regional airlines cannot go. Many of the major European capitals have such hubs, with a bank or two of flights serving North America and Asia. Tokyo is the most extreme example of such a hub. Even the shorter feeder flights to Narita are international.
Regional hubs create value by connecting smaller cities throughout a region or country. Most US hubs are regional hubs. In the US, they tend to start with three banks a day. A morning, midday, and evening time for connections. The biggest hubs, such as Chicago or Atlanta, have 6 banks a day, and each bank is divided into a two banks itself. One for Eastbound connections and the other for Westbound. So they really have 12 banks a day. This is about all that time permits.
Finally, some hubs that have high numbers of flights stop using banks of simultaneous arrivals and departures. They move to smoother continuous operations, letting the many natural connections form as they may. American has just done this with their Chicago hub. The United hub in Chicago is 80% banked. The American one is 45% banked. This measure means take-offs and landings are more often alternating than grouped. At 50%, they are random. High values mean organized waves of arrivals or deparutres.
Surprizingly, the most famous point-to-point carrier, Southwest Airlines, actually forms hubs, by coincidence. 30% of Southwest traffic is connecting (For hubbed carriers 50%-60% of their traffic is connecting.) It turns out Southwest’s frequencies at its major airports are so high that they form many convenient connections, without direct schedule coordination.

14. Secondary Hubs in US SEA MSP DTW PIT JFK SLC ORD SFO EWR DEN CVG STL
LAX
ATL
PHX
DFW
IAH
MIA

15. Value Created by Hubs The idea in business is to Create Value
Do things people want at a cost they will pay
Hubs make valuable travel options
Feeder city gets “anywhere” with one connection
Feeder city can participate in trade and commerce
Hubs are cost-effective
Most destinations attract less than 10 pax/day
Connecting loads use cost-effective airplanes

16. Hubs Build Loads First, then Frequency

17. Hubs Give Competitive Advantages
Less peaking of demands, as variations in different markets average out
Dominate feeder legs
Connect loads allow dominant frequency
Connect loads avoid small, expensive airplanes
Feeder cities can be “owned”
Dominant airline will get 15% market share advantage
Dominant airline can control sales channels
Control of feeder cities makes airline attractive to alliances

18. Hubs Compete with Other Hubs
Compete on quality of connection
Does the airport “work?”
Short connecting times
Reasonable walking distances
Reliable baggage handling
Few delayed flights
Recovery from weather disruptions
Later flights for when something goes wrong

19. Hubs Develop Pricing Mixes
Higher fares in captive feeder markets
Low discount fares in selected connecting markets to fill up empty seats
Low connecting fares compete against nonstops
Select low fare markets against competition
It pays to discount and fill
Unless you discount your own high-fare markets