Hub and Spoke vs Point-to-Point: How Airlines Build Networks

The Hub-and-Spoke Model: Concentration for Efficiency

The hub-and-spoke model concentrates passenger flows through central hub airports, where passengers arriving from many origins connect to flights bound for many destinations. The mathematical logic is compelling: if you want to connect N cities directly to each other, you need N×(N-1)/2 routes. For 20 cities, that is 190 routes. If you instead route all traffic through a central hub, you need only N routes — 20 routes to connect those same 20 cities through the hub. This reduction in route count allows airlines to offer more frequencies on each route, fill larger aircraft to higher load factors, and extend effective network reach without operating money-losing thin routes directly.

American, Delta, and United built their networks around the hub-and-spoke model following US deregulation in 1978. Delta's main hubs at Atlanta (ATL), New York JFK, Minneapolis, Salt Lake City, Detroit, Seattle, and Los Angeles allow passengers from almost any US city to reach almost any other with at most one connection. American's hubs at Dallas/Fort Worth, Charlotte, Philadelphia, Miami, Chicago O'Hare, and Phoenix cover the national map with similar efficiency. These hub operations generate enormous coordination complexity — a missed connection can cascade through dozens of downstream passengers and crew — but the economic benefits have sustained the model for decades.

Hub airports themselves benefit enormously from serving as connecting points. Hartsfield-Jackson Atlanta (ATL) handles roughly 100 million passengers per year, but a significant fraction — typically 60–70% at major hubs — are connecting rather than origin/destination passengers. These connecting passengers still generate revenue for airport retailers, restaurants, and parking, and their presence allows the airport to justify the scale of investment in facilities that O&D-only airports could not support. The symbiosis between airlines and their hub airports creates a mutually reinforcing competitive moat: airlines invest in hub dominance, hub airports grow infrastructure to support that dominance, and together they make it very difficult for competing carriers or airports to break into the market.

Point-to-Point: The Low-Cost Carrier Revolution

The point-to-point model, pioneered by Southwest Airlines and later adopted by Ryanair, easyJet, and dozens of other low-cost carriers worldwide, routes passengers directly between origin and destination without hub connections. This approach is operationally simpler — no connection management, no through-check baggage complexity, no minimum connection time constraints — and can be faster for the passenger (a direct flight, even with a longer flight time, beats two shorter hops with a connection layover).

Southwest's legendary operational model illustrates the point-to-point advantages clearly. By operating exclusively between secondary airports (Dallas Love Field rather than DFW, Baltimore rather than Reagan National, Chicago Midway rather than O'Hare) where slots and gate access were available and congestion lower, Southwest avoided the congestion and costs of mega-hubs. Fast aircraft turns (25 minutes versus 45–60 for legacy carriers) maximized aircraft utilization. Simple pricing (no fare classes, no change fees historically) reduced distribution costs. These advantages produced an airline that has been consistently profitable for over 50 consecutive years before the COVID-19 disruption — an extraordinary record in an industry notorious for cyclical losses.

Ryanair took the model further in Europe, operating exclusively into secondary airports (often marketed under optimistic names like "Frankfurt Hahn" — actually 130 km from Frankfurt — and "Stockholm Skavsta" — 100 km from Stockholm) where airport charges were extremely low or where airports paid incentive fees for route launches. Ryanair famously negotiated landing fees of €1–5 per passenger rather than the €10–25 typical at major airports, a cost advantage that enabled genuinely low fares on routes where there was sufficient demand to fill Boeing 737 aircraft several times daily. At peak routes during promotional sales, Ryanair has offered seats for €0.01, covering costs through checked bag fees, seat selection charges, and high-margin food and beverage sales.

Network Economics: Load Factors and Revenue Management

The economic success of either network model ultimately rests on load factor — the percentage of available seats filled with paying passengers. Airlines target load factors of 80–90% across their networks to achieve profitability, but individual routes vary enormously. Hub operations allow airlines to consolidate thin demand: a route from a small city to London that might fill 60% of a direct A320 could fill 80%+ of a regional jet if passengers from three smaller cities are consolidated through a hub. The connecting traffic "works" for the airline if the contribution of each passenger's fare toward the hub-spoke system's total costs is positive.

Revenue management — the sophisticated algorithmic pricing of seats by demand, booking day, and competitive dynamics — is far more complex for hub airlines than point-to-point carriers. A seat on a Chicago to London flight might be occupied by a passenger who boarded in Kansas City, paid Kansas City–London pricing, and contributes revenue allocated across two flight segments. Revenue management systems must optimize prices across thousands of origin-destination pairs and connecting options simultaneously, not just for each individual flight segment. Airlines invest hundreds of millions of dollars in these systems because even a 1% improvement in revenue per available seat mile (RASM) translates to hundreds of millions in annual revenue at scale.

The fundamental tension between the two models is the trade-off between network reach and operational simplicity. Hub airlines can serve almost any city pair with a single connection; low-cost point-to-point carriers serve only cities where demand justifies a direct flight. For leisure travelers between common city pairs with price sensitivity, low-cost carriers win. For business travelers who need flexibility and connections to small cities, hub airlines remain essential. The hybrid response — hub carriers launching "Basic Economy" products to compete on price while maintaining their network breadth, and low-cost carriers entering transcontinental markets with no-frills configurations — represents the current competitive equilibrium that neither model has yet resolved decisively.

Ultra-Long-Haul and the Future of Network Models

Ultra-long-haul point-to-point services represent the most dramatic recent challenge to the hub-and-spoke model. Routes like Singapore–New York (19 hours, operated by Singapore Airlines), London–Sydney (direct services being evaluated), and Qantas's proposed "Project Sunrise" flights from Sydney to London and Sydney to New York would allow passengers to bypass hubs entirely on journeys that previously required two flights. These routes are made possible only by new aircraft — the Airbus A350-900ULR — and are economically viable only in premium cabins where the time savings justify high fares.

The economics of ultra-long-haul point-to-point are instructive. Singapore Airlines' SIN-JFK Airbus A350-900ULR service (launched 2018) carries only about 161 passengers in business and premium economy — no economy class. The aircraft, reconfigured to carry maximum fuel, has essentially no belly cargo capacity and very high per-seat trip cost. The service is viable only because business travelers and premium economy passengers pay fares of $3,000–$10,000+ for the 19-hour flight, valuing the time savings from avoiding a connection over Abu Dhabi or Doha. For economy-class travelers, the connection via a Gulf hub remains far cheaper and thus the preferred option.

Low-cost long-haul — the attempt to apply Ryanair's cost discipline to transatlantic and transpacific routes — has proven more challenging than its proponents anticipated. Norwegian Air Shuttle's ambitious expansion into transatlantic markets ended in bankruptcy in 2021. WestJet's Swoop, LEVEL (IAG's low-cost transatlantic brand), and others have struggled with the reality that a 10-hour transatlantic flight cannot be operated with the 25-minute turns and minimal amenities of a 2-hour European hop. Passengers on long-haul flights expect enough comfort to arrive functional, and providing that minimum costs significantly more per seat-mile than short-haul operations. The structural cost advantages that sustain low-cost carriers in short-haul markets diminish substantially at long range.