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Author Topic: Route Strategy - Nonstop Hub/Spoke vs. A-B-C-B-A  (Read 1723 times)

Branmuffin

  • Former member
Route Strategy - Nonstop Hub/Spoke vs. A-B-C-B-A
« on: October 21, 2009, 07:49:27 PM »
Hi all,

I have been thinking about how I'd like to plan my routes and I started wondering; what are the advantages/disadvantages to setting up direct routes (hub and spoke method) versus setting up two-stop ABCBA routes, and which will draw in more profit in your opinion?

I know the answer depends on the market and the aircraft you use, but in general?

For example, if I fly an ABCBA route, i can conserve slots and reach more destinations with one airplane.  However, this means that my average route length will probably be shorter.  But then again, I am flying a larger number of individual, distinct flights in the same amount of time that I could fly the longer, nonstop routes.

If I do the nonstop way with each flight going to only one destination and then back to base, I am flying longer legs on average but fewer unique flights in the same amount of time.

So I guess it comes down to this: ignoring slot availability, is it better to have high-frequency short flights or lower-frequency long flights? (Let's assume that the aircraft is a 100-200 seater, not a regional turboprop...)

Talentz

  • Former member
Re: Route Strategy - Nonstop Hub/Spoke vs. A-B-C-B-A
« Reply #1 on: October 22, 2009, 05:29:04 AM »
If your looking at which is more profitable. It depends on your idea of profit.

In a Hub and spoke routing system, your yields are much higher. Thus, you have a higher profit margin to work with. Its also considered "conservative" game play.

In a Continuation routing system (A-B-C-B-A) your per route yields are lower. Less cash flow on a per-route-basis. Continuation game play is also considered "aggressive". Because your basically invading another airline's hub. Which.. people don't seems to like.  :laugh:


Now, there are advantages and disadvantages to both styles of game play. Slot conservation, player image, airline stability and long term profit.

Generally, the most stable airlines are hub and spoke systems. Where a high profit margin is better able to handle unexpected events (ie fuel crisis).

Roughly, a continuation style will provide more slots for use. Thus, doubling your profit potential. While conservative game play produces higher yields, Continuation provides more profit by volume. So.. 20% profit margin of 100 million is good. But its not more then a 10% profit margin of 300 million. 

Not to mention using Continuations is looked down upon. Your likely to be the poster child of someone's angry forum rant/crying by using this style  ;)


Both offer rewarding game play and take several games to master.



Talentz

aircanada

  • Former member
Re: Route Strategy - Nonstop Hub/Spoke vs. A-B-C-B-A
« Reply #2 on: October 22, 2009, 10:52:37 AM »
I use both, but only when it would be a tech stop otherwise, my most profitable route is a ABCBA route, but i must say 90% or my routes are hub and spoke.  I tried a tech astop to asia once, decided to use my B757 to europe where it made more money and wait for my B767-200ER's to be delivered for my Asian flights

Offline powi

  • Members
  • Posts: 435
Re: Route Strategy - Nonstop Hub/Spoke vs. A-B-C-B-A
« Reply #3 on: October 22, 2009, 02:56:20 PM »
For some long haul routes ABCBA is very effective, as you can fly three legs per day or two days with one aircraft. You can achieve same amount of legs per week with sliding schedules, ie every day's flight is with own number, but it requires much work to create and departure / arrival times are probably little poorer by average.

Branmuffin

  • Former member
Re: Route Strategy - Nonstop Hub/Spoke vs. A-B-C-B-A
« Reply #4 on: October 23, 2009, 05:10:02 AM »
In a Hub and spoke routing system, your yields are much higher.

Is that because the airplane is sitting on the ground less because it has less stops to make?  Is it safe to infer that longer routes are more profitable than a higher frequency of short routes?

Thanks for the replies so far :)

Talentz

  • Former member
Re: Route Strategy - Nonstop Hub/Spoke vs. A-B-C-B-A
« Reply #5 on: October 23, 2009, 06:43:40 AM »
Is that because the airplane is sitting on the ground less because it has less stops to make?
Thanks for the replies so far :)

Not exactly. The reason your yields are higher is because your overhead costs for moving pax are lower. Example: YYY-XXX route is 500 pax daily. In a conservative hub/spoke system, you use one aircraft (100 seater) flying the route 5x daily. Wheres in a Continuation system, you are likely to use five 100 seaters to move the same 500 pax. Thus, your overhead costs by nature are much higher. Five aircraft vs one aircraft for moving the same 500 pax.

Quote
Is it safe to infer that longer routes are more profitable than a higher frequency of short routes?

Depends on the distance. > 500nm routes are the most profitable. Yields are much better flying 4x 500nm routes vs flying 3x 800nm or 2x 1000nm routes. After about 3000nm or so, LH international starts to pay off when using high capacity aircraft. 7x daily LH routes are solid. The best would probably be 4100-4400nm, 6x daily LH routes. On a per profit route basis. As long as you keep the aircraft in the air flying the longest route possible, it will make a strong profit.


Hope that helps.


Talentz

Offline Teemu

  • Members
  • Posts: 348
Re: Route Strategy - Nonstop Hub/Spoke vs. A-B-C-B-A
« Reply #6 on: October 23, 2009, 10:23:28 AM »
For me the HUB system is working out nicely. Using correct planes for the short/medium-longhaul routes is the key. Current fleet is 757's and ATR 72-200's. I use the ATR's to routes less than 400 NM, they are most efficient on that area and jets for the longer routes.

Offline Andriy

  • Members
  • Posts: 226
Re: Route Strategy - Nonstop Hub/Spoke vs. A-B-C-B-A
« Reply #7 on: October 23, 2009, 06:21:52 PM »
Depends also on the airport you are flying from. If you are based in not so popular airport, the only way for you to grow is using ABCBA system as there is simply not enough demand on your direct routes.
The guys who have hubs at London, Atlanta, Tokyo, etc have the luxury to enjoy hub system. My Ukrainian Airways are based in Kiev and simply have no chance but to "invade" the nearby airports) - otherwise I would overgrow the route capacity already after 2-3 game years

 

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