Environmental Engineering Reference
In-Depth Information
Low-cost airlines
A primary result of market deregulation and liberalization has been the birth of
low-cost scheduled airlines. This was led by the model of Southwest Airlines of
Texas, US, which began operations in the early 1970s. In Europe, the emergence of
Ryannair, easyJet, Virgin Express, Go and Buzz since the late 1990s has introduced
low-cost travel at low fares previously restricted by regulation. In 2000, low-cost
operations began in Brazil and Australia, suggesting the potential for this model of
airline operations to grow on a global basis.
In the UK, low-cost scheduled traffic is forecast to grow at 6.6 per cent per annum
for the years 1998-2015 (DETR, 1998). Some of this growth is undoubtedly due to
domestic low-cost air services attracting trips from land-based modes such as rail.
Domestic air services between London and Scotland can be up to four times quicker
than rail or car (city centre to city centre) and also cheaper. At the time of writing,
the Ryannair website quotes one-way prices for London Stansted to Dublin for
UK£8, Frankfurt for UK£5, Turin for UK£8, Brussels for UK£8, Glasgow for
UK£8 and Stockholm for UK£8, a fraction of the fares available four years earlier
(Ryannair, 2001).
Low-cost fares appear to have encouraged travel for the sake of it and certainly
for leisure. This highlights the conflict between increased mobility affordable for
lower-income groups as a result of market freedom, with sustainable use of resources
by the aviation industry (Graham and Guyer, 1999). Graham (2001) is right to
question the necessity of the degree of mobility low-cost airlines have introduced.
Notably, consumer choices made now may limit the scope available for consumer
choice in the future.
Hub-and-spoke networks
Another significant impact of US domestic airline deregulation that has had impor-
tant repercussions for global airline networks is the change in airline network struc-
ture from point to point to hub and spoke. The reason for the rise of airline hubbing
can be seen in Figure 2.2. If the network were connected by point-to-point route
structure, four city pairs would be served. If the same points were connected using a
hub, then 36 city pairs would be served. The impact of spokes (n) on city pairs served
in a hub network, including the hub city, can be calculated by: total city pairs served
= n (n + 1)/2. For example, if the number of spokes were doubled to 16, then the
number of city pairs served in a hub network would be 136. In contrast, due to bilat-
eral regulations, airline networks in countries outside the US were naturally focused
upon key points, although the scheduling of flights to maximize connectivity between
flights was not common practice (Dennis, 1994).
Hub-and-spoke networks minimize airline operating costs per seat kilometre
flown in relation to the airports served in a network. A hub can be defined as a central
airport location used as a transfer point for services from outlying spoke airports. Air-
lines schedule waves of flights into the hub and then back out to where they came
from within a short time period. Passengers transfer between flights at the hub. This
allows the airlines to maximize the number of marketable connections between points
of the network for the lowest airline operating cost.
