> Why does Airline U insist on having so little point to point > service and so much traffic through it's hubs? The idea was that an airline could do two things with a Hub/n/Spoke system, that with the same # of planes one could: a) Serve more destinations b) Serve them more frequently ... and that by using a hub it would be cheaper than running point-to-point and avoid suffering poor aircraft utilization, and possibly lots of empty seats. Of course, it's a traditional marketing and pricing problem that people don't value their time very well. Folks will spend 10 minutes in line to save 1/4 cents a litre (about 13 cents per average fill-up) on gas. Compounded with the fact that flights are listed side by side in reservation and web-sites they appear as equivalent commodities. It's obvious why airlines attempt to fill their seats, because they'll go empty anyways. But it begs the question the more specific question, how did these 'seats' come about anyways? And how does Air Tran do it? Matthew On Friday, September 19, 2003, at 11:57 AM, kurtzke@xxxxxx wrote: > Suppose I were setting prices at airline U. Clearly what I want to do > is maximize net revenues. Now suppose a person wants to fly from > Portland OR (PDX) to Washington Dulles (IAD). Airline U has a non-stop > flight and several connecting flights to Dulles. On a non-stop flight, > a person does not change planes, has much less chance of the luggage > not getting there with him, and has a shorter flight time than on > making a connection. That seems like a benefit to the passenger It sure > is to me. I know there is something lively about O'Hare that I miss, > something Carl Sandburg would have understood, but I can forego that, > knowing that you can't avoid O'Hare forever. Is the passenger willing > to pay extra for this benefit? Well, let's charge a premium for the > non-stop flight, but make sure we can still fill the plane. > > If the passengers are willing to pay a premium for being on a non-stop > flight from Portland to Dulles, then airline U, my imaginary employer, > makes two gains, one from having fewer people go through a hub and the > second from the premium charged to avoid a hub. In real life, I am > willing to pay a premium, say $50, to fly non-stop from Portland to > Dulles. After all, some people will pay a premium to fly into > Washington National (DCA) instead of Dulles. > > Why does airline U insist on having so little point to point service > and so much traffic through its hubs? Hey, I only set fares. I don't > run the airline. Notice that if airline U had several non-stops from > Portland to Dulles, and less service through hubs, then it would be the > more expensive (to the airline) trip through O'Hare that would cost > more in my scheme of things. > > There's been a lot written about this and some I've just skimmed, so if > I have repeated someone's ideas, I apologize to the list; if I repeated > your ideas, then remember, great minds think alike. :-). > > john > > Fan of Non-Stops > > John Kurtzke, C.S.C. > Dept of Math > Univ of Portland > Portland OR 97203 > > 503-943-7377