FlyerTalk Forums - View Single Post - Why doesn't NW focus on international hubs instead of direct service?
Old Apr 18, 2005 | 5:10 am
  #8  
Threy
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Join Date: May 2001
Location: DUS
Posts: 4,004
Stay with hub and spoke...

First of all I second the correct use of terms mentioned by themicah, even today in the Internet age too many passengers are fooled by the term direct used by airlines and travel agencies, using the term non-stop is clear and easy…

Secondly to answer the original question why NW does not fly more non stops ?? Simply because they are a smart airline and know how to operate a worldwide network

One can find two interesting threads in the CO and AA forums about the respective airlines thinking about non-stop service from the US to India and why they will fail.

Until today no airline with an international point to point network has survived, simple because the economics are not suitable for flying such operations, not with A 345, not with a 772 ER, not with a Dreamliner or Sonic Cruiser, maybe with a Airbus BBJ or Boeing BBJ
( at least only LH is doing it successfully ex DUS and MUC with daily nonstops to the US. These flights are operated by a Boeing 737 or A 319 with an all C class 48-50 seat configuration )

So yes, it can work, if you consider all important points. DUS has the third biggest catchment area of all European airports, third only to LHR and CDG , way over 15 million people living in the vicinity of 100 kilometers.
DUS is home to the largest fair in Germany, home of 25 % of all Dax 100 companies and DUS is home airport of Essen as well with huge companies like RAG or RWE there, to some extent even home airport for Cologne with giants like Deutsche Post or Deutsche Telekom having their world headquarters there. Now DUS-ORD is nothing special, a typical hub and spoke operation, DUS-EWR is a little bit different, but New York City is the world`s second home according to the marketing guys there.
In addition to that LH has maintenance facilities in DUS and use already established infrastructure without add. costs ( airport facilities, slots, sales etc. )

All other routes, SQ`s SIN-LAX/EWR or EK`s DXB-PER are rumoured not to be profitable from well informed sources , btw. Same with the new TG BKK_JFK service. You need at least 2 aircrafts, two crews and you need to charge a premium over the hub and spoke operating competition. While over 90 % of the C class buyers prefer a non-stop flight, only a very small % of Y class flyers would pay a premium, especially in price sensitive countries like the US or Germany. If you do the math now, those flights will not be profitable, maybe on routes where you need only one plane and one crew, but only a small percentage of US-ASIA routes would fall into that pattern. And why risk to start a new route, when you can use your partners hub, like NW and KL used to do since nearly 15 years now.
The KL/NW partnership has always been a main reason for both airlines still being in the business and doing halfway okay in comnparison to the competition…

So relying on hub and spoke operations is successful over here in Europe, unfortunately in the US it is completely different. But if the Government decides to stop all those huge subsidies and guarantees one or two players will be forced out of the market and the airlines will become profitable again, assuming they do their homework in between and lowering operating costs and increasing labour productivity is a table stake.

Last edited by Threy; Apr 18, 2005 at 5:18 am
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