italdesign

I mean, I understand the concept: your home airport is a hub to a certain airline, and you feel stuck with that airline.

What I don't understand is why people at these home airports find it hard to switch to another airline (presumably other airlines fly there). Is it because prices are higher at hubs even with other airlines? Or the thought of additional connections?

I live in a non-hub airport with few direct flights, so most of my domestic flights require connecting. Is living in a hub and flying other airlines any worse?

jacobac00

I think it mostly comes down to direct flights. Maybe others on here have a different opinion. I'm in MSP, which is probably 80% DL traffic. Yet I "choose" to fly UA. Mostly because every flight I need to take is allowed by my corporate booking tool. Unlike DL where $1000 economy fares to go a few states over are becoming surprisingly frequent.

javabytes

Usually it's because people don't feel they can take connecting flights. Whether the airport is so poorly served by other airlines that 1-stop options are not limited, or people feel their time is far too limited/valuable to take 1-stop flights, the dominant carrier feels like the only viable option.

I live in a city that is home to hubs for three major airlines, and Delta isn't one of them. I chose to fly Delta anyway. For me, the benefits of doing so outweighed the inconvenience of a connection. For others, the same might not be true.

kop84

A lot of people work for companies that have contracts that may require that they fly the hub airline.

Or as you are very accustomed to having to connect, going non stop is typically a more reliable way to get to your destination as a delay doesn't cause a miss-connect.

Another analogy for your point about having to connect would be if you were going on a road trip and I told you that you could take the freeway and be there in 3 hours or you could take the back roads and be there in 6 it would be a tough decision to take the 6 hour trip. Especially if it was every week or multiple times per week.

rdurlabhji

Its the opposite for me. When I moved to Chicago I moved almost all my traffic off of DL because I really prefer not having a connection, and that outweights DL's operational superiority.

Frogbone

Maybe this will illustrate what I have to deal with every week being hub captive

kop84

That is also looking at flights for over Christmas break two days prior. I have no doubts that DL has a higher cost for the non stops most of the year, but this might not be the best week to illustrate that point fairly

Frogbone

Doesn't matter. I always book Friday's for Monday travel across the 48, xmas or not.
I see these disproportionate fares every week to more and more destinations. I am pointing out the fare difference, not how expensive they are. I highlighted my point in the image now.

Kwaj boy

I agree with you 100%. Unless you just can't stand connecting, "hub captive" has little meaning to me personally. Since I prefer Delta, I'd probably fly them even if I lived near another airline's hub. Delta happens to have the most flights from HSV anyway, and typically they are competitive on price.

jrl767

while I recognize that you may need (or be required/forced) to do this, I'd suggest that a different booking paradigm (say, book on Tues) would perhaps yield different results

BenA

tl;dr: Hub cities are expensive and residents feel 'captive' because the dominant carrier gains pricing power through capacity. There are only three major carriers now, and in a form of détente they tend not to challenge each other very severely, so they can all maximize their profits.

That means even alternate airlines tend to cost more in these cities, making it feel like there is less choices available.

A popular misconception is that the cost difference is due to nonstop flights, but that isn't borne out in the data - nonstops only tend to command about a $20 pricing premium.

---

To justify that statement, I think understanding pricing trends is key to understanding why hub city passengers feel "captive". Let's examine Texas - it's convenient because there are three nearby cities we can use to compare:

- IAH, which is a UA hub with minimal low fare presence;
- DFW, which is an AA hub with strong WN presence nearby; and
- AUS, which has both legacy and low fare carriers and isn't dominated by any one airline

(Sorry I didn't include Delta - it's hard to get data about them now that they blocked ExpertFlyer. I imagine this sort of analysis is precisely what they wanted to suppress with that maneuver...)

I spent a few minutes in EF and gathered data on the lowest published airfares as of today (19 Dec) to five geographically distributed destinations: DSM, SEA, DEN, SMF, and PWM. DSM, SEA, and SMF are interesting as midsized markets - meaning a carrier operating a hub likely has direct flights, but a non-hub carrier will require a connection. PWM is a city that is unreachable from Texas without a connection. And DEN is particularly interesting as it is also a UA hub in its own right.

Here's the raw data:



Some observations:

• You are almost always better off living in a major non-hub city that's well served but a bit smaller from a cost perspective, hence the term "hub captive". Austin always comes ahead in pricing against at least one hub. There's a strong low fare presence there, but all the legacies participate too, and nobody controls enough markets to own the airport. A perfect example of competition keeping fares low across the board. And this is borne out in DoT statistics: on average for these cities, weighted by passenger counts, Austin is 5.5% cheaper than Dallas and 10.6% cheaper than Houston.
  
  
• The pricing difference for hubs isn't due to nonstops. Looking at the blue cells, UA only demands a surprisingly reasonable premium for nonstop flights, about $20 more than connecting itineraries. In other words, just enough that business travelers can justify the cost savings to their manager in the name of convenience without seeming extravagant. On the AA side, their nonstops sometimes even come at a discount.
  
  What's actually happening is that the existence of a hub carrier gives them lots of capacity, which comes with pricing power and drives up airfares for everyone. Sales can still tilt the balance in the opposite direction, but now that there are only three major carriers, each carries a lot of pricing leverage and a form of détente is emerging where they simply match each other's lead.
  
  
• Low fare carriers have a mixed impact. WN may be helping keep DFW fares lower overall, but AS seems to have little to no impact. But the impact of both pales in comparison to Spirit - when they get involved, all bets are off. I'd never bothered looking before, but their route map looks a who's who of legacy airline hubs. The legacies end up needing to compete with Spirit, and that shows up here: DFW-DEN and DFW-PHL are both routes they are affecting, and UA/AA have priced their fares to compete. Maybe they're hoping to drive NK out of the market.
  
  Looking at the bloodbath here, I can almost start sympathizing with Delta's alternate approach of assuming they're here to stay and introducing Basic Economy fares to balance things out a bit...
  
  
• For hub-to-hub routes without Spirit, high fares prevail. On IAH-DEN, AA's competition means the price isn't too bad - albeit still higher than AUS. But IAH-PHL, where both UA and AA have directs, is wildly expensive - no surprise there that they've chosen to share the passengers and avoid mutually assured destruction in that market.
  

As one final observation, this all in aggregate explains why very few SEA-based passengers would describe themselves as hub captives, even though AS and DL are the dominant carriers in the market: SEA is almost 15% below average overall in airfare costs compared to the rest of the country, based on DoT data for 2014, and so while AS and DL are the obvious carriers to choose, nobody really feels "captive" because neither carrier has significant pricing power in this market yet. This disparity is also likely why Delta sees a large market opportunity here...

And yes, I understand that AUS is not directly comparable to IAH or DFW due to its smaller size - but I felt that of my options, focusing on Texas was the most accurate comparison I could offer. I'd certainly love to see other folks' analyses on this topic as well.

BenA

HSV is an interesting case to consider, as it commands the second highest fare premiums in the country (just after Eagle, CO and just above Cincinnati, KY). Given high fares and a lack of many direct options, perhaps uniquely in this market, selecting on service definitely sounds like your best choice until more low fare competition arrives...

(source: http://www.dot.gov/office-policy/avi...t-quarter-2014)

pbarnette

It depends how much you value your time. If you don't, connect away. If you do, then living in a hub means you don't have to waste your time.

Often1

+! - This is the key. Time is money. And that includes frequencies and IRROPS recovery. Businesses are more than willing to pay for that and leisure travelers fill around that.

pbarnette

Even for leisure travelers, wasting time on connections can be undesirable. I don't want to connect if I don't need to because money can't buy me more time.