Estonian Aviation Seminar 13 14 November 2014 Airlines

Estonian Aviation Seminar 13 -14 November 2014 Airlines and their home airports Hogeschool van Amsterdam Aviation Gert Meijer❘g. meijer@hva. nl 1

Estonian Aviation Seminar Airlines and Airports Introduction ■ Airlines produce connections between two airports ■ Every single flight is produced by 1 airline + 2 airports ■ Airline- en airport network systems is an integrated value chain Airline network strategy starts with the Home airport 13 November 2014 Hogeschool van Amsterdam Aviation 2

Estonian Aviation Seminar Airlines and Airports The Home Airport ■ The Airline’s home airport’s catchement area defines Size of the home airline ■ The Airline’s home airport’s location defines Network structure of the home airline ■ Airline and airport need to exploit their shared value 13 November 2014 Hogeschool van Amsterdam Aviation 3

Estonian Aviation Seminar Airlines and Airports The Home Airport ■ Starting point for any airline network huge home fragmented home small home multiple homes peripheral home nice home small home at a very central geographical location. . . Home? . . . home is where the markets are. . . 13 November 2014 Hogeschool van Amsterdam Aviation 4

Estonian Aviation Seminar Airlines and Airports Wealthy population The Home Airport ■ Airport home location determines airline island network potential global city No surface alternatives dense population central poor population leisure peripheral 13 November 2014 Hogeschool van Amsterdam Aviation 5

Estonian Aviation Seminar Airlines and Airports The Home Airport ■ Every airport has two potential forces relevant to any airline: catchment area O+D potential geographic location Hub potential O+D = Origin & Destination 13 November 2014 Hogeschool van Amsterdam Aviation 6

Estonian Aviation Seminar Airlines and Airports The Home Airport ■ Airport location defines its O+D potential How many passengers need, want or like to fly from or to that location? and can they afford the fare? - Population size - Economic activity - Wealth O+D potential - Accessibility - Surface alternatives Examples: LHR CDG FRA MPX 13 November 2014 Hogeschool van Amsterdam Aviation 7

Estonian Aviation Seminar Airlines and Airports The Home Airport ■ Airport location determines Hub potential - Airway routing - Directionality central location: catchment Hub area Potential Examples: AMS ZRH VIE IST 13 November 2014 Hogeschool van Amsterdam Aviation 8

Estonian Aviation Seminar Airlines and Airports The Home Airport ■ Airport location determines Hub potential Airway routing and Directionality: From this point of view, HEL is a peripherical location 13 November 2014 Hogeschool van Amsterdam Aviation 9

Estonian Aviation Seminar Airlines and Airports The Home Airport ■ Airport location determines Hub potential Airway routing en Directionality: Now the position of HEL is very central! 13 November 2014 Hogeschool van Amsterdam Aviation 10

Estonian Aviation Seminar Airlines and Airports The Home Airport ■ Airport location determines Hub potential Airway routing and Directionality: ■ Northern locations have global HUB potential 13 November 2014 Hogeschool van Amsterdam Aviation 11

Estonian Aviation Seminar Airlines and Airports The Home Airport ■ Every airport has two potential forces relevant for the airline ■ Airline networks are designed for optimal utilization of either one of two or both forces O+D potential 13 November 2014 Hub potential Hogeschool van Amsterdam Aviation 12

Estonian Aviation Seminar Airlines and Airports The Home Airport ■ Airport location with high O+D demand - Global coverage - City pair driven O+D - Capacity driven HUB 13 November 2014 - Hub connectivity is secondary Hogeschool van Amsterdam Aviation 13

Estonian Aviation Seminar Airlines and Airports The Home Airport ■ Airport location at a central location - Selected coverage - Hub destination driven HUB - Frequency driven O+D 13 November 2014 - Hub connectivity is key Hogeschool van Amsterdam Aviation 14

Estonian Aviation Seminar Airlines and Airports The Home Airport ■ Airport location with high O+D demand at central location - Global coverage O+D - O+D/Hub destinations HUB - Capacity variety - Mix of Hub connectivity and O+D demand 13 November 2014 Hogeschool van Amsterdam Aviation 15

Estonian Aviation Seminar Airlines and Airports Connecting the Home Airport ■ Every airport has two potential forces; the home airport and the destination airport 13 November 2014 Home airport Destination airport O+D Hub Hogeschool van Amsterdam Aviation 16

Estonian Aviation Seminar Airlines and Airports Connecting the Home Airport ■ Connecting airports is connecting potential forces 13 November 2014 Home airport Destination airport O+D Hub Hogeschool van Amsterdam Aviation 17

Estonian Aviation Seminar Airlines and Airports Connecting the Home Airport ■ O+D demand from&to home is the inverse of the same demand at the destination London (LHR+LGW) O+D Daily flights to at any time of the day Hub 13 November 2014 Destination airport San Diego Phoenix Baltimore Hyderabad O+D Chennai Islamabad Perth Brisbane Hub Livingstone Hogeschool van Amsterdam Aviation 18

Estonian Aviation Seminar Airlines and Airports Connecting the Home Airport ■ HUB need from&to home is the inverse of the same connectivity need at the destination Home airport 13 November 2014 Destination airport O+D Hub Hogeschool van Amsterdam Aviation 19

Estonian Aviation Seminar Airlines and Airports Connecting the Home Airport ■ HUB need from&to home is the inverse of the same connectivity need at the destination Vienna Destination airport Washington San Francisco Bangkok Singapore O+D Johannesburg O+D Hub Daily flights to Hub scheduled in transfer banks 13 November 2014 Hogeschool van Amsterdam Aviation 20

Estonian Aviation Seminar Airlines and Airports Connecting the Home Airport ■ Hub airlines need hub connections O+D Hub O+D Connection to Hub scheduled in transfer banks ■ Hub airlines need hub connectivity at the destination ■ That destination is the home airport of another airline 13 November 2014 Hogeschool van Amsterdam Aviation 21

Estonian Aviation Seminar Airlines and Airports Connecting Home Airports ■ These airlines cooperate in alliances Vienna Destination airport O+D Hub Daily flights to Hub scheduled in transfer banks 13 November 2014 Hogeschool van Amsterdam Aviation 22

Estonian Aviation Seminar Airlines and Airports Alliance home airports ■ Alliance airlines connect their home HUB airports 13 November 2014 Hogeschool van Amsterdam Aviation 23

Estonian Aviation Seminar Airlines and Airports Alliance home airports ■ Skyteam members. . . 13 November 2014 Hogeschool van Amsterdam Aviation 24

Estonian Aviation Seminar Airlines and Airports Alliance home airports ■ Skyteam members connect their home HUB airports AMS CDG MPX DTF SVO INC ATL SVG MEX TPE NBO EIZ 13 November 2014 Hogeschool van Amsterdam Aviation 25

Estonian Aviation Seminar Airlines and Airports Alliance home airports ■ Star Alliance members. . 13 November 2014 Hogeschool van Amsterdam Aviation 26

Estonian Aviation Seminar Airlines and Airports Alliance home airports ■ Star Alliance members connect their home HUB airports SFO CPH FRA/MUC ZRH/VIE LIS YYV ORD INC NRT PEK BKK ADD SIN RIO GRU JNB 13 November 2014 Hogeschool van Amsterdam Aviation 27

Estonian Aviation Seminar Airlines and Airports Alliance home airports ■ One. World Alliance members. . 13 November 2014 Hogeschool van Amsterdam Aviation 28

Estonian Aviation Seminar Airlines and Airports Alliance home airports ■ One. World Alliance members connect their home HUB airports HEL LHR DUS MAD ORD NRT DFW DOH HKG CMB KUL RIO GRU SYD SCU 13 November 2014 Hogeschool van Amsterdam Aviation 29

Estonian Aviation Seminar Airlines and Airports LCC Home airports ■ LCC’s exploit the O+D force of the Home airport only ■ They do so by exploiting many homes 13 November 2014 Hogeschool van Amsterdam Aviation 30

Estonian Aviation Seminar Airlines and Airports LCC Home airports ■ exploiting many homes ● ● ● ●● ● ● ● 13 November 2014 Hogeschool van Amsterdam Aviation 31

Estonian Aviation Seminar Airlines and Airports LCC Home airports ■ LCC’s exploit the O+D force of the Home airport ■ They do so by exploiting many homes ■ They did not invent this network model. . . 13 November 2014 Hogeschool van Amsterdam Aviation 32

Estonian Aviation Seminar Airlines and Airports Multiple Home airports ■ They copy it from the US majors. . ■ Homes of 13 November 2014 Hogeschool van Amsterdam Aviation 33

Estonian Aviation Seminar Airlines and Airports Multiple Home airports ■ They copy it from the US majors. . . ■ Homes of 13 November 2014 Hogeschool van Amsterdam Aviation 34

Estonian Aviation Seminar Airlines and Airports Multiple Home airports ■ They copy it from the US majors. . ■ Homes of 13 November 2014 Hogeschool van Amsterdam Aviation 35

Estonian Aviation Seminar Airlines and Airports: Airlines exploit O+D and Hub potentials of airports Airport potentials determine airline success 13 November 2014 Hogeschool van Amsterdam Aviation 36

Estonian Aviation Seminar Airlines and Airports Thank you for your attention 13 November 2014 Hogeschool van Amsterdam Aviation 37