Optimality of the hub-spoke system: A review of the literature, and directions for future research

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Abstract

This paper reviews the relevant literature to answer the question if hub-spoke networks are optimal from an economic and environmental aspect. Hub-spoke networks are used to serve a large number of destinations with a high frequency. The concentration of flights and demand leads to positive economic effects: additional indirect effects come from the high number of destinations. Airlines may prefer indirect passengers over direct passengers, at the expense of local welfare, if the willingness-to-pay of the former is higher. Furthermore, indirect effects are a redistribution of the direct effect, and may lead to double counting. Empirical evidence on environmental performance is mixed. Some case studies suggest hub-spoke networks are more harmful, given aircraft technologies and load factors. Proposed climate policies increase costs of operations, likely leading to a strengthening of the hub-spoke system. Further research into network development and the effect of climate policy on airline behaviour is necessary to support climate and aviation policy.

Original languageEnglish
Pages (from-to)A1-A10
Number of pages9
JournalTransport Policy
Volume104
DOIs
Publication statusE-pub ahead of print - 16 Aug 2020

Keywords

  • Airports
  • Aviation
  • Economic effects
  • Externalities
  • Hub-spoke

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