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

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.