11 ms·
Interning at Boeing in 2005, when the Dreamliner was still 2-3 years away from production, I asked a BD manager if Boeing was worried about A380 (the burning qu
by double0jimb0 9y ago
Interning at Boeing in 2005, when the Dreamliner was still 2-3 years away from production, I asked a BD manager if Boeing was worried about A380 (the burning question at the time was "Who is going to win, A380/Airbus or Dreamliner/Boeing").
Without pause, he said "Not worried at all, A380 serves the hub and spoke model, which is dying. People hate layovers, they want more direct flights."
Not a hard insight to grasp, and one which seems to have doomed A380 from the start.
- rurban 9y agoBut this is also the Dubai business model. Nobody wants to stay there, it's just a convenient stop. With more direct flights Dubai will also die. Also the EU is strongly behind this project. This is more than just Airbus or Emirates. So I see no death of the A380, even if the market moved on since.
- dx034 9y agoDubai won't die but the region won't need 3 super-hubs anymore (DOH, DXB, AUH).
- pkaye 9y agoIt is not a obvious insight to grasp since airlines take a strategy that makes them the most money and passengers are cost sensitive. Wasn't this the driving force behind the hum and spoke model?
- double0jimb0 9y agoPassengers are cost AND travel-time/hassle sensitive. It appears Airbus didn't place enough value into the "travel-time/hassle" part. More detail: the Dreamliner is 20% more efficient than previous generation planes. This allowed airlines to "break" the major hubs into many quicker/easier direct flights at a price that passengers are willing to pay. Boeing bet increasing value in this manner was superior than Airbus's bet to simply make hubs cheaper to operate.
- ghaff 9y ago>Passengers are cost AND travel-time/hassle sensitive. Especially among business travelers. Many business travelers may still shop on price up to a point but they'll tend to do so given that the flights have the same number of stops.
- bunderbunder 9y agoFor me, the price needs to be quite a bit lower to justify a layover even on pure financial grounds. I can't back this up with any hard math, but my sense is that time in transit curtails my productivity severely enough that there'd have to be a pretty enormous savings in ticket price to offset the cost of having me spend (say) twice as much time camping out in airport waiting areas and being subject to takeoff/landing laptop embargos.
- ghaff 9y agoI can't really point to a whole lot of productivity when traveling anyway. And, if I'm being honest, I will sometimes take connections to fly preferred (because of programs) airlines on longer flights. But, yeah, it's more time and that many more opportunities to have blown up travel plans that do lose significant chunks of time.
- geezerjay 9y agoPassangers are sensitive to travel time but the constraint is placed firmly on cost, particular on major tourism destinations where airports are already saturated. Furthermore, some international and national air travel networks are in fact organized in a hub and spoke pattern, particularly trans-oceanic flights where demand is high and cost is the main competitive advantage, including business travel. It's easy to claim now that the choice that was made a couple of decades ago was the right or wrong one, just like it's very easy to pick yesterday's lottery numbers, but if the world economy didn't tanked and if Airbus's projects weren't with so many delays then I really doubt Boeing's bet would be so right.
- 9y ago
- JumpCrisscross 9y ago> Wasn't this the driving force behind the hum and spoke model? No, the range of small jets (which were constrained by relatively unreliable, inefficient engines) was. Small jets can safely go further today than they could before. Boeing saw this. To be fair, Airbus also saw this. Political factors, similar to those behind NASA’s Space Shuttle debacle, constrained them to making a giant ass plane.
- InTheArena 9y agoThis. To be fair, Airbus actually owned the big twin market until the 767 and 757 came out. Then those planes (as well as Airbus's own planes) fragmented transatlantic flying. Then they lost their way when they focused on the A380 - but the engines that enabled the 787 were not yet out.
- mthomasb 9y agoThis is a great video on the economics of the hub and spoke vs. direct model embodied by the A380 vs 787: https://www.youtube.com/watch?v=NlIdzF1_b5M https://www.youtube.com/watch?v=NlIdzF1_b5M That channel also has alot of very interesting content on the economics of air travel (e.g., seating classes, how tickets are priced, etc).
- cwyers 9y agoOthers have mentioned the improvements in range in more fuel-efficient aircraft. But there's also other incentives at play. Remember when United had a passenger dragged off the plan on a commuter flight? Turns out that wasn't United, but one of many regional airlines that contracts with United. United's union contract constrains the size of these flights, but the pilots at these airlines make less than members of the union. So there's other incentives for airlines to abandon hub-and-spoke in favor of more commuter flights.
- forkandwait 9y agoIf I were building a model, I would estimate my customers average hourly income and figure that is how to calculate break even in a time vs money calculation for a flight. I make 60 an hour (low for regular flyers I bet), a flight change adds 4 hours, so a $240 cost difference for each direct flight is realistic. That might turn into real money if you scale it.
- Gibbon1 9y agoI have a suspicion which is you are right, ticket prices don't capture full cost. Especially for business passengers. Problem with the spoke and hub model is passengers not only decide on whether to fly based on price but on psychological stress[1]. When that gets too high they won't fly no matter what the price is. Airlines probably make more money if they _all_ charge more for lower stress flights. [1] More stress means business travelers need more down time after flights, which lowers productivity and moral. Long stressful flights impacts the quality of vacation travel.
- kelnos 9y agoPeople don't actually value things that way, because people don't work for a wage every hour they aren't doing something else. This kind of calculation comes up all the time when people are trying to "value their time", but the reality is quite different.
- aceinaday 9y agoListened to the American Airlines CEO talk about the hub and spoke a couple months ago and they seem pretty committed to it. He was saying that if there was an obvious market for a direct flight, they would break the hub and spoke, but otherwise, it was there to say.
- ghaff 9y agoIt's probably more accurate to say that airlines have tended to move toward more and often smaller hubs augmented by some point to point flights than that they're abandoning hub and spoke entirely.
- jrs235 9y agoHub and spoke allows the airlines to keep costs down by using smaller airplanes for the spoke routes which can be contracted out to smaller regional airlines that pay their pilots peanuts.
- raz32dust 9y agoIsn't A350 the competitor to Dreamliner? I think A380 was aimed at replacing B747, which it did. Also I feel (no data) that hub and spoke is alive and well. It's just that it is using more efficient, lower capacity flights (B787, A350) which are easier to fill up and maintain.
- seanmcdirmid 9y agoThe 787 replaced the 767 in Boeing's lineup, which in turn was competitor of the 350. The 747 is still incredibly successful for cargo, so the 380 didn't replace it; it is absolutely nuts that AirBus didn't come up with a cargo version of the 380 yet. Next up is the 777, which has higher capacity than the 787/350. However, it is modern enough that it can probably just be upgraded, no new plane is needed.
- rwmj 9y agoYou can't just take the seats out and fill it with boxes? What else is needed for a cargo plane?
- Alupis 9y agoUsually you need special flooring with tie-downs and rollers to facilitate moving the load around, which helps maintain an appropriate CG (Center of Gravity). Purpose-built freighter models also remove things that aren't necessary and just add weight - such as windows (packages don't need a view). This allows the carrier to transport more cargo in the same flight.
- txcwpalpha 9y agoYou need a good way to get the boxes on and off the plane, such as the 747 freighter's nose door [1]. The A380 can't be fitted with one of these due to its cockpit placement. The 2nd floor of the A380 also can't be removed because it's required structurally, and that really limits the size of the cargo you could potentially put in it. 1: http://www.aerospace-technology.com/wp-content/uploads/sites/15/2017/10/Boeing747Freighter_4.jpg http://www.aerospace-technology.com/wp-content/uploads/sites...
- chrisper 9y agoYou have to admit that it was a gamble though.
- Havoc 9y agoAs long as hub & spoke works out cheaper (which it will thanks to centralisation & economies of scale) it'll have a place in the budget market
- InTheArena 9y agoAs far as I am aware, there are no A380s in the charter market yet (which is a lot of budget market) and very very few in the discount carrier world (EasyJet, RyanAir, Sprit, Norwegian, Iceland Air, etc). The charter carriers and discount carriers typically don't have the traffic to sustain these flights, and really don't have first or business class traffic to sustain the flight. The a380 was made for large traffic to and from Asian cities. If there is going to be a savior for the program, that's where it will come from. There are rumors that Airbus has approached China to talk about taking over a large portion of the project, in exchange for Chinese orders. That's something to keep a eye on.
- kalleboo 9y agoIt looks like the problem with the hub & spoke model right now is that the big hub airports are all slot-restricted. LCCs like to use smaller airports out of town that have cheaper open slots, and this makes it harder to implement hubs. But I predict as they build out intercontinental travel (like Norwegian are doing now), hubs will emerge for the intra-continental legs.
- Havoc 9y ago>right now is that the big hub airports are all slot-restricted Dubai too? Looked to me like they had loads of capacity left last few times I went through
- dmead 9y agoCan you clarify why it serves the hub and spoke model?
- wlesieutre 9y agoThe only routes with enough people to fill an A380 are from one hub to another. If you flew Buffalo to Chicago to Denver to Colorado Springs, the Chicago to Denver leg could be on an A380 combined with people on tons of other itineraries that use the same hub-to-hub connection. But airlines are moving toward more small flights that just get you from one place to another without routing through the same central points. Maybe you'd fly direct, or maybe you'd fly to Chicago and then straight to Colorado Springs without going through Denver. Without the hub/spoke model there's no individual flight with so many people on it.
- jsjohnst 9y agoChicago - Denver is too short a flight to justify an A380 even if it’s full. Nothing short of NYC to SF or NYC to LAX would likely be justified.
- bluGill 9y agoEven when a hub->hub flight is that full it might make sense to run two smaller planes. People who arrive a little earlier get the earlier flight and get there sooner. If there is mechanical problems at least half the customers get there (probably more than half as you can fill empty seats) and are happy. If not enough people buy tickets one day you park a plane and fly a full plane instead of a half full one.
- princeb 9y ago>People hate layovers, they want more direct flights. still waiting for direct sin-jfk or syd-lhr. none exist. SIN-EWR used to exist, but it was too costly to run. edit: the new a350-900 ULR delivering this year is capable of flying long distance, so we'll see some of these flights reappear, esp now that fuel is cheap again.
- stephen_g 9y agoQantas announced last year that they're interested in flying direct to London and some other European cities from the eastern states of Australia. They're still waiting for a plane that can economically I think. A variant of the 777X might be an option. https://www.sbs.com.au/news/qantas-eyes-sydney-to-london-direct-flight https://www.sbs.com.au/news/qantas-eyes-sydney-to-london-dir...
- dx034 9y agoSYD-LHR will come as soon as technically possible. It'll be a 20h flight but can probably mostly be filled with business and premium eco. The yield on that route would be high enough to justify it (SIN-EWR was only so costly because the plane wasn't built for the distance).
- thaumasiotes 9y ago> People hate layovers, they want more direct flights. But the fact that people hate layovers is a tool that airlines use for price discrimination. I just searched priceline.com for one-way flights to PVG on February 20. SFO to PVG nonstop is $640 and up. LAX to PVG with a layover in SFO is $594.
- eloisant 9y agoIt might be true for US domestic flights, but for international flights you'll always have many people flying from one population hub to an other. Think Paris-Tokyo, London-New York, etc. You'll never have a direct flight from Edinburg to Osaka anyway.
- bluGill 9y agoWhile we may never have the Edinburg to Osaka direct flight, the 5 people/month (number made up, it seems reasonable) who make that trip want it. The smaller the plane the can profitably make those long trips the more small airports get direct flights and the happier customers will be. I know if I could get a direct flight to my in-laws only once a week I'd plan my vacation around when the plane runs over taking a layover someplace I don't want to be.