Resurgent hub-and-spoke model lurking in the shadows?
The pre-COVID-19 pandemic world in aviation was like it was full of sunshine and glitter. Record profits, unprecedented growth in the industry and most importantly, connectivity like unlike ever before allowed passengers to enjoy direct connections to their favorite vacation spot, or allowed them to visit their families on a whim without any second-guessing whether they would have to endure a long and excruciating connection in a city far away from their loved ones.
But then the sunshine and glitter were replaced by doom and gloom, as airlines cut capacity, parked fleets, while governments around the world imposed travel restrictions to keep the virus under control. Consumers were grounded as well – as business closed down, capital expenditure was becoming more and more limited from the very bottom of the money tree to the very top of it.
And unfortunately, connectivity became very limited. Not only for consumers to put their bottoms somewhere else in the continent, but to also transfer crucial supplies to fight the virus. As airlines parked their fleets, the total cargo capacity went down drastically, as freight was also carried in the bellies of passenger aircraft. International Air Transport Association (IATA) indicated that demand fell by 27.7% in April 2020 compared to the same period last year. However, there was still insufficient capacity to meet the demand of freight “as a result of the loss of belly cargo operations on passenger aircraft.”
After every crisis in aviation, nevertheless, changes were seen. Whether it would be the oil crashes of the 20th century, the post-9/11 shock, or the 2008 financial crisis, changes were apparent to consumers and more avid enthusiasts alike.
The coronacrisis will definitely bring changes to the way we travel. However, could it also bring the hub-and-spoke model back to life?
Point-to-point and ultra-long-haul
Prior to the current pandemic, the point-to-point model seemingly started to overshadow its hub-and-spoke competition. Low-cost carriers forced full-service carriers to innovate regarding their interior outfitting, reduce their prices or risk losing out on customers. In addition, the same no-frills airlines pioneered their own point-to-point routes by stimulating demand just by offering dirt-cheap tickets. While for some, low-cost airlines became the topic of heated discussions in some executive boardrooms, for others the model allowed to explore places like no other airline allowed to do so before.
Full-service carriers were not sitting on their laurels, either though: 2019 was a monumental year for ultra-long-haul travel. Project Sunrise, despite only being in its trial phase, gathered monumental momentum in the public eye, as Qantas connected London and New York with Sydney directly. The airline did it once before, with a delivery flight of a Boeing 747-400 in 1989 – but this time, it carried passengers and was eyeing to make it commercially available. Air New Zealand announced their own plans to connect its capital, Auckland, to New York via Newark’s Liberty International Airport (EWR). El Al, the Israel-based carrier, planned to trial ultra-long-haul connections from Tel Aviv, Israel to Melbourne, Australia.
COVID-19 had shifted those plans. Qantas indicated that it still plans to launch the Sunrise flights, but the decision to do so was postponed indefinitely. Air New Zealand indicated that instead of October 2020, Project Kiwirise would be delayed until late 2021, as the airline anticipates being as much as 70% smaller in two years’ time to weather the crisis. El Al had its chance to “trial” the flights in form of repatriation flights from Ben Gurion International Airport (TLV) to Melbourne Airport (MEL) and back, carrying stranded Israelis back home to Tel Aviv.
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