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Biography for William Swan

Biography for William Swan.

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Biography for William Swan

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  1. Biography for William Swan Chief Economist, Seabury-Airline Planning Group. AGIFORS Senior Fellow. ATRG Senior Fellow. Retired Chief Economist for Boeing Commercial Aircraft 1996-2005 Previous to Boeing, worked at American Airlines in Operations Research and Strategic Planning and United Airlines in Research and Development. Areas of work included Yield Management, Fleet Planning, Aircraft Routing, and Crew Scheduling. Also worked for Hull Trading, a major market maker in stock index options, and on the staff at MIT’s Flight Transportation Lab. Education: Master’s, Engineer’s Degree, and Ph. D. at MIT. Bachelor of Science in Aeronautical Engineering at Princeton. Likes dogs and dark beer. (bill.swan@cyberswans.com) • Scott Adams

  2. Minot, N. Dakota, USA, is served over one Hub

  3. Minot Feeds to Minneapolis Hub MOT MSP

  4. 18:00 Bank Gives Minot 38 DestinationsInbound BankOutbound Bank

  5. Minot Connects to the World

  6. Half of Travel is in Connecting Markets

  7. Half the Trips are Connecting

  8. Connecting Share of Loads Averages about 50%

  9. Long-Haul Flights are from Hubs, and carry mostly connecting traffic

  10. Hub Concepts • Hub city should be a major regional center • Connect-only hubs have not succeeded • Early hubs are centers of regional commerce • Early Gateway Hubs get Bypassed • Early International hubs form at coastlines • Interior hubs have regional cities on 2 sides • Later hubs duplicate and compete with early hubs • Many of the same cities served • Which medium cities become hubs is arbitrary • Often better-run airport or airline determines success • Also the hub that starts first stays ahead

  11. Regional and Gateway Hubs in US JFK ORD SFO DEN LAX ATL DFW MIA

  12. Three Kinds of Hubs • International hubs driven by long-haul • Gateway cities • Many European hubs: CDG, LHR, AMS, FRA • Some evolving interior hubs, such as Chicago • Typically one bank of connections per day • Regional hubs connecting smaller cities • Most US hubs, with at least 3 banks per day • Some European hubs, with 1 or 2 banks per day • High-Density hubs without banking • Continuous connections from continuous arrivals and departures • American Airlines at Chicago and Dallas • Southwest at many of its focus cities

  13. Secondary Hubs in US SEA MSP DTW PIT JFK SLC ORD SFO EWR DEN CVG STL LAX ATL PHX DFW IAH MIA

  14. Value Created by Hubs The idea in business is to Create Value Do things people want at a cost they will pay Hubs make valuable travel options Feeder city gets “anywhere” with one connection Feeder city can participate in trade and commerce Hubs are cost-effective Most destinations attract less than 10 pax/day Connecting loads use cost-effective airplanes

  15. Hubs Build Loads First, then Frequency

  16. Hubs Give Competitive Advantages • Less peaking of demands, as variations in different markets average out • Dominate feeder legs • Connect loads allow dominant frequency • Connect loads avoid small, expensive airplanes • Feeder cities can be “owned” • Dominant airline will get 15% market share advantage • Dominant airline can control sales channels • Control of feeder cities makes airline attractive to alliances

  17. Hubs Compete with Other Hubs • Compete on quality of connection • Does the airport “work?” • Short connecting times • Reasonable walking distances • Reliable baggage handling • Few delayed flights • Recovery from weather disruptions • Later flights for when something goes wrong

  18. Hubs Develop Pricing Mixes • Higher fares in captive feeder markets • Low discount fares in selected connecting markets to fill up empty seats • Low connecting fares compete against nonstops • Select low fare markets against competition • It pays to discount and fill • Unless you discount your own high-fare markets

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