Minot, N.

Dakota, USA, is served over one Hub

airport Destination Dist (km) Passengers fare
MSP MINNEAPOLIS/ST. PAUL-INTL 724 23.9 $ 191
PHX PHOENIX, ARIZONA, USA-INTL 1879 8.7 $ 215
LAS LAS VEGAS, NEVADA, USA-MCCARRA 1771 5.6 $ 213
DFW DALLAS/FT. WORTH, TEXA-INTL 1747 5.0 $ 241
SEA SEATTLE/TACOMA, WASHIN-SEA/TAC 1574 4.9 $ 209
DCA WASHINGTON, DC, USA-NATIONAL 2211 4.8 $ 309
DEN DENVER, COLORADO, USA-INTL 974 4.7 $ 197
MCO ORLANDO, FLORIDA, USA-INTL 2797 4.5 $ 226
LAX LOS ANGELES, CALIFORNI-INTL 2139 3.7 $ 220
SAT SAN ANTONIO, TEXAS, USA 2097 3.6 $ 331
ANC ANCHORAGE, ALASKA, USA 3360 3.0 $ 245
ORD CHICAGO, ILLINOIS, USA-O'HARE 1263 2.9 $ 225
ATL ATLANTA, GEORGIA, USA 2152 2.7 $ 255
SFO SAN FRANCISCO, CALIFORNIA, USA 2082 2.7 $ 219
EKO ELKO, NEVADA, USA 1418 2.6 $ 48
IAH HOUSTON, TEXAS, USA-INTERCONT 2097 2.6 $ 290
LGA NEW YORK LA GUARDIA 2323 2.6 $ 228
Rest of World (117 more Cities) 2022 91 $ 240
TOTAL/avg 1818 177 $ 230
Minot Feeds to Minneapolis Hub
MOT

MSP
 18:00 Bank Gives Minot 38 Destinations
Inbound Bank Outbound Bank
Origin Depart Hub Origin Depart Hub Hub Arrive Destin' Hub Arrive Destin'
city time time city time time ==> time time city time time city
ONT 1200 1727 DLH 1655 1748 1848 2116 MBS
BOS 1505 1728 SAN 1210 1748 1849 2136 CMH
SNA 1200 1728 IND 1604 1749 1850 2227 HPN
PSP 1210 1729 TUL 1550 1750 1850 2130 AZO
PDX 1210 1729 DTW 1700 1753 ==> 1835 2030 MEM 1850 2130 AZO
MSO 1355 1730 GRB 1641 1755 ==> 1836 1932 FAR 1850 2215 TYS
CWA 1630 1731 MKE 1635 1756 ==> 1837 2159 IAD 1850 900 LGW
GFK 1620 1731 SJC 1215 1756 ==> 1838 2159 RDU 1851 2142 DTW
RST 1650 1732 RAP 1530 1757 ==> 1839 2209 PVD 1852 2128 FNT
SMF 1205 1732 DTW 1705 1759 ==> 1839 2214 GSO 1853 2217 BWI
ORD 1600 1734 DSM 1650 1759 ==> 1840 2207 BDL 1854 2246 BOS
DFW 1510 1735 MSN 1645 1800 ==> 1841 2108 GRR 1855 2255 ORF
YEG 1355 1735 MOT 1635 1800 ==> 1842 2139 BUF 1855 2008 MLI
YYC 1357 1735 SFO 1220 1800 ==> 1843 2104 OKC 1855 2124 LAN
ABQ 1405 1739 BOI 1415 1804 ==> 1844 2210 ATL 1856 2126 DFW
LNK 1615 1740 GEG 1312 1804 ==> 1845 2159 ROC 1857 2158 YYZ
DCA 1559 1741 ATL 1620 1805 ==> 1845 2022 SBN 1858 2007 GRB
STL 1600 1742 MDW 1635 1809 ==> 1845 2134 DAY 1859 2002 OMA
LAX 1215 1744 CVG 1655 1809 ==> 1846 2208 CLT 1900 2200 PIT
YWG 1618 1744 CWA 1715 1815 ==> 1847 2208 DCA 1900 2027 ORD
BIS 1630 1747 1847 2253 TPA 1901 2030 MCI
Minot Connects to the World
 Most Markets are Small
16%
14%
Too Small For
12%
Share of RPKs

Nonstop
10%
8%
6%
4%
2%
0%

+
5

00

00

00
00
25

5
5

60
<5
<2

00
2.
.2

<2

<4

<8
<1
.1

<1
<6

<1

16
<3

Passengers per Day One Way

 Half of Travel is in Connecting Markets
16%
14%
Share of World RPKs

12%
Connecting Markets
10%
8%
6%
4%
2% Nonstop Markets
0%

O&D Passengers per Day

 4-leg connect
Lots of O&D Connections Double Connect
1-connect
100% thru
90% nonstop
Share of O&D Passengers

80%
70%
60%
50%
40%
30%
20%
10%
0%

00 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 00 0 0 0 0
3 10 20 30 40 50 60 70 80 90 00 10 20
1 1 1
St. Mi. Range Block (excludes US domestic O&Ds)
 Half the Trips are Connecting
400000 3+legs
350000 2-legs
300000 Nonstops
ASMs (000/day)

250000
200000
150000
100000
50000
0

St. Mi. Range Block (excluding US domestic)

 Connecting Share of Loads Averages
about 50%
80%
Local Traffic Share of

70%
60%
50%
Onboard

40%
30%
20%
10%
0%
0 2000 4000 6000 8000 10000
Flight Distance (Km)
 Long-Haul Flights are from Hubs,
and carry mostly connecting traffic
100%
90%
Point-to-Point Markets
80%
Local % of Onboard Load

70%
60%
50%
40% Trend
30%
20%
10%
0%
100 150 200 250 300 350 400 450 500
Markets over 5000km Seats per Departure
 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
 Regional and Gateway Hubs in US

JFK
ORD
SFO
DEN

LAX ATL
DFW

MIA
 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
 Secondary Hubs in US
SEA

MSP
DTW PIT JFK
SLC ORD
SFO EWR
DEN STL CVG

LAX PHX ATL

DFW

IAH
MIA
 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
 Hubs Build Loads First, then Frequency
$600
Too Expensive
$500
Trip Cost Per Seat

$400

$300

$200
Good Balance
$100
Add Frequency
$-
0 50 100 150 200 250
Seats
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
 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
 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