A thousand years ago during the Tang Dynasty, traders and travellers used the silk road to travel between Europe and China’s ancient capital Xi’an. But as sea routes took over, nascent Shanghai and Guangzhou grew wealthy while Urgench, Tashkent and Almaty fell into decline. But now another silk road city, Urumqi, could be poised for aviation success, one of three such candidates globally.
Journey to the west
Airlines gather in hubs to benefit both themselves and their passengers. Having people, equipment and infrastructure in one place creates economies of scale, reducing cost. Meanwhile, when groups of aircraft called banks arrive at one time and depart soon after it is possible to connect between flights easily and quickly – convenience the airline can monetise through higher fares.
An ideal hub will be well-located geographically so flyers do not have to fly further than on a competing airline. China’s main international airports – Beijing, Shanghai and Guangzhou, are on the east coast (see map A) and Nik Maltsev, an analyst, told me that passengers flying to inland Chinese cities via Shanghai and Dubai will fly between 11% and 21% further than those flying through Urumqi.
Nawal Taneja of the University of Ohio pointed out to me that Chinese airlines could operate the Airbus 321XLR (extended long range), a particularly powerful and economic aircraft, from Urumqi to almost anywhere in Europe or Asia.
Landing down under
Australia has a similar issue as most cities developed at the south east of the continent, so today most passengers have to cross Australia even if they are heading back. Qantas have direct flight from London to Perth, but a Darwin hub could be perfect for passengers starting in Asia. A passenger visiting Uluru (via Alice Springs) will fly more than 2,000 miles further if travelling through Sydney rather than Darwin (see map B).
However unlike in China, where many passengers do fly back, travel to Australian cities not in the Adelaide to Sydney corridor is comparatively low volume, which means that large aircraft operating through Darwin are unlikely to sell all their seats. Alan Joyce, CEO of Australia’s national carrier Qantas, attempted to launch Darwin as a hub for low-cost subsidiary Jetstar in 2009 but it never seemed to reach it’s potential.
Fortunately clean and efficient single-aisle aircraft like the Airbus 320neo (new engine option) and 321XLR, or (soon) the Comac 919 reach most of China, Korea and Japan, as well as the whole of south-east Asia, offering cost-efficient Asia-Australia connections through Darwin to more than two billion people. Time will tell whether Darwin can truly reach it’s potential as an aviation hub.
United American Emirates
I believe the greatest opportunity for a new hub lies in the Americas. With legacy networks, travel between most cities in North America and South America requires two or three stops, with high fares and high risk for the consumer.
An airline operating in or around the Cayman Islands, Jamaica or the Dominican Republic can reach almost anywhere in the Americas and a selection of European destinations with the 320, 321 or 919 (see map C). The model would be similar to how Emirates, Etihad and Qatar Airways, three large middle eastern airlines, connect Europe, Africa, Asia and Australia through their centrally located hubs.
One airline manager down in South America reminded me a few weeks ago that COPA, the flag carrier of Panama, is already giving this a go. But their hub may be too far south for efficient connections from North America to Central America and the Caribbean, which could be achieved through Jamaica.
When the region gets an Emirates-like carrier with regular connections to many cities, consumers will be the winners. Large US carriers like Delta Air Lines have been vocal in their opposition to middle eastern airlines so it will be interesting to see how they address a more local competitor.
The money hub
Airlines operating through these hubs will have shorter travel times than competitors, which puts them at the top of the list when people search for the quickest flight and may allow them to charge a higher fare. But short travel times alone are not enough – the secret to success for Emirates has been to ensure daily services at consistent times to every destination, and airlines should not develop a new hub unless they can be sure of a daily or at least five-weekly service on all routes.