Lufthansa's main hub still offers intra-European connections, but rather than being carefully planned, they are mostly coincidental by-products of a system serving long-haul traffic. Seventy-five percent of the Frankfurt capacity (in available seat miles) is deployed to long-haul routes.
Lufthansa operates a four-bank system in Frankfurt, but it is in the process of introducing a fifth and making some of the bank peaks higher to improve connectivity. It plans to add long-haul services to its afternoon peak, which is currently the only predominantly short-haul-to-short-haul one.
Since Frankfurt is a relatively small origin-destination market, Lufthansa needs feed even on short-haul routes, though it must minimize losses in the sector. To do this, the airline is decoupling high-frequency services from the hub logic. Markets such as Hamburg, Berlin, Munich or London are served so often on any given day that Lufthansa has stopped bothering about optimizing connectivity in Frankfurt. These markets are run for efficiency and, with a fourth runway and more slots available now, there is some potential to actually achieve that. Low-frequency markets still have to be put in synch with long-haul operations, however, in order to be economically viable.
Von Hoensbroech forecasts that there will be further structural changes for hubs, as the “winner-takes-all” paradigm is felt. Wherever two airlines operate parallel hubs at the same airport, the bigger carrier grows faster over time and the smaller carrier tends to shrink, as witnessed at Chicago O'Hare International Airport with United Airlines and American Airlines.
Hub carriers also grow more quickly than the airlines serving them from elsewhere, and the hubs continue to align for alliance membership. “It is becoming increasingly difficult for us to fly into hubs of competing alliances,” von Hoensbroech concedes. That challenge will be felt in particular in Charlotte, N.C., where US Airways essentially owns the market and is switching from the Star Alliance to Oneworld (as a result of its merger with American), leaving Lufthansa and its other former Star partners without feed.
Von Hoensbroech expects the Sao Paulo market to become less of an issue (with TAM leaving Star for Oneworld) because the local market is so big that alliance members are less dependent on connections.
The dominant hubs are only becoming more dominant because airlines are becoming less liberal on interlining deals that have historically opened their networks to competitors at relatively attractive terms. “That approach is being questioned more and more,” von Hoensbroech says.
Goedeking argues that airlines should allocate more revenues generated in short-haul-to-long-haul connections to the shorter sectors, which have very high unit costs but are necessary. The costs are high partly because of the legacy structure built up over decades, but partly almost by definition. Short-haul flying is less efficient in terms of fuel burn, airport charges and bank structures. “But the economies of scale are still very powerful,” Goedeking says.
Air France still has significant short-haul flying built into its Paris-Charles de Gaulle (CDG) hub, but the bank system is arranged in such a way that are short-haul-to-short-haul connections unattractive. In any given bank, short-haul services are the last to arrive and the first to depart. Narrowbody aircraft can be turned around more quickly than widebodies, but scheduling sometimes means that low-yield short-haul passengers will have to wait for the departure sequence of the next bank because some connections are simply too short to make.