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Comment by bogomipz | Hacker News Reader

Sure I understand about the logistical concerns and population densities but how do these spokes allow them to "defend their pricing power"?

Is it simply that that they can charge customers in those small secondary markets a premium on fares into the hub areas? Is that the pricing leverage?

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They can lessen competition by not building a big hub in an airport that that's already a hub for a competing airline. If they avoid stepping on each others toes with hubs there are less airlines to compete on price with. If Minneapolis is a hub for Delta, then they have a virtual monopoly for all the smaller airports in the area that need to first fly to Minneapolis before the final destination.

Right, OK so the industry collectively defends their pricing power by tacitly accepting these rules. That makes sense.

That being said when you look at the locations of some of these hubs they are in pretty undesirable places in terms of incurring flight delays due to weather - Chicago? San Francisco? Minneapolis, Denver, New York?

A hub will always be in a fairly large city: a hub city has a lot of non-stop flights to all over. Not only does the hub capture the small cities nearby, it also captures most of the traffic to other small cities far away from the large city.

Chicago [same for New York] is large enough that it will be a hub: enough people want to get from Chicago to every other city that if you don't offer the direct flight someone else will. From there people will figure out you can get from Chicago to anywhere they will will make it a hub despite your wishes.

The other part is historical. Minneapolis was a hub for Northwest Orient Airlines because it started in Minneapolis and thus made that their home hub. Delta eventually bought Northwest and got the hub with the deal. They decided to keep Minneapolis as a hub.

I don't know what the situation is with San Francisco. I suspect historically planes needed to stop there for fuel before crossing the ocean. That is just a guess though.

Sure, hubs are a window into air travel history in the U.S. And with consolidation comes these hubs that have a historical reason for being there. And while I certainly understand that the New Yorks and Chicagos will always need to be hubs I have trouble with airlines exposing travelers in New York or Chicago to the vagaries of weather in Denver or Minneapolis. It seems these airlines could move some of these "historical hubs" into places with more favorable weather conditions.

I am not trying to slight Denver or Minneapolis in any why I'm just using them as an example. It just seem that a strategic rebalancing of hub locations might make help with delays and rescheduling. The situation now seems to be the airline inherited the hub through consolidation and that's where it will stay because they're too cheap to move it.

it isn't just cheapness. Minneapolis has built a large airport. If delta threatens to move out Minneapolis will sell those extra gates Delta is no longer using to someone else who wants to start a hub. In the mean time where ever Delta relocates too needs to builds a lot of gates and probably runways - even though the city ultimately wants to be a hub I'm not sure the city is willing to pay for all that.

No and I completely understand agree with you. If you look at the amount of fees and insane amount taxes US citizen pay on airfares though it seems quite reasonable that the Federal government might might use some of that for improving air travel by building smarter hubs in more strategic places.

I just remembered another consideration: The geographical center of North America is in North Dakota. Minneapolis is the closest large airport. As such it on average uses the least fuel to use Minneapolis as a hub.

Though why Fargo isn't a hub by this logic I don't know. Also a population weighted geographic center is probably a better consideration than just pure geographic.

Yes and no. Sometimes a flight going out of one of those tiny airports and continuing from the hub is paradoxically cheaper than taking the same flight from the hub. A friend of mine will occasionally drive from Atlanta to South Carolina to save a few hundred dollars on a flight leaving Atlanta.

It's more that airports are only so big. It's expensive to build a new terminal, so if one airline takes over most of an airport, the others can't turn it into a hub. If you don't mind a layover, that's not a big deal. If you want nonstop from your nearest airport, the airline that made it a hub will be able to charge you more. But that's only fair, because they invested the capital in making that airport a hub. If they over-invested, that's a lot of capital lost.

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