Chapter Four
The Hub & Spoke System
Deregulation didn't just change prices — it fundamentally rewired the geography of American air travel. The hub-and-spoke network was not mandated by law. It emerged, organically and rapidly, as the dominant response to a deregulated market.
What Is Hub & Spoke?
In a hub-and-spoke network, an airline concentrates its operations at one or more central hub airports. Passengers travelling between two smaller cities — say, Omaha and Raleigh — are routed through the hub (perhaps Chicago O'Hare or Atlanta Hartsfield), connecting two spoke flights rather than flying direct. The alternative — the point-to-point model — operates direct flights between city pairs regardless of volume. Under CAB regulation, point-to-point was the norm. Deregulation changed the calculus entirely.
Why Did It Emerge?
The economics are compelling. A hub-and-spoke network allows an airline to serve far more city pairs with far fewer aircraft. If an airline operates from a hub to 20 spoke cities, it can theoretically offer connections between all 190 possible city-pair combinations. A point-to-point network serving the same 20 cities would require 190 separate routes. Hubs also generate passenger density — filling aircraft more efficiently, which drives down unit costs. In a deregulated market where cost efficiency is survival, the hub model was almost inevitable.
America's Major Hubs
The world's busiest airport. Delta's fortress hub handles over 100 million passengers annually.
A dual-hub airport, contested between United and American, serving as a critical Midwest connecting point.
American's primary hub, strategically positioned at the centre of the continental US.
United's western hub, connecting the Mountain West to both coasts.
A classic fortress hub — American holds over 90% of seat capacity, with minimal competition.
The Fortress Hub Problem
The hub model created a new form of market power: the fortress hub. At airports like Charlotte, Cincinnati, and Memphis, a single airline achieved near-total dominance. With no meaningful competition, fares at these hubs ran significantly higher than at contested airports. A 1993 DOT study found that fares at concentrated hub airports were on average 27% higher than at comparable competitive airports. The hub model delivered efficiency — but it also delivered monopoly power, and consumers at fortress hubs paid the price.
The Spoke City Problem
For passengers in smaller spoke cities, the hub model brought mixed blessings. Connectivity improved dramatically — a resident of Bozeman, Montana could now reach almost any US city with a single connection. But the journey often took longer than a direct flight would have, and the hub airline's dominance on spoke routes meant limited competition and higher fares. When airlines restructured after 2001, many spoke routes were cut entirely, leaving some communities with reduced or no service.
The Point-to-Point Alternative
Southwest Airlines built its entire business model on point-to-point flying, deliberately avoiding the hub-and-spoke system. By operating direct flights between secondary airports — Midway instead of O'Hare, Love Field instead of DFW — Southwest avoided hub congestion, reduced turnaround times, and kept costs low. Its success demonstrated that point-to-point remained viable on high-density routes. But it also proved the exception: for most of the industry, the hub-and-spoke model remained the dominant architecture of the deregulated era.