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December 3, 2023
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The US market has long been thought of as a market where airlines develop fortress hubs, from which they control their markets.  But what does this look like?  And how do these hubs compare?

To answer these questions we took a look at a data source that explains the market and also provides answers to both questions.  Here we look at the DB1B Market (10% sample) and offer a hub table.  The data is for the first half of 2019. Please click on the table to enlarge it for better viewing.  The primary US airlines are listed across the top and down the left are the nation’s major markets by airport code.

The way to read the table is to select an airline and then go down the column to see what it’s hub profile looks like.  For example, looking at Alaska Airlines in the first column: Seattle (SEA) is its most important market.  Next, in order, are San Francisco (SFO), Los Angeles (LAX) and Portland (PDX).  Now looking across the SEA row, we see that Alaska’s main rival at that airport is Delta, followed by Southwest and United.

The table offers the same views for each of these airlines in these major markets.  Not only does one get a sense of how each airline features by market, but one also gets a sense of how airlines stack up against each other overall.  For example, the table illustrates how JetBlue dominates at JFK and Boston.  But we also see that JetBlue is considerably weaker in other markets.  This guides us to conclude that JetBlue is only a market maker in Boston and JFK.  Important markets for sure, but limited all the same.

By contrast, we see that Southwest is a market maker in several places. This leads to the conclusion that Southwest influences market pricing where it holds a significant market share and can enforce its market power.  Because it is strong in six markets, that influence trickles out across the nation far away from these six markets.  Indeed Southwest looks like the airline with the “best” market influence profile because it has six strongholds.  But in Atlanta (ATL) where Delta has an iron grip, Southwest’s best strategy is not to fight Delta on pricing – rather follow Delta’s pricing lead and benefit from having lower costs and therefore make Atlanta a more profitable market. And indeed that seems to be what Southwest has done in Atlanta.

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Co-Founder AirInsight. My previous life includes stints at Shell South Africa, CIC Research, and PA Consulting. Got bitten by the aviation bug and ended up an Avgeek. Then the data bug got me, making me a curious Avgeek seeking data-driven logic. Also, I appreciate conversations with smart people from whom I learn so much. Summary: I am very fortunate to work with and converse with great people.

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