"American Airlines goes to 'rolling hub' strategy"

Wednesday, November 6, 2002

American Airlines goes to 'rolling hub' strategy 
By Tom Ramstack
THE WASHINGTON (DC) TIMES 


     American Airlines started a new flight-scheduling plan last week at
all three major airports in the Washington area to increase the
efficiency of its operations. 

     The airline says the only difference passengers might notice is
that one flight out of Washington Dulles International Airport to St.
Louis leaves at 7:11 a.m. instead of 6:54 a.m.

     "That allows us to staff one less gate for the morning flights,"
said Marty Heires, American Airlines spokesman.

     Nevertheless, the "rolling hub" scheduling system represents a
significant change from previous strategies by major airlines.

     Before the September 11 attacks and a slumping economy created
record losses, most big airlines clustered their flights around peak
flying hours at "hub" airports, which roughly follow the morning and
evening rush hours. A hub is a large airport where flights are clustered
around peak times and sent out in "spokes," or connections to other
airports.

     To arrange the flights in close sequence, the airlines often leave
planes waiting on standby until their departure times arrive.

     Under the rolling hub concept, airlines try to reduce waiting time
for airplanes and return them to the air as promptly as possible to cut
costs and generate more revenue.

     Rolling hubs are one of several tactics airlines are using to cut
costs and avoid bankruptcy. Layoffs and service cutbacks are others.

     AMR Corp., American's parent company, is trying to cut $4 billion
in annual costs, up from an earlier target of $3 billion, it said
yesterday.

     Even if American Airlines is successful with rolling hubs, the
airline industry is going to need to do much more to regain revenue lost
in the last two years, according to analysts. 

     "You're not going to cut costs enough to get back to
profitability," said David Swierenga, chief economist for the Air
Transport Association, the trade association for major airlines. "With
the economy in the tank, there's a big revenue shortfall."

     Nevertheless, he predicted the industry would be watching the
experiment by American, the industry's largest airline.

     "I think every airline is probably looking at it at least," Mr.
Swierenga said.

     Delta Air Lines also uses rolling hubs. Continental Airlines uses
the strategy at Newark International Airport.

     Southwest Airlines, currently the industry's most successful
airline, does not use any kind of hub system. Instead, it adjusts its
flights more frequently than most major airlines to reach the largest
number of passengers.

      Keeping airplanes flying for longer periods with the rolling hub
strategy means fewer of them are available for flights clustered around
peak hours. As a result, the airplanes might be in the air longer but
they could end up carrying fewer passengers.

     In addition, passengers at large airports might need to wait longer
between flights.

     American Airlines uses Chicago's O'Hare International Airport and
Dallas-Fort Worth International Airport as its hubs. Flights out of
O'Hare Airport have used rolling hubs since April. The airline started
the strategy at Dallas-Fort Worth Airport Friday. 

     American Airlines also flies out of Ronald Reagan Washington
National Airport and Baltimore-Washington International Airport. Most of
the changes are taking place in the airlines' administrative offices,
except for the morning flight to St. Louis from Dulles Airport, airline
officials said.

     "That's the only one people might notice," Mr. Heires said. 

     Rolling hubs are most efficient at airports plagued by airline
traffic congestion, said Rahsaan Johnson, Continental Airlines
spokesman.

     "It works in some places," Mr. Johnson said.

      Airports with enough runways and air traffic control capacity are
more capable of efficiently moving large numbers of passengers quickly
during peak flying hours. One of them is Houston's George Bush
Intercontinental Airport, the headquarters for Continental.

     With two runways at the airport available for takeoffs and two for
landings, "We can get airplanes on the ground more quickly," Mr. Johnson
said. "You can still keep your airplanes operating efficiently by doing
that."

     Even the Air Travelers Association, an advocacy group for airline
passengers, said rolling hubs represented no significant threat to
passenger convenience. 

      "I don't think it's anything the passengers are really going to
see or have any problems with," said David Stempler, the association's
president. 

     Any additional time passengers spend waiting for connecting flights
probably would be offset by shorter delays on runways waiting for
airplanes to take off, he said.


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