Minot, N. Dakota, USA, is served over one Hub. Minot Feeds to Minneapolis Hub MOT MSP.

Minot, N. Dakota, USA, is served over one Hub

airport Destination Dist (km) Passengers fareMSP MINNEAPOLIS/ST. PAUL-INTL 724 23.9 191$ PHX PHOENIX, ARIZONA, USA-INTL 1879 8.7 215$ LAS LAS VEGAS, NEVADA, USA-MCCARRA 1771 5.6 213$ DFW DALLAS/FT. WORTH, TEXA-INTL 1747 5.0 241$ SEA SEATTLE/TACOMA, WASHIN-SEA/TAC 1574 4.9 209$ DCA WASHINGTON, DC, USA-NATIONAL 2211 4.8 309$ DEN DENVER, COLORADO, USA-INTL 974 4.7 197$ MCO ORLANDO, FLORIDA, USA-INTL 2797 4.5 226$ LAX LOS ANGELES, CALIFORNI-INTL 2139 3.7 220$ SAT SAN ANTONIO, TEXAS, USA 2097 3.6 331$ ANC ANCHORAGE, ALASKA, USA 3360 3.0 245$ ORD CHICAGO, ILLINOIS, USA-O'HARE 1263 2.9 225$ ATL ATLANTA, GEORGIA, USA 2152 2.7 255$ SFO SAN FRANCISCO, CALIFORNIA, USA 2082 2.7 219$ EKO ELKO, NEVADA, USA 1418 2.6 48$ IAH HOUSTON, TEXAS, USA-INTERCONT 2097 2.6 290$ LGA NEW YORK LA GUARDIA 2323 2.6 228$

Rest of World (117 more Cities) 2022 91 240$ TOTAL/avg 1818 177 230$

Minot Feeds to Minneapolis Hub

MOT

MSP

18:00 Bank Gives Minot 38 DestinationsInbound Bank Outbound Bank

Origin Depart Hub Origin Depart Hub Hub Arrive Destin' Hub Arrive Destin'city time time city time time ==> time time city time time cityONT 1200 1727 DLH 1655 1748 1848 2116 MBSBOS 1505 1728 SAN 1210 1748 1849 2136 CMHSNA 1200 1728 IND 1604 1749 1850 2227 HPNPSP 1210 1729 TUL 1550 1750 1850 2130 AZOPDX 1210 1729 DTW 1700 1753 ==> 1835 2030 MEM 1850 2130 AZOMSO 1355 1730 GRB 1641 1755 ==> 1836 1932 FAR 1850 2215 TYSCWA 1630 1731 MKE 1635 1756 ==> 1837 2159 IAD 1850 900 LGWGFK 1620 1731 SJC 1215 1756 ==> 1838 2159 RDU 1851 2142 DTWRST 1650 1732 RAP 1530 1757 ==> 1839 2209 PVD 1852 2128 FNTSMF 1205 1732 DTW 1705 1759 ==> 1839 2214 GSO 1853 2217 BWIORD 1600 1734 DSM 1650 1759 ==> 1840 2207 BDL 1854 2246 BOSDFW 1510 1735 MSN 1645 1800 ==> 1841 2108 GRR 1855 2255 ORFYEG 1355 1735 MOT 1635 1800 ==> 1842 2139 BUF 1855 2008 MLIYYC 1357 1735 SFO 1220 1800 ==> 1843 2104 OKC 1855 2124 LANABQ 1405 1739 BOI 1415 1804 ==> 1844 2210 ATL 1856 2126 DFWLNK 1615 1740 GEG 1312 1804 ==> 1845 2159 ROC 1857 2158 YYZDCA 1559 1741 ATL 1620 1805 ==> 1845 2022 SBN 1858 2007 GRBSTL 1600 1742 MDW 1635 1809 ==> 1845 2134 DAY 1859 2002 OMALAX 1215 1744 CVG 1655 1809 ==> 1846 2208 CLT 1900 2200 PIT

YWG 1618 1744 CWA 1715 1815 ==> 1847 2208 DCA 1900 2027 ORDBIS 1630 1747 1847 2253 TPA 1901 2030 MCI

Minot Connects to the World

Most Markets are Small

0%2%4%6%8%

10%12%14%16%

<3.12

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2.5 <25

<50

<100

<200

<400

<800

<160

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Passengers per Day One Way

Shar

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s Too Small For Nonstop

Half of Travel is in Connecting Markets

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10%12%14%16%

O&D Passengers per Day

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Connecting Markets

Nonstop Markets

Lots of O&D Connections

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100%

3001000

20003000

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St. Mi. Range Block (excludes US domestic O&Ds)

Shar

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s4-leg connectDouble Connect1-connectthrunonstop

Half the Trips are Connecting

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St. Mi. Range Block (excluding US domestic)

ASM

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3+legs2-legsNonstops

Connecting Share of Loads Averages about 50%

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Long-Haul Flights are from Hubs, and carry mostly connecting traffic

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Trend

Markets over 5000km

Point-to-Point Markets

Hub Concepts• Hub city should be a major regional center

– Connect-only hubs have not succeeded– Early hubs are centers of regional commerce

• Early Gateway Hubs get Bypassed– Early International hubs form at coastlines– Interior hubs have regional cities on 2 sides

• Later hubs duplicate and compete with early hubs– Many of the same cities served– Which medium cities become hubs is arbitrary– Often better-run airport or airline determines success– Also the hub that starts first stays ahead

ORD

ATLDFW

DEN

JFK

LAX

MIA

SFO

Regional and Gateway Hubs in US

Three Kinds of Hubs• International hubs driven by long-haul

– Gateway cities– Many European hubs: CDG, LHR, AMS, FRA– Some evolving interior hubs, such as Chicago– Typically one bank of connections per day

• Regional hubs connecting smaller cities– Most US hubs, with at least 3 banks per day– Some European hubs, with 1 or 2 banks per day

• High-Density hubs without banking– Continuous connections from continuous arrivals and departures– American Airlines at Chicago and Dallas– Southwest at many of its focus cities

ORD

ATLDFW

DENJFK

LAX

MIA

SFO

Secondary Hubs in US

STLSLC

CVG

PHX

IAH

MSPDTW PIT

EWR

SEA

Value Created by Hubs

The idea in business is to Create ValueDo things people want at a cost they will pay

Hubs make valuable travel optionsFeeder city gets “anywhere” with one connectionFeeder city can participate in trade and commerce

Hubs are cost-effectiveMost destinations attract less than 10 pax/dayConnecting loads use cost-effective airplanes

Hubs Build Loads First, then Frequency

$-

$100

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$600

0 50 100 150 200 250Seats

Trip

Cos

t Per

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t

Too Expensive

Good Balance

Add Frequency

Hubs Give Competitive Advantages

• Less peaking of demands, as variations in different markets average out

• Dominate feeder legs– Connect loads allow dominant frequency– Connect loads avoid small, expensive airplanes– Feeder cities can be “owned”

• Dominant airline will get 15% market share advantage• Dominant airline can control sales channels• Control of feeder cities makes airline attractive to alliances

Hubs Compete with Other Hubs

• Compete on quality of connection– Does the airport “work?”

• Short connecting times• Reasonable walking distances• Reliable baggage handling• Few delayed flights• Recovery from weather disruptions• Later flights for when something goes wrong

Hubs Develop Pricing Mixes

• Higher fares in captive feeder markets• Low discount fares in selected connecting

markets to fill up empty seats– Low connecting fares compete against nonstops– Select low fare markets against competition– It pays to discount and fill

• Unless you discount your own high-fare markets