Investigation into the Hub-and-Spoke model using brand and frequent-flyer program

Abstract

Purpose: This paper seeks to understand if customer acceptance on flying through a hub has changed today, compared to the findings from past research conducted many years ago. The study involves investigations of Singapore Airlines, a successful FSC in terms of its ability to generate sustainable profits for many consecutive years as reflected in its annual financial reports. The carrier also has a strong corporate brand, a world-class airport hub as well as a frequent flyer program, which makes it attractive to explore. Design/methodology/approach: The survey method is utilized in order to seek the answers to the three questions developed in the literature review. Descriptive statistics are employed to analyze 723 datasets using SPSS v20. Findings: Although the paper shows that some findings resonated past arguments, some others have changed. Brand has no longer become a significant factor for passengers when deciding to travel with a full-service carrier (FSC) via its hub, and an FFP that is likely to hold less compelling attractiveness with passengers with regard to purchasing consideration. Research limitations/implications: The research involved only passengers traveling two routes in Southeast Asia, therefore the generalization of the findings must be carried out with caution. Future studies to extend this research to different geographical markets are necessary to investigate if similar behaviours are also observed, as described in this study. Originality/value: This paper offers insights into in the hub-and-spoke airline business model discipline. The author suggests that the role of strong brands and frequent flyer program to attract passengers travelling via a hub have diminished. Nowadays, even FSC passengers are more concern with airfare.

Keywords

• airline brand, airport brand, frequent-flyer program, hub-spoke model, hub-skipping flights, airfares.