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“The fact is, Southwest Airlines...uses a ridged hub-and-spoke system.” No they don’t. They use a system of heavily utilized focus cities. They serve ten destinations with over 100 daily departures, yet none see more than 240 (as of December 2011). The vast majority of Southwest's passengers are origin and destination, not connections. Houston Hobby International was (I'm not sure if it still is) the Southwest destination with the highest percentage of connecting passengers in their route network: approximately 30%. Contrast that with Atlanta's connecting percentage of 69%, Dallas' 62%, and Chicago's 57% according to the 2006 Airport Benchmarking Report from the Air Transport Research Society. The legacy carriers use hub-and-spoke systems. Delta serves seven destinations with over 100 departures per day. However, that number would have been four had not three of those been placed under Delta’s control because of their merger with Northwest. Delta’s three largest hubs see 967, 478 and 433 peak day departures. Two of the remaining four see more than 250 daily departures. The exact same type of operation is utilized by American, United and US Airways in order to build massive economies of scale and reduce the number of needed daily flight operations.

“Don't forget, Southwest is a low-cost airline. That's how it keeps its costs down, through hubs and spokes.” The first statement is somewhat true, although it becomes quite evident at times that Southwest does not offer the lowest fares in some route segments. However, Southwest has one of the highest cost structures in the industry. Legacy carriers have undercut Southwest in numerous aspects thanks to cost-cutting measures over the past decade. For example, Southwest pilots earn the highest average salary in the industry. As of 2009 their first-year minimum was $49,572. Entry pilots that same year working for US Airways earned a minimum $21,600. The airline’s cost savings come in other forms, such as fleet commonality, fuel-hedging (the impact of which has drastically shrunk), high aircraft utilization rates, historically flying to secondary airports, and the outsourcing of maintenance. Cost savings do not come from hub-and-spoke operations.

From: What's cost-benefit of longer runway?

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