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5 reasons why PIA should switch to Hub & Spoke Business model

PIA being a mid-range carrier with multiple hubs serving more than 50 domestic and international destinations with the fleet of 35 aeroplanes with an average age of 11.4 years; is currently operating on point to point business model. However, some of the PIA flights are scheduled with hub & spoke system as well.

Currently, PIA has eleven international stations in the country that are Karachi, Lahore, Islamabad, Peshawar, Sialkot, Multan, Faisalabad, Quetta, Gawadar, Turbat and Rahim Yar Khan. Serving all these stations with very less number of aeroplanes is costly business and selling number of seats on a particular route is another tough job.Here are 5 reasons why PIA should switch to Hub & Spoke Business Model.

1. Increased frequencies to international destination

If we consider that Islamabad (Considering New Islamabad Airport) becomes the operational hub for PIA and all the international flights fly from Islamabad. Given the fact that Islamabad station already covers more than 40% of PIA operations. There would be an increase in frequencies of the international destinations as well as domestic destinations after the completion of the new airport. For example currently, PIA operates 4 flights weekly to Toronto from 3 different stations, if PIA adopts Hub & Spoke model it could be easily turned into a daily frequency with convenient connections from the other domestic stations. Increased frequency to international stations is only a convenience for the Pakistani passenger.

2. Increased number of international passengers in a single terminal

If Islamabad becomes the gateway for PIA, that will turn the fortunes of the airport increasing its revenue dramatically. Almost all the Gulf carriers have adopted the hub and spoke system. Pakistani passengers travelling from Pakistan who use these Gulf carriers prefer to fly them even though they have to spend 2 or 3 hours long layover. At some airports in Gulf, the layover is very long and the departure from Pakistan is at very odd hours. Thorugh this we can clearly establish the fact that if proper services are provided at airports within Pakistan people will be comfortable with the layovers and transits. With improved duty-free shops, restrooms, smoking lounges at Islamabad airport, the airport will generate a huge amount of revenue that will remain inside Pakistan. And if this model is developed properly PIA can attract international travellers to use PIA for its services to other destinations across the world on PIA network or other Pakistani airline’s network.

3. Cheap tickets and minimised operational costs

If and only if, PIA adopts this model, the sales teams might be able to offer cheap fares which may attract the traveller who is frequently flying with other airlines. We all know that Gulf carriers have deep pockets but why gulf carriers save costs to provide cheap fares is the fact that they Destination A to their Hub B and fills out another plane which goes to destination B. There are multiple flights arriving at destination B to fill the plane for destination C. This way the airline ensure its plane to destination C is full where it earns major revenue. And picks and chooses its destination A options. If PIA also flies the passenger from all its local stations to a single hub instead of operating 3 different flights from different cities it can fill out the planes. With more than 18 local stations PIA must be able to fill 80% of the right sized plane for the final destination. This will also spare the bulk of its widebody fleet for right destinations and save the airline billions in the useless movement of aircrafts just for the sake of it. Since the traveller behaviour is comfortable with layovers, they could also do layovers in their own country.

4. Increased productivity

If PIA adopts hub & spoke model, the staff productivity will dramatically increase. There will be dedicated staff for an international route rather than the current status where the staff sometimes flies from A destination to B destination and then onwards to destination C. Not only the planes will have better performance staff will also have a better working environment.

5. Value addition for customers

Since hub & spoke business is very tried and tested model if PIA adopts this model properly it will not only capture a huge chunk of Pakistani travellers will switch given the fact that they will fly non stop out of Pakistan. And with fewer aircraft movements there will be fewer issues and PIA would surprisingly increase in terms of, on-time departures, easy and frequent connections to their final destination.

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