I have searched around the forum and didn’t seem to find a discussion about this topic. I also looked in the WIKI, looked at tutorials and other places to find some kind of response to this.
My main question is the following:
What would be deemed a good Seat Load Factor when you want to grow a Hub system? I am assuming that a 100% seat load factor would be good(profit wise) but would be bad, growth wise since you would not be able to have connecting passengers.
I have been struggling with this question since I have started my company. I have been mainly running a strong SLF of about 96% however, I feel that the SLF might be too high to accommodate new routes with less direct demand and more connection pax.
I would be curious to know what would be a decent SLF to maintain for a HUB system that others have attempted to maintain?
The logic behind it would be if you have an SLF of 87%-94%, the more routes you add the most likely you will get connection pax, however, with an SLF of 95% plus, you are most likely not taking advantage of your entire connection network.
Also, is there a different way to look at this? For instance; do you look at it on a per route basis? Or some other magic way?
Thoughts?
PS: If I may have missed a topic about this in the past, please link me to it!
Seat load factor does not indicate if you have connecting passengers or not. It only shows that your plane is fully or 64% or… booked.
If you want to know if you have created a good connecting network, you should look into the overview page in station tab of your hub.
There is no way to know whether you’ve got all connections covered to an optimum in your network.
You can only check the % direct vs indirect pax per airport and route, like highscore mentioned.
AS lacks statistics to find out where exactly your transfer pax are coming from/travelling to. This would be a great management tool to help with what you’re trying to figure out, but I don’t expect to see this option in AS (was suggested years ago, but I believe it was explained to need a massive database and maybe give (too much?) insight in the demand data).
Anyway, this is why it can be useful to offer connections multiple times a day in a wave system = more options = possibly more coverage. Furthermore it’s trial and error experimenting with connections and airplane sizes, I guess.
My question relates more to what should a good SLF be for a company seeking to grow a HUB system. The idea is that eventually you run out of direct pax, so how do you add connecting destinations and succeed while having a high SLF?
Always try to add as many “feeding” seats as you add “connecting” seats.
You end up with a perfectly timed and structured hub that can have >90% both SLF and connecting pax.
The only reason you are building up a hub is to achieve and secure a 100% SLF - or more precisely maximum profits. It doesn’t matter how many of your pax are connecting through your hub, as long as you make as much money as possible
I always wonder what I should be willing to accept when it comes to connections. Right now, I have some flights that run at about 60% SLF. They turn a profit but when I look at these flights, I wonder if I should cut them to find flights with 100% SLF or simply to continue growing my HUB and let the destinations and connection options do the rest.
In this scenario, I always wonder what would be best? Cut the routes with medium SLF and replace them with routes with 100% SLF or keep the medium SLF(but profitable) routes to allow for expansion of my HUB when I add more connections.
My HUB currently stands at 89% SLF with 49% internal connecting PAX and 51% connection PAX.
In week 8 of 2020, this was at 28% connecting pax and 72% direct. I am thinking the ORS changes may have impacted the direct demand on some of my routes.
If your SLF is 100%, it means that not only you, but also your competitors make a lot of money. I would increace capacity if SLF is higher than 90%. But be careful with these statistic figures: SLF of 90% could mean that 9 of 10 flights are fully booked and one is flying empty, you should check that.
I don´t see any use in achieving 90% or 100% connecting pax. A hub is not a religion. If you can better serve the demand by flying direct, you should do so. That depends on your country and the traffic rights. If I have 90% connecting pax in polycentric markets such as Europe or the US, I would introduce more direct flights bypassing the hub, instead of waiting for a competitor doing so. I often use the strategy of bypassing hubs of big competitosrs, you can make a lot of money with that.
