DALLAS – If you check our routes section, you may have noticed it is common practice for airlines to stop flying to some destinations and to open new routes.
Just last month, Air India (AI) made the decision to no longer operate flights to Amsterdam Schiphol Airport (AMS) at the end of the month. the airline said the halt was due to slot constraints at AMS. As for new flight options, from VietJet (VT) to Emirates (EK), Aegean to Porter (PD), and Jet2 to Lynx Air, announcements for upcoming new routes abounded at the start of October.
So what happens behind the scenes before such announcements are made? In this post, we’ll take a look at the process of launching a new route, from market analysis to the inaugural flight.
Selecting a destination on a world map and commencing flights may appear straightforward, but the process of launching a route is significantly more intricate than what most people initially realize. It typically involves years of meticulous planning, starting from the moment an airline begins analyzing a new market opportunity to the eventual inaugural flight.
Before launching a new route, every airline must make sure there is enough passenger demand to support the route and make it profitable. Knowing how many people are most likely to fly on the route is also very important to choosing the right aircraft to operate the new route. Another crucial point is the price people would be willing to pay for this particular flight.
Airlines use special tools and software to analyze the data they need to evaluate passenger demand for possible routes. One of those tools, airlinedata.com, allows airlines to study demographics around airports.
For example, if I am an airline considering flying to Seattle (SEA), I can see that nearly 5 million people live within 100 miles of the airport, that their median age is 35, and that the median income per household is a little over US$57,000.
While demographic data is important information for airlines, multiple other factors are studied. With these tools, an airline can also surmise the average number of passengers per departure, the average load factor, the fares, and the revenues of its competitors on each route.
For example, before Delta Air Lines (DL) considered flying nonstop to Cape Town from Atlanta last year, a particular data set would have told the airline that about 2,300 people flew from ATL to CPT in 2021, with 1,000 of them flying with DL and KLM (KL) with a connection in Amsterdam (AMS), and 250 flying with Qatar Airways (QR) with a layover in Doha (DOH). Other options were available, mostly with stops in Europe or the Middle East.
The data would have also told DL that passengers paid an average fare of US$884 for this direct trip, which gives it an idea of the price it could ask for nonstop travel to Cape Town.
The Hub-and-Spoke Model
When encountering the data, it may appear perplexing that DL made the decision to initiate a flight on a route that is only frequented by 2,300 fliers annually. Considering that there are an average of 50 passengers per week, it may seem unfeasible to fill the aircraft and generate profitability for the route. However, this initial impression fails to consider the hub-and-spoke model, which is utilized by all major airlines, including DL.
The main idea is that instead of flying passengers directly from the origin airport to their destinations, the airline flies passengers to its hub for a short layover and then connects them to a second flight to their final destination.
This allows the airline to fly to many more destinations and increases the load factor on all of its flights. Every major airline has at least one hub where its passengers can connect. For example, DL has a major hub in ATL but also has New York JFK, Los Angeles (LAX), and airports in other major US cities.
The schedules, however, have to be planned accordingly. If DL wants to connect travelers to CPT, the carrier has to set the departure a little after most of the flights from domestic destinations have already landed.
Passengers usually don’t want to wait for more than four hours at an airport. When there is high demand for a route from the airline’s hub, the carrier can decide to operate multiple flights, with some planned for business travelers, usually early in the morning and late in the evening, and others for connecting passengers during the day.
For example, on the flight from ATL to CPT, passengers starting their journey from ATL represent a very small percentage of the total load factor. Most people will fly from any DL destination, land in ATL, and then fly to CPT on a new flight.
This is why DL can operate the route even if there are only a few passengers traveling between these airports. It is worth noting here that DL’s ATL-CPT nonstop flights are priced at US$1,517 for the week of April 6–14, 2023.
Competing with Other Airlines
While airlines occasionally introduce routes that have never been operated before, it is common for carriers to launch one that is already being served by one of its competitors. Some routes experience intense competition, making it challenging for new entrants to generate sufficient demand and achieve profitability on the route.
In such cases, the airline considering the route will analyze the fares and passenger numbers of the competitor to assess the route’s viability. Another crucial factor is the load factor of other airlines operating on the same route. The load factor represents the percentage of occupied seats during a flight. If the competitor maintains a high load factor with consistently full flights, it indicates that there might be enough demand for another airline to enter the market and capture a share of the passenger load.
There are several strategies an airline can employ to attract passenger demand, even when multiple competitors are already operating on the route. One such strategy is offering lower ticket prices. Since most passengers tend to seek cheaper flights to their destinations, reducing ticket prices can help attract more passengers. However, airlines often face narrow profit margins, and it can be challenging to lower prices while still maintaining route profitability.
Another way to compete on an already-served route is to offer many connections with a hub-and-spoke network and partner airlines. For example, when United Airlines (UA) decided to launch a new route from Denver (DEN) to Munich (MUC) last summer, the airline did not fly to a lot of major European cities from this hub to Paris.
It can seem counterintuitive, but UA has a partnership with Lufthansa (LH), as they are both members of the Star Alliance and have codeshare agreements. This means passengers can fly to MUC with LH and then fly UA to DEN under the same reservation.
The last, and maybe the hardest way for a newcomer to attract passengers right away on a competitive route is with an exceptional or brand-new product. If the airline manages to create a different experience for passengers and aggressively advertises the new route, this will likely ensure there will be enough demand to sustain the route at first.
For example, US low-cost carrier JetBlue (B6) entered a brand new market last year: long-haul transatlantic flights between London and New York. It is one of the most competitive long-haul markets in the world.
When B6 began its flight to London, six different airlines already operated over 50 flights daily offering over 12,000 seats between the two cities, according to airlinedata.com. However, B6 managed to make the route work with its low-cost fares and its special Mint product, adding new flights from Boston (BOS) in the process.
Before opening a new route, especially for international destinations, airlines often have to get special authorization from the local civil aviation authority. In the US, airlines have to get a special foreign air carrier permit from the Department of Transportation (DoT), which is sometimes not an easy task, as Wizz Air’s (W6) application for the permit was denied in July of 2022.
There are also regulations that prevent foreign airlines from operating domestic flights in some countries. For example, airlines based in the US are the only ones who have the right to operate revenue flights between two US airports.
In the European Union (EU), most countries signed an open skies agreement, which allows airlines based in the EU to operate flights anywhere in Europe. For example, the Spanish airline Volotea (V7) operates numerous routes between two French airports.
While it is sometimes hard for airlines to negotiate with local governments, the latter can more often than not offer help and funds. For instance, a new direct route from your local airport will most likely have a positive impact on the local economy and increase tourism. That is why local authorities are sometimes keen to offer financial advantages to airlines operating these routes.
Rephrased: The Department of Transportation (DoT) in the United States is responsible for overseeing Essential Air Service (EAS) routes. These routes receive government subsidies to ensure that small and underserved communities have access to regular air service. Thanks to these funds, numerous regional airlines in the US are able to operate flights from larger hubs to smaller cities, thereby enhancing the hub-and-spoke system.
Choosing the Right Aircraft
Once the airline analyzes the demand for a new route, it has to choose which aircraft type will operate the flight. The first concern is, of course, the number of passengers the aircraft can carry. If an airline expects to fly a lot of passengers, it will choose a larger aircraft for the route compared to routes with lower passenger demand.
Another key element is the range of the aircraft: airlines cannot fly a regional jet from the US to Europe; it just doesn’t carry enough fuel for such a trip. This is why the Airbus A321LR and XLR aircraft are so popular among airlines, as they can fly medium-haul aircraft on long-haul routes.
Something else you might not think about right away is the cargo capacity of the aircraft. While the primary goal of passenger airlines is to fly passengers, they often also carry cargo in the aircraft’s hold on long-haul flights. This cargo can be crucial to increasing a flight’s profitability. We saw this, especially during the COVID-19 pandemic, when passenger demand was extremely low but cargo demand remained steady.
Other factors that come into play are the airport’s size and runway length. Large aircraft such as the A380 need special airport infrastructure before operating any route. Conversely, smaller airports located in mountainous regions or on small islands can only accommodate small aircraft.
Once the aircraft is selected, the airline has to make sure the airport is ready to welcome the new passengers, especially if it is the first time the carrier serves this specific destination.
Airlines sometimes hire their own ground and airport staff but also subsidize specialized aircraft and passenger handling companies, such as Swissport in Zurich (ZRH).
The airline also has to negotiate with the destination airport for the fees and taxes that are going to be charged. Moreover, for some very high-demand airports, airlines have to negotiate slots, which allow them to land at a certain time during the day.
While some airports have a lot of availability, others, such as London Heathrow Airport (LHR), are highly slot-controlled, and air carriers sometimes wait for months or spend millions of dollars to buy these precious slots.
Scheduling the Route
Once the airline has finished its market research, selected the aircraft for the route, decided it can be competitive against its competitors, received all of the authorizations needed, and managed to ensure its logistics at the airport, it can finally plan the flight schedules. The airline will adapt its frequencies to the route and the aircraft’s capacity.
For example, the DL route from ATL to CPT is operated three times a week, once daily year-round, on Monday, Thursday, and Saturday, while some high-density domestic routes are operated by the same airline over 15 times a day.
Airlines usually try to fly their routes as regularly as possible to offer more choices for passengers, but other factors also contribute to the final decision, such as aircraft availability. Then the airline announces the new route to the public and publishes a press release so media outlets like Airways can spread the news.
For long-haul routes, airlines usually make the announcement about six months before the first flight to allow passengers to book their tickets in advance. It is less the case for short-haul routes, which are sometimes announced only a few months before launch.
When opening a new route, the airline also prepares an event for the inaugural flight. There are usually special gifts and branded goodies for the passengers and guests, speeches by the airline and airport executives, cake and drinks at the airport, and other special amenities. Our story on the Turkish Airlines (TK) route opening ceremony in Seattle (SEA) is a good example of what an event like this looks like.
A long-lasting tradition when an airline opens a new route is the water salute, where an airport’s fire brigade places their trucks next to the taxiway and sprays arcs of water on the aircraft upon its arrival. It is often seen as a great honor to receive a water salute, and it is only done on special occasions, like a new route opening, a pilot retiring, or an aircraft joining the fleet.
Adapting the Operation
Rephrased: After going through months of intricate and multi-step procedures, the airline has successfully inaugurated a new route to serve a previously unserved destination. It can now operate flights between two airports. However, there are still tasks ahead for the airline’s management team.
The scheduling teams must ensure that there are available aircraft and crews to operate each flight. Additionally, the carriers continuously monitor the demand for their flights in order to adjust their offerings accordingly. If the demand exceeds the airline’s initial expectations, they may increase the airfare to maximize revenue on each flight.
At times, airlines may switch the type of aircraft operating on a route if they observe sufficient demand to support it. For instance, Air France (AF) introduced a new seasonal route from Paris (CDG) to Denver (DEN) in 2021, initially utilizing the Boeing 787-9 Dreamliner. However, during the previous summer, the airline opted to operate the larger Boeing 777-200ER on the route due to the substantial demand that justified filling a bigger aircraft.
While it may not always appear apparent, airline operations are highly intricate, and the process leading up to the launch of a new route is extremely detailed. Behind the scenes, thousands of airline employees work diligently to constantly monitor their network, align their offerings with demand, schedule flights, and essentially ensure the smooth functioning of the industry to the best of their abilities.
Featured image: Ocean Hoevet/Airways