A GEOGRAPHICAL ANALYSIS OF AIR HUBS IN SOUTHEAST ASIA

CHAPTER THREE: AIR HUB COMPETITION AND DEVELOPMENT IN 3.1 Introduction 45 3.2 The Nature of Air Hub Competition in Southeast Asia 49 3.3 The Developmental History and Overview of Selecte

A GEOGRAPHICAL ANALYSIS OF AIR HUBS IN

SOUTHEAST ASIA

HAN SONGGUANG

(B Soc Sci (Hons.)), NUS

A THESIS SUBMITTED FOR THE DEGREE OF MASTER OF SOCIAL SCIENCES

DEPARTMENT OF GEOGRAPHY NATIONAL UNIVERSITY OF SINGAPORE

2007

ACKNOWLEDGEMENTS

It seemed like not long ago when I started out on my undergraduate degree at the National University of Singapore and here I am at the conclusion of my formal education The decision to pursue this Masters degree was not a straightforward and simple one Many sacrifices had to be made as a result but I am glad to have truly enjoyed and benefited from this fulfilling journey This thesis, in many ways, is the culmination of my academic journey, one fraught with challenges but also laden with rewards It also marks the start of a new chapter of my life where I leave the comfortable and sheltered confines of the university into the “outside world” and my future pursuit of a career in education

I would like to express my heartfelt thanks and gratitude to the following people, without whom this thesis would not have been possible:

I am foremost indebted to Associate Professor K Raguraman who first inspired me in the wonderful field of transport geography from the undergraduate modules I did under him His endearing self, intellectual guidance, critical comments and helpful suggestions have been central to the completion of this thesis A special word of thanks to you Ragu, my supervisor, mentor, inspiration and friend

All faculty members at the Department of Geography, NUS who have taught me (hopefully well enough!) during my undergraduate and postgraduate days in the university and enabled me to see the magic behind the discipline that is Geography In particular, Professor Henry Yeung, Associate Professors Victor Savage, Shirlena Huang, Peggy Teo, Tim Bunnell, TC Chang, David Higgitt, Wong Poh Poh and Drs Carl Grundy-Warr, Pow Choon Piew and Noorashikin Abdul Rahman for their guidance, faith and belief in me all these years

Dr Paul Barter from the Lee Kuan Yew School of Public Policy, NUS, whom I had learnt a lot about transport issues, both as an undergraduate and as a postgraduate student

The administrative staff at the Department, Lai Wa, Pauline, Sakinah, Mrs Chong, Mr Lee, Mr Yong, Mr Tow, Mrs Chee and Mrs Lim for their excellent administrative support and help

Faculty and staff from the University Scholars Programme who have helped deepen

my scholarship and broaden my horizons

All my teachers from years gone by for teaching me the finer things in life and moulding me into what I am today

My beloved fellow current and former graduate students Chih Yuan, Daryl, Seeta, Monica, Hanglu, Desmond, Gu Ming, Yunmei, Winston, May, Brian, Choon Hon and Seng Lee who have made these two years of postgraduate studies some of the most memorable in my life

The friends whom I have made (and still continue to cherish) from GeogSoc and the geography honours class Thank you for all the fantastic memories and continuing to

be an important part of my life

My dearest students (especially those from the Field Studies module), whom I have had the greatest pleasure teaching as a graduate teaching assistant in my time here at the NUS, for challenging me to new heights, both intellectually and pedagogically All my anonymous survey respondents who have taken time to do the survey Especially to my friends who have helped me disseminate the online survey to their contacts

Mr Gerald Ng, Air Transport Manager, Civil Aviation Authority of Singapore for granting me an interview despite his hectic schedule from which I derived plenty of rich information used in this thesis

My two anonymous markers for their time in reading this thesis and their critical comments and insights

My family for their support and encouragement through undergraduate and graduate schools

And finally, my fiancé and soon-to-be wife, Shi’an, for her understanding and support throughout my candidature even though it meant a delay in my career and our marriage plans It is her love that I will cherish and take with me as we journey on the rest of our lives no longer as individuals but as a wedded couple

Songguang August 2007

2.4 Airports, Route Networks and the Global City Paradigm 20

2.8 Regulation and Liberalization in the Industry 33

CHAPTER THREE: AIR HUB COMPETITION AND DEVELOPMENT IN

3.1 Introduction 45 3.2 The Nature of Air Hub Competition in Southeast Asia 49 3.3 The Developmental History and Overview of Selected Airports 53

3.3.3 Bangkok Suvarnabhumi International Airport 61

CHAPTER FOUR: METHODOLODY FOR HUB ANALYSIS 69

4.1 Introduction 69

4.6 Flight Frequency/Volume/Schedule Comparison 76

5.1 Introduction 82 5.2 Network Analysis of Air Hubs in Southeast Asia 82

5.4 Incentives and Policies to Encourage Hub Development 102

5.5 Air Hubs and National Carriers 102

CHAPTER SIX: CASE STUDY – THE KANGAROO ROUTE 114

6.1 Introduction 114 6.2 Background 115

6.5 Supply Side Analysis – Airline Schedules 129

6.6 Demand Side Analysis – Passenger Survey Findings 140

SUMMARY

This research explores and examines the formation, development and the current role of airport hubs for civil aviation within the context of Southeast Asia The notion of “hub” is explained and the various measures by which hubs are defined are also critically analyzed The various processes that lead to or favour hub formation are also given some mention to draw linkages between the theoretical discussion and real world phenomena A brief overview of the developmental histories and trajectories of the major airports in the region is then provided to situate the research in its unique socio-economic and geopolitical context I explain why certain airlines and airports are more successful than others, and how hubbing is used to increase network coverage and reach The intricate linkages between airlines that use the sixth freedom rights and airports which situate themselves as hubs are examined by looking at the extent to which flag carriers contribute to airport hub formation I also examine the operations of selected airlines and airports and the pattern of air services through an analysis of spatial networks, establishing the degree of “hubness” of the airports examined Finally, this research uses the case study of the Australia-Europe air route (also commonly known as the Kangaroo Route) to illustrate the varying importance and significance of air hubs in Southeast Asia by drawing upon both quantitative and qualitative sources of data

Key words: Airports, Air Hubs, Southeast Asia, Kangaroo Route, Spatial Analysis

LIST OF TABLES

Page 1.1 Main Commercial Passenger Aircraft 1935 – 2007 7

2.1 Analytical Research on Hub-and-Spoke Networks 19

3.1 International Passenger Traffic for 12 months ending February 2007 48

5.2 Exclusive Destination cities for the Three Hub Airports 93

5.6 A Comparison of Key Statistics for the Three Airports 98

5.7 Example of Hubbing by Foreign Airlines 99

5.8b Change in Route Intensity of Selected Destinations 101

5.9b A Comparison of the Secondary Carriers at the Three Hubs 104

6.2 Intermediacy Measures on the Kangaroo Route 124 6.3 International Passengers by Uplift/Discharge Country From/To Australia 125 6.4 Traffic on Board Passenger Movements between Australia and International 126 Cities [selected cities on the Kangaroo Route]

6.6a Qantas Flight Schedules on Kangaroo Route 130

6.6f THAI Flight Schedules on Kangaroo Route 135 6.6g Cathay Pacific Flight Schedules on Kangaroo Route 136 6.6h Emirates Flight Schedules on Kangaroo Route 137

LIST OF FIGURES

Page

2.1 Themes of Geographic Analysis in Air Transport 17

5.1 Singapore Changi Airport (SIN) Intraregional Network Map 83 5.2 Kuala Lumpur (KUL) Intraregional Network Map 84

5.4 Intraregional Network Map of all Three Hub Airports 85

5.5 Singapore Changi Airport (SIN) Interregional Network Map 87 5.6 Kuala Lumpur KLIA (KUL) Interregional Network Map 88

5.8 Interregional Network Map of all Three Hub Airports 91

LIST OF PLATES

Page 2.1 Four Basic Principles of International Aviation Regulation 37

4.1 Map Showing Selected Transit Airports for Online Questionnaire Survey 78

6.1 QF and BA Codesharing Options on Kangaroo Route 131

CHAPTER ONE

INTRODUCTION AND BACKGROUND

CHAPTER ONE: INTRODUCTION AND BACKGROUND

1.1 Preamble

Civil aviation and air transport has transcended its original role as a facilitating medium for the carriage of goods and passengers over a sparse network of domestic and international linkages and evolved into an indispensable tool of mass transport in the world today It has radically impacted our lives, and is perhaps one of the primary avenues by which forces of globalization are manifested today Overcoming the friction of distance, and providing added convenience and time savings over other

forms of transport, air transport is arguably the only form of transport that is

three-dimensional (Bamford & Robinson, 1978: 42) since aircraft are not tied to the surface

and have the ability to fly over terrestrial obstacles which have been important dividers of societies over space and time

Stephen Wheatcroft, an eminent air transport scholar commented in the

beginning of his 1964 book Air Transport Policy that hardly a day went by without

any new developments in air transport and that he faced problems keeping up with a constant flow of new material Back then, some of the issues he was concerned with, amongst others, were the reasons why governments needed to control entry to routes, airline capacity management strategies, and the economic impact of bigger and faster aircraft (cited in Hanlon, 1996: v) More than four decades later, new developments in air transport are still constantly appearing, albeit at a much faster rate Many of the issues highlighted by Wheatcroft in 1964 are still pertinent today, some with different foci, in particular, the contemporary trend towards deregulating the industry and how state interests coincide or come into conflict with industry trends

In 2005, aviation transported two billion passengers annually, with 40% of all tourists using air transport (ATAG, 2005) The air transport industry generated a total

of 29 million jobs globally (through direct, indirect, and induced impacts), and aviation’s global economic impact is estimated at US$2,960 billion, equivalent to 8%

of world Gross Domestic Product (GDP) (ATAG, 2005) The world’s 900 airlines have a total fleet of nearly 22,000 aircraft (ICAO, 2006) They serve some 1,670 airports through a route network of several million kilometres (ACI, 2005)

As one of the fastest growing economic regions of the world, Asia is a hotbed for aviation activity The region has recovered from the financial and economic turmoil of the 1997 crisis and is now on an accelerating path to development with trade being the key driver The densely populated region of Southeast Asia (over 500 million inhabitants) in particular has seen tremendous growth in the aviation sector over the past decade and remains one of the fastest growing aviation regions in the world today However, it is not unique from any other aviation region in the world insofar as regulation of air services is concerned In many instances, the state (as I shall show) plays a pertinent and central role both regulating and promoting the air transport industry

Forty years on from Wheatcroft, at a meeting with senior management and union officials of Singapore Airlines (SIA) in December 2005, Singapore’s Minister Mentor Lee Kuan Yew highlighted the challenges facing the national carrier SIA and Changi Airport in light of rapid and new developments in the civil aviation industry

In particular, given the uncertain outlook in the wake of skyrocketing fuel prices, he

stressed the Singapore government’s priority in safeguarding Changi Airport’s status

as an air hub, even if this was to come at the expense of SIA

“As long as we remain a hub, whichever airline succeeds or fails, Singaporeans will

benefit and jobs increase”

(Lee Kuan Yew, 2005, cited in The Straits Times, 30th December 2005)

Lee’s statement in itself was symptomatic of global and regional developments of air transport in the past decade which have brought about profound changes not only in the way governments structure their aviation policies, but on business decisions relating to airline and airport management, and also on how scholars and researchers study and approach air transport as a discipline – not unlike what Wheatcroft was interested in 40 years ago It is within such a context that this thesis was conceptualized and developed, framed around the academic confines of aviation studies, and in the wider sub-discipline of transport geography in general In particular, the formation and development of air transport hubs in Southeast Asia forms the focus of this thesis A personal interest arose out of Lee’s statement as I wanted to understand the whole notion of a “hub”, and why in Singapore’s case it was deemed even more important than the national carrier The following section draws linkages between air hubs and the discipline of Geography as I explain why a phenomenon that seemingly stems from an operating business model warrants a geographical perspective

1.2 Air Hubs and Geography

Geography as an academic discipline, loosely defined, refers to the study of patterns and processes over space Transport, thus, provides an avenue for interaction

to take place over space, connecting distant places and facilitating movement between

them Transport provides a fundamental foundation for the building blocks of societies – labour, capital, territory – and intersects with the human and physical environment in ways that have profound geographical consequences (Keeling, 2007)

As a subset of economic geography, transport geography was initially concerned with the location of economic activities and the monetary costs of distance Over time, it was recognized that transport geography deserved to be a sub-discipline

in its own right for it is characterized by a defining set of axioms which dictate the way transport geographers go about their work Haggett (2001) described the core elements of transport geography by its systematic nature in studying transport nodes, networks and demand (see Fig 1.1) In transport geography, geographers focus on the spatial organizations and patterns created by (and for the purposes of) movement of people and goods over space Transport studies also examine the concepts of movement, flow and activity patterns Transport nodes like airport terminals also occupy an important place in space and constitute the basis of a complex spatial system These ideas are integral to the field of geography as they provide some measure of “spatial interaction” and “areal association” both between and within places (Ullman, 1954) Although the field of transport studies has traditionally been dominated by economists and engineers, the multidisciplinary nature of the field provides geographers opportunities to contribute through spatial analysis at different scales No other discipline places emphasis on interactions between the local and the global, and deals with complex issues such as safety, aesthetics, working conditions, gender, deprivation, the environment, governance and heritage within a single framework

Figure: 1.1: The Transport System (source: Rodrigue, J (2005))

Given the broad overview of transport geography, let us now focus on one of the core modes of transport geography which forms the backbone of this thesis Of all the different modes of transport known to man, air transport is arguably one of the most impactful and revolutionary Together with shipping, air transport is one of the truly global forms of transport From being a service initially targeted at the delivery

of small quantities of high value items (postal mail) and a link between colonies, air transport has become the main mode of transport for people as they transverse the world today Air transport has played a key role in the globalization of the world by breaking down the barrier of distance and allowing fast and efficient transport between any two points on the globe, providing impetus for the development of numerous service industries such as banking and tourism

The notion of a “shrinking world” can largely be attributed to the advent of air transport At the same time, the air transport system is also one that encompasses interrelationships among various economic, political, technological and socio-cultural elements and thus presents itself as an arena where the geographer could contribute

through the synthesis of diverse and complex linkages eminent in this highly dynamic system (Ong, 1995) This is especially pertinent in the era of globalization where flows and linkages between places dominate the focuses of many geographers However, what we often fail to acknowledge is that air transport is a key mode used

by these “flows and linkages” which include on the basic level the movement of people and goods/cargo, but also that of ideas, cultures and identities The very notion

of “connectedness” as denoted by air links between cities in the world remains a key tenet in the global economy For “global cities” such as London and New York, “the international airport is both a vortex drawing together people, goods, information, and money from across the world and a window though which the global reach of such cities extend” (Leinbach & Bowen, 2004: 298)

The central component of air transport (apart from the aircraft) is the airport This is the interaction point for passengers, cargo and the aircraft Airports dictate where aircraft land and where passengers and cargo go to In the global airport network, there are complex orders and hierarchies which manifest into the dominance

of huge nodes we come to know as “hubs” or mega-airports where there is the confluence of a large number of carriers, passengers and cargo

The air transport industry is extremely sensitive to technological developments

in aerospace, especially in terms of capacity or range increase in aircraft which allow airlines to expand or extend their markets Today, the forerunners in innovation in terms of aircraft development are the Airbus A3801 and the Boeing 777-200LR2 in terms of capacity and range respectively Such technologies enable the never-before-

seen scale in terms of passenger movement between two cities, and give us the ability

to connect virtually almost 3 any city-pair in the world today via a single non-stop flight

Aircraft Year of First

Commercial Service

Speed (km/hr)

Maximum Range at Full Payload (km) Seating Capacity

Table: 1.1: Main Commercial Passenger Aircraft 1935 – 2007 (source: Leinbach, T.R and

Bowen J.T (2004), cited in Rodrigue, J (2005) Updated by author

The very notion of a “hub” implies some kind of geographical confluence of activity, in this case aviation activity Since the whole essence of the geographical discipline maintains a strong spatial element, air hubs present the perfect opportunity for geographers in that they involve the coagulation of aircraft, passengers and cargo

in some kind of a spatial hierarchy This spatial hierarchy may take the form of a regional gateway, or a global centre for aviation activity depending on the air hub in question Thus there is a strong correlation between airport hub intensity and extensiveness and the global reach of any city in the world A significant portion of

3

Chapter 6 presents the case where given current technology, certain city pairings (e.g London – Sydney) are now possible to connect via a direct flight but the reality is that such flights have not taken place due to a variety of reasons explained later

Chapter Two is dedicated to illustrating some of the issues relating to air hubs which I

have briefly introduced above

1.3 Aims, Objectives and Scope

This thesis has the primary aim of providing a critical understanding of hub airport formation and development in Southeast Asia by adopting a geographical framework I seek to explore why certain airlines and airports are more successful than others, and how airlines use hubbing to increase their network coverage and reach The intricate linkages between airlines that use the sixth freedom rights and airports which situate themselves as hubs will be discussed by looking at the extent to which flag carriers contribute to airport hub formation Thus, an overview of airport development (which is intrinsically related to the fortunes of the flag carrier) will be essential to establish an understanding of past and contemporary trends Next, I also examine the operations of selected airlines and airports and the pattern of air services through an analysis of spatial networks, establishing the degree of “hubness” of the airports examined Thirdly, this paper also seeks to use the case study of the Australia-Europe air route (also commonly known as the Kangaroo Route) to illustrate the varying importance and significance of air hubs in Southeast Asia Although not the central focus of this thesis, the impact of Low Cost Carriers (LCCs)

on air hub development shall be alluded to, especially in the light of increased regional competition by states to become the dominant air hub in Southeast Asia Finally, I seek to situate my findings in the broader socio-economic context of the region This involves the application of established conceptual frameworks to aviation geography and the relation of the issues at hand with those regarding the larger question of globalization of economic activities

As early as 1978, Robinson and Bamford in their flagship book Geography of

Transport observed the importance of the Southeast Asian region in the air transport

industry They noted that “because south-east Asia is a great ‘cross-roads’ [sic] of the world, the region has assumed a very significant role in international aviation while the very varied physiographic character of the region together with the sparsity of alternative modes of travel both within and between several political units have promoted internal air links” (Robinson & Bamford, 1978: 193) Southeast Asia’s airline industry has come a long way since the 1940s when fledgling flag carriers were being developed to the early 1970s which heralded the entry of wide-bodied aircraft that enabled these carriers to drastically increase their capacities Although Southeast Asia did not contribute a sizable amount of traffic, its airlines were situated conveniently at stopover locations along expanding long-haul routes, and inbound tourism was growing rapidly (Hooper, 2005: 336)

Even within the region, air transport remains the predominant mode of transport due to its geographical incontiguity consisting of mainland, insular and archipelagic maritime states Recent developments in Southeast Asia like the development of new airports and the rise of Low Cost Carriers (LCCs) have made the region an interesting and exciting context to study air transport Although a comprehensive study of all airlines and airports in the region is long overdue and extremely warranted, space and information constraints dictate otherwise and render such a task unfeasible for the purpose of this thesis The scope of analysis for this thesis covers the three major and arguably most important hub airports in Southeast Asia - Singapore Changi Airport, Kuala Lumpur International Airport, and Bangkok

International Airport (Don Muang and Suvarnabhumi); and their relationships with their respective flag carriers namely - Singapore Airlines, Malaysia Airlines, and Thai Airways These carriers and airports were chosen on the basis of their high impact levels and larger share of the Southeast Asian air transport market The analysis is focused solely on passenger traffic and the situation with freight and mail (although important in its own right) is omitted due to length constraints

1.4 Significance of Study

Contemporary literature on air transport focuses either on the commercial aspects of air transport, or the policy, planning and management perspectives Similarly, scholars often choose to focus their work on the airlines, airports or state and industry issues Little in contrast has been written on the relationships between different components and sectors in air transport The regional approach adopted by this thesis differs from the sectoral approaches outlined above I aim to fill one small part of this lacuna in academic literature through this research on air hubs in Southeast Asia

An understanding of such airport-airline relationships will enable us to better account for the rise and demise of airlines and airports in the region, as well as to be able to examine different developmental trajectories taken by different airlines/airports from a historical context to better explain and predict future trends in air transport Thus, the findings of this thesis serve not only as a descriptive tool to better understand Southeast Asian air transport, but also to some extent an analytical one to make conjectures for future tendencies for hubbing as a strategic priority for states

1.5 Methodology

This thesis firstly adopts a somewhat historical perspective by first providing the contextual background on the developmental trajectories of the selected hub airports This is achieved primarily through a literature review of published secondary sources and annual reports of these airports I shall attempt to provide an extensive literature review of works relating to both airline and airport development in the region, as well as more general works on air transport in- and outside of the geographical discipline An analysis of newspaper articles will also be undertaken to provide additional information not available from official sources as well as to provide the media perspectives on such issues A spatial analysis of past and present airline route networks and airport spoke networks will be provided to determine the extent to which hub airports are dominated by flag carriers This is done through a chronological mapping of airline and airport networks by deriving information from airline flight timetables and other aviation-related reports and documents A theoretical investigation of the degree of connectivity of hub airport will allow us to measure the “hubness” of the airports Using the case study of the Australia – Europe

“Kangaroo” Route, a large scale quantitative survey with Australian travelers will provide an empirical insight into factors which affect consumers’ airline and airport hub choice

1.6 Outline of Thesis

A rough outline of this thesis is as follows In Chapter Two, a review of the literature on air hubs will be undertaken This not only highlights the works that have been done to date, but also seeks to provide conceptual underpinnings to this study

The issue of regulation and liberalization in the air transport industry will also be discussed, paying attention issues of air rights and conventions This chapter serves as

a foundation for many of the themes and trends discussed in the later chapters

Chapter Three focuses on the developmental experiences of the selected airports in the region In particular, the histories of main international airports will be traced and future expansion plans will be given some examination An overview of their current and future operating capacities will also be provided

Chapter Four deals with the methodological issues pertaining to this research The choice of research methods will be justified and the methods themselves explained in this chapter of the thesis Limitations of the employed methods will also

be critically discussed

Chapter Five presents the findings of the research and provides an empirical examination of the current status of air hubs in Southeast Asia I examine the degree

of “connectedness” of the various airports and the extent to which the national airline

is dominant in hub formation Also, a periodic analysis will be provided to see temporal changes in the statuses of the air hubs The notion of a regional “open skies” policy will also be considered as a necessary tenet for the continued success and survival of air hubs in Southeast Asia

The sixth and penultimate chapter presents a case study of the Australia – Europe Kangaroo Route Flight frequencies, volumes and schedules are compared and using travelers’ choice analysis, this chapter will allow us to see the “other” side of air

hub development from the user’s perspective The findings from this case study will also add an empirical dimension to issues and themes discussed in this thesis

Finally, the concluding chapter reviews and summarizes the issues raised in this thesis and highlights some of the results and conclusions of this study Suggestions for some directions for future research will also be provided at the end of the chapter

CHAPTER TWO

HUBBING – LITERATURE REVIEW

AND KEY CONCEPTS

CHAPTER TWO: HUBBING - LITERATURE REVIEW AND KEY CONCEPTS

of the study and the relationships among them In particular, the notion of “hubs” and

“hubness” will be analyzed in detail, and various means by which scholars define and measure air hubs will also be presented as a foundation of this thesis The two contravening and arguably most pertinent trends in air transport, that of regulation and liberalization will also be presented as they have significant impact on hub formation

2.2 Academic Writings on Air Hubs

The general issue of hubs in air transport is studied by scholars from a ranging number of disciplines, including economics, history and many others The multi-disciplinary nature of the topic enables researchers to publish in a variety of

wide-journals that transcend these disciplines such as Journal of Air Transport

Management, Journal of Transport Geography, Transportation Research, Journal of Transport Economics and Policy as well as many others which are more discipline

specific

A significant proportion of works in the literature deal with the economic and operations research aspects of air hubs – concerning themselves with costs, pricing, and scheduling analysis The rise of hub-and-spoke networks spawned a wave of

works in economics that deal primarily with pricing strategies by both airlines and

airports For instance, Kanafani & Ghobrial (1985), Spiller (1989) and Hendricks et

al (1995) describe how hubbing affect airport economics Berechman and Shy

(1998), Pels et al (1998) and Schipper et al (1998a) provide an analysis on spatial

equilibriums and optimal networks Others adopt a more airline-centric focus, like

Bittlingmayer’s (1990), Berechman et al.’s (1994) and Hendricks et al.’s (1997)

works on airline entry and exit; Brueckner and Spiller’s (1991), Zhang and Wei’s

(1993), Oum et al.’s (1995), Nero’s (1996) and Schipper et al.’s (1998b) pieces on

airline competition; and Park’s (1997) work on airline alliances Increasingly, the environmental aspect of air hubs have also come under academic scrutiny, spawning papers like Nero and Black’s (1998) piece on including environmental costs in airport pricing

Another strand of focus on air hubs stems from the business and management streams, where authors have written extensively on issues like competition, (de)regulation, policy implications and business strategies all in relation to hub-and-spoke network structures Some of these works include McShan (1986), Hansen (1990), Button & Lall (1999), Hanlon (1999), Adler (2001), Chin (2001), Shy (2001),

Doganis (2002, 2006), Albers et al (2005), Alderighi et al (2005) and Gillen &

Morrison (2005) Worthy of special mention is Button’s (2002) seminal article which presents a summary of the hub-and-spoke network of American domestic air routes and provides a contemporary review of some of the arguments for and against hub formation

Although not as extensive as the previous two strands of economics and business oriented literatures, there exist also a small number of authors who have written on hub airports from a different approach where the focus is on the social and political implications of hub networks and flag carriers Such works include Raguraman (1997), Gottdiener (2001), Pascoe (2001), Wood (2003), Fuller & Harley (2004) and Aaltola (2005) Topics include the roles of flag carriers in nation building, the cultural significance of air hubs, symbolism and imperialism, and the social networks in terminal spaces of hub airports

The issue of air hub development and competition has not only gained prominence amongst professional academics, but there is also strong interest from students pursuing tertiary and higher degrees in Singapore to do work in this field Research dissertations written on air hubs come mainly from students in Geography and Economics with myriad focuses, including those like Lim (1989), Gonzales (1995), Khoo (1997), Chew (1998) and Zou (2002)

2.3 Literature on the Geography of Air Hubs

The contribution of geographers to air hub literature is significant but often overlooked when compared to those of economists and business researchers This is primarily due to the notion (and arguably fact) that airports are business entities with economic functions and everything else is relegated to secondary importance Geographers working in this field tend to focus their attention on the spatial issues relating to hub-and-spoke networks, often engaging a variety of both theoretical and empirical methods to highlight the changing geographies of air hubs A short synopsis

of geographic work in air transport in general is provided in Vowles (2006) recent

article in The Professional Geographer

Figure: 2.1: Themes of Geographic Analysis in Air Transport (source: Vowles, T.M (2006))

Although a precise definition of what an “air hub” is or should comprise of is lacking consensus at the moment, there have been attempts to provide empirical classifications for air hubs There are a number of contributions dedicated to this issue, including O’Kelly (1986, 1992), Chou (1990), Shaw (1993) and Button (2002, 2004)

One of the forerunners of the discipline, Morton O’Kelly has written extensively on hub location theory and hub system analysis Various articles written

by O’Kelly and his colleagues (O’Kelly & Miller, 1994; O’Kelly, 1998; O’Kelly and Bryan, 1998; Bryan & O’Kelly, 1999; Horner & O’Kelly, 2001) concentrate on the optimum location of hubs within a network, the differences between models and reality, and the variation between passenger and freight air transport systems (cited in

Vowles, 2006) In particular, O’Kelly & Miller (1994) devised a classification scheme which places the hub-and-spoke network into different categories based on various geographical criteria which was subsequently critiqued and reviewed in a later paper (O’Kelly, 1998) With reference to Table 2.1, we can see that analytical research based on modeling hub-and-spoke networks forms a significant proportion of the literature

Fleming & Hayuth’s (1994) article attempts to highlight the spatial

characteristics of transport hubs by adopting the concepts of centrality and

intermediacy to determine the relationships between hub location and city

development Vowles (2006) has looked at the pricing determinants in hub-to-hub markets using econometric models The focus on the terminal and its responses to hubbing and globalization is discussed in Rodrigue (1999) and Goetz & Rodrigue (1999)

There are also a number of works which are essentially region-based, looking

at the empirical characteristics of air hubs in various parts of the world Most notably,

these include Dennis’s (1994) and Burghouwt et al.’s (2003) works on Europe,

O’Conner’s (1995) and Bowen’s (2000) works on Southeast Asia, Park’s (2003)

article and Findlay et al.’s (1997) volume on the Asia Pacific region, Zhang’s (2003),

Feldhoff’s (2002) and Matsumoto’s (2005) works on the East Asian region, and Vowles’s (2002) work on the United States

Table 2.1: Analytical Research on Hub-and-Spoke Networks

(source: Bryan & O’Kelly, 1999)

Air transport literature has seen a shift away from compartmentalized studies towards a greater integrative focus judging from the newer works which are appearing In a recent progress report, Keeling (2007: 220) noted that “significant effort has been applied to understanding and explaining how transport is critical to the globalization imperative.” However, he also lamented that “transport geographers have been reticent to tackle the bigger methodological and empirical challenges raised

by an expanding world system and the world cities that act as command and control

centres in the global economy” (Keeling, 2007: 220) To some extent, the role of air hubs in the global city network and associated discourses has been examined by

Derudder & Witlox (2005), and Derudder et al (2005a, 2005b), where the “hubness”

of cities and airports is one of the key measures of globalization They used key

empirical data like flight connections and passenger numbers to postulate the relative standings of cities within the global economy, linking their findings to the various discourses of “world citi-ness” This has been one of the most recent emerging trends

of research in the geography of air transport

2.4 Airports, Route Networks and the Global City Paradigm

The idea of a global city as being a command and control centre for transnational businesses and a node for the proliferation of the arts and culture is well documented in the field of urban studies (Amin & Thrift, 1994; Castells, 1996; Hall, 1966; Reed, 1981; Sassen, 1991, 1994; Knox, 1995) A key theme of the global city literature is the focus on inter-city competition to attract capital and investment as demonstrated by Sassen’s (1991) work on the global dynamics of the New York – London – Tokyo triad of global cities This competition based on the concept of competitive advantage is the driving force of many modern city planners and urban authorities today as they strive to ensure that their cities do not lag behind in the

perpetual race to out-do one another

The role of airports in urban development often escapes attention The airport

is critical to the growth of any city or region, especially those aspiring to become global cities as “[the] airport is perhaps the most important single piece of infrastructure in the battle between cities and nations for influence in, and the benefits

of, growth and development” (O’Connor & Scott, 1992: 241) Airports are also often presented as catalysts to both short- and long-term economic growth, encouraging inward investment into regions from businesses that require direct contact with customers (Graham, 1995: 244) The airport ostensibly is not by any means a small

project Judging by the amount of capital normally invested by nation-states into airports and aviation related facilities, the term ‘mega-project’ is justified in the case

of many hub airports The link between the ‘global city vision’ and these projects is drawn out in Yeoh’s paper where “the ‘global’ has become an ‘icon’ or a spatial metaphor” (2005: 946) Such aspirations are thus inscribed into buildings and monuments which are often imprinted with notions of connectedness, openness and are spaces where people of various nationalities congregate Mega-projects are not only a tangible association between the city and the global economy, but also their symbolic importance is significant in this respect (Olds, 1995) They are aimed at a global audience and their huge scale serves to “reorient the international imagery of the city” (Olds, 1995: 1713)

mega-Sriram et al (2001) have also noted that air gateways represent the highest

level of the global transport network Thus, the strength of the airport’s gateway function reflects and supports a city’s overall economic and social central place function By this we can infer that cities with higher order social and economic functions tend to have airports that serve a larger market population and area Although the authors make a clear differentiation between the concepts of a

“gateway” and a “hub”, with the former focusing on a city’s hinterland relationships and the latter focusing on the geometry of a network, I argue that more “globalised” cities also tend to have greater hinterlands for their goods and services, thus the

prominence of their air gateways remains significant

Another key theme towards global city formation is that of modernity and modernization The airport is the epitome of modernity, and to some authors, the

ultimate symbol of hyper- or supermodernity (Augé, 1995; Boswell, 1997; Wood, 2003; Pascoe, 2001) where technology knows no bounds Modern airports have been defined as “complex industrial enterprises”, where “disparate elements and activities are brought together to facilitate, for both passengers and freight, the interchange between air and surface transport” (Pascoe, 2001: 27) Architects revere peers who work on airport projects, for it is one of the ultimate expressions of modernity in its built form

Empirically, one of the most distinguishing and significant measure of “global city-ness” lies in a city’s overall connectedness to the rest of the world Rimmer (1998) postulated that “air passenger travel contribute to economic globalization by

bringing people together to acquire complex knowledge relatively unburdened by

geographical constraints and national borders (p 454) Keeling (1995) justifies the use of air network and air traffic data in global city research in that:

“Airline linkages offer the best illustration of transport’s role in the world system for

five reasons: (i) global airline flows are one of the few indices available of transactional flows of inter-urban connectivity; (ii) air networks and their associated

infrastructure are the most visible manifestations of world city interactions; (iii) great

demand still exists for face-to-face relationships, despite the global telecommunications revolution (Heldman, 1992; Noam, 1992); (iv) air transport is

the preferred mode of inter-city movement for the transnational capitalist class,

migrants, tourists, and high-value, low-bulk goods; and (v) airline links are important

components of a city’s aspirations to world city status.”

fares on the global arena Geopolitical factors also affect the air networks of various countries, as with the case of the very select air networks of the Republic of China (Taiwan) and the Democratic People’s Republic of North Korea (DPRK) Relationships between cities and regions manifested through air networks not only vary over space, but more often than not, also over time periods O’Connor & Scott (1992) raised the case of Tokyo which in the 1970s had just regional and local connections on a non-stop, daily basis, yet today it is an important international hub and world city

Examining networks not only allows us to identify important nodes and linkages on a global scale, but also allow us to make regional comparisons between airports Certain important regional nodes serve as primary inter-continental gateways

to entire regions, feeding traffic into many other secondary regional airports Others may serve as important crossover and stopover points on transcontinental routes with

a high composition of transiting passengers compared to traditional O&D (origin and destination) traffic

2.5 The Network Focus in Air Transport

Generally speaking, research in transport geography have been characterized

by different analytical approaches which include the modeling of spatial interaction, using behavioral analysis to understand the choice making decisions by the consumers

of transport, and the study of networks in transport systems to establish patterns and trends Although the emergence of air hubs in contemporary aviation development has prompted an assimilation of these strands of research into a more integrated approach

to understand the complex phenomenon of hubbing, the central point of this thesis

deals predominantly with the lattermost approach and the present section highlights the significance of network analysis in air transport research

As early as 1963, Kansky espoused the importance of network analysis in transport geography where he suggests that the term “transportation network” infers

“a set of geographical locations interconnected in a system by a number of routes” (Kansky, 1963: 1) In this there are three fundamental building blocks, namely origins, routes and destinations Thus, the locational pattern formed by the building blocks is, by definition, the spatial structure of a transportation system (Kansky, 1963: 1) This is clearly in line with the discipline’s focus on spatial phenomena, and by understanding the networks of transport systems, we can derive not only cartographic and empirical meanings, but also and more importantly, symbolic and embedded patterns and processes influencing the structure of the network in question

Akin to fishing nets or a spider webs, networks are best represented cartographically on a planar surface and subsequently this was taken one step further

by the use of graph theory (a branch of mathematics) which represented the network

as a series of nodes (or vertices) and the links (or edges) between them, with each node or vertex having an equal weighting of unity Mathematically, such relationships can be expressed on a binary matrix and certain characteristics like density, connectedness and orientation can be empirically measured The main proponents of this method of analysis have been Kansky (1963) and Chorley & Haggett (1974)

Most pertinent to this thesis is the concept of “network economies” where the connectivity and spatial structure of various transport networks help differentiate one

from another in terms of efficiency and comprehensiveness The commonly cited example to illustrate the concept of “network economies” and “network effect” is the hypothetical case that if there are only two fax machines in the whole world linking

up two individuals at two locations, the network would be a purely linear one with just one possible route/connection Such a network would therefore have little practical value if one wishes to communicate with more people However, if every household were to own a fax machine, then the network effect would be of a much higher magnitude and would allow many more connections, making such a network intrinsically more valuable To link this back to air transport and air hubs, one of the main criteria of a “good” hub lies in its connectivity and its network, i.e the more places you can reach from a certain hub, the higher the value of the hub Economists generally term this phenomenon as achieving “positive network externalities”

2.6 Hubbing and Hub Airports

The term “hub” or “air hub” has been used more than generously in this paper, but I have not provided an adequate definition as yet This is perhaps symptomatic of the fact that scholars and researchers do not have a consensus on what the term actually entails due to the complexities and differing uses of the term The term has to some extent been so widely used and adapted that it has become almost a meta-narrative, lacking precise definition and empirical justification, or as aptly put by Button, “there is certainly no hard nor fast economic or legal definition of a hub airport” (2002: 179) This is compounded by the fact that there is often inadequate statistical data on air hubs (c.f Veldhuis, 1997) In this section, I will summarize the various definitions and methodological approaches for measuring air hubs to illustrate the concept of hubbing

From an air traffic management perspective, it is the geographical and temporal concentration of traffic through an airport that is important and not which airline carries it Conversely, from a general economic policy analysis perspective, hubs are normally treated as airports that have a large preponderance of flights operated as part of an essentially radial network by one carrier Functionally, Fotheringham & O’Kelly (1989: 171) state that a hub is a type of facility located in a network in such a manner so as to provide a switching point for flows between other interacting nodes

Figure: 2.2: Hub and Spoke Networks (source: Rodrigue, J (2005))

The USA Federal Aviation Administration (FAA) defines air hubs as

“geographic areas that serve as transaction centres for air traffic” (FAA, 2000; cited in

Derudder et al., 2005a: 6) This definition is based on communities of airports rather

than on individual airports which in turn implies that a hub may entail several airports This is predominantly the case in many North American cities where two or three large airports may co-exist within a single metropolitan area (e.g New York, Los Angeles etc) The FAA uses a classification scheme to distinguish hubs based on

the ratio between (i) number of passengers making an onward connection from the node and (ii) the number of passengers that use the node as origin or as final destination Based on this classification, a large hub will have a ratio > 1.00, a medium hub a ratio between 0.25 and 1.00, and a small hub a ratio < 0.25 Although a crude measurement, the FAA definition does give us a rough idea on the “hubness” of various airports and has been adopted by many researchers Rodrigue (2005) proposed

a similar classification scheme also based on the ratios of connecting passengers (see Figure 2.3 below)

Figure: 2.3: Airport Hubbing Level (source: Rodrigue, J (2005))

Going a step further, Derudder et al (2005a) attempt a “spatialized” measure

of air hubs by looking at the number of city-pairs connected by a network node This

is premised on the fact that an important hub acts as a major switching point in terms

of the quantity of connected nodes He argues that ratio comparisons are spatialized” measures because they simply focus on the number of passengers that use

“de-a node “de-as “de-a switching point (Derudder et “de-al., 2005“de-a: 7) Thus his is “de-a me“de-asure of

connectivity rather than volume per se