Air Transport World

No peaking: the revolution in distribution and buyer behavior has enabled American Airlines to take a new look at its hub structure.

Desperate times call for desperate measures, and with US airlines expected to lose at least $7 billion for a second consecutive year the times certainly are desperate enough.

That's the simplest explanation for American Airlines' decision to scuttle the traditional schedule structure at Chicago O'Hare and Dallas/Fort Worth that has been a hallmark of the deregulated era and to substitute a "continuous" or "rolling" hub in which aircraft arrive and depart throughout the day rather than being concentrated in a series of tightly coupled arrival and departure banks. The number of flights being offered remains the same, but with the wordload more evenly distributed, aircraft, staffing and facility demands are lessened at a time when every penny saved is one less that has to be earned from an increasingly parsimonious traveling public.

But the so-called "depeaked" schedule that was unveiled at O'Hare in April and takes effect at DFW this month represents far more than a gambler's last-chance roll of the dice. In effect, it is a shrewd bet on the revolution in distribution and customer purchasing behavior in the era of the Internet. Indeed, absent the Internet it is doubtful executives here would have been willing to take such a dramatic step, which despite the substantial cost savings represents an abandonment of the central tenet upon which all network airline scheduling has been based for most of the deregulated era.

To understand why this is so, it only is necessary to go back a few years--before Expedia and Travelocity, Priceline and Orbitz changed the sales dynamic--when distribution meant a travel agent sitting in front of a computer monitor fed by one of the GDSs. At peak, almost 90% of tickets were being sold that way. Because flights were displayed in order of elapsed flying time and studies showed that the vast majority of tickets were being sold off the first screen, airlines fought for the shelf space with the only weapon they had-- their schedules.

It is almost impossible to overestimate the value that airlines attached to being at the top of the CRS display. "You had to be on the first screen," AA MD-Capacity Planning Don Casey recalls to ATW. …

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