Study of aviation hub strategies

Abstract

Aviation sector plays an imperative role in maintaining economic health of a nation and it has been substantiated by a number of examples. One such example is that of Singapore Changi Airport which has been a milestone in Singapore’s history and has been a major driver in its rapid growth from a developing to a developed country. Singapore’s aviation industry contributed almost 5.4% to its overall GDP in 2011.1 The aviation market in India is poised to grow at an unprecedented rate and the passenger traffic at Indian airports is expected to grow at a CAGR of 16.4% to reach 421 million from 169 million in 2013- 14. As a result of this, India is all set to become the third largest aviation market in the world by 2020. This growth is fuelled by increased spending on business as well as leisure travel. As per the estimates by World Travel and Tourism Council, spending on business travel is expected to increase from USD20.8 billion in 2013 to USD60.4 billion in 2024. While, the spending on leisure travel is estimated to rise to USD224.7 billion in 2024 from USD77.8 billion in 2013.2 In order to sustain this growth trajectory in the Indian aviation sector and to achieve new heights in the world aviation industry, it is extremely important to concentrate on the most crucial factors, one of which is development of Indian airports as regional aviation hubs. The concept of Hub-and-Spoke business model isn’t new to this industry and is being successfully leveraged by most major airports and airlines across the world. This model has numerous advantages some of which being, efficient utilization of aircrafts, variety and flexibility to travellers and increased profitability to airports and airlines.