How Airlines Launch New Routes

[In The News]

DALLAS – If you often check our airline routes news, you may have noticed it is pretty common for airlines to stop flying to some destinations and to open new routes on a regular basis.

Last week, Delta Air Lines (DL) revealed new flights from Atlanta (ATL) to Cape Town (CPT). What happens behind the scenes before such an announcement is made?

We’ll take a look at the process of launching a new route, from market analysis to the inaugural flight.

It would seem pretty easy to pick a destination on the world map and start flying there. However, launching a route is way more complicated than most people would consider at first. It often takes multiple years of planning between the first time an airline studies a new market opportunity and the initial flight.

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Major airports like Denver (DEN) have over 200 different destinations, with numerous airlines. Photo: Michael Rodeback/Airways

Market Analysis

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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 in order to choose 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 in order to evaluate the 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 are important information for airlines, there are multiple other factors that 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, going back to the DL example, I can see that a particular data set tells me that about 2,300 people flew from ATL to CPT last year, 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). Of course, there are multiple other options, mostly with stops in Europe or in the Middle East.

The data also tells me that passengers paid an average fare of US$884 for this trip, which gives an airline an idea of the price they could ask.

Salt Lake City (SLC) airport is a hub for DL, with many connecting passengers. Photo: Michael Rodeback/Airways

The Hub-and-Spoke Model

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Upon discovering this data, it could seem confusing that DL decided to launch a flight on a route only flown by 2,300 people every year. Indeed, with an average of 50 passengers per week, it would be impossible to fill up the aircraft and make the route profitable. However, this first impression doesn’t take into account the Hub-and-Spoke model, which is followed by every major airline, 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 when 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 especially, 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.

Routes from New York City are often competitive because of the high passenger demand. Photo: Darryl Sarno/Airways

Competing with Other Airlines

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While airlines sometimes launch routes never operated before, it is pretty common for a carrier to launch a route already operated by one of its competitors. There are some routes with extremely high competition, and this makes it hard for newcomers to gain enough demand in order to make the route profitable.

In this case, the airline considering the route will study the competitor’s fares and passenger numbers to evaluate if the route is viable. Another important element is the load factor of other airlines operating the route. The load factor is the percentage of seats that are occupied by passengers during the flight. If the competitor has a high load factor, with many flights flying full, it means there may be enough demand for another airline to come in and take some of the load.

There are a few ways for an airline to get enough passenger demand even if multiple competitors already operate the route. The first one, of course, is the ticket price. Indeed, most passengers will look for a cheaper flight to their destination, so selling tickets at a lower price helps attract passengers. However, the margin for airlines is often very low, and it is hard to lower prices and keep the route profitable at the same time.

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, United Airlines (UA) decided to launch a new route from Denver (DEN) to Munich (MUC) this summer, but the airline does not fly to a lot of major European cities from this hub, to Paris, for example.

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: long-haul transatlantic flights between London and New York. It is one of the most competitive long-haul markets in the world.

Just today, six different airlines operated over 50 flights 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 and is now opening new flights from Boston (BOS).

Lufthansa D-AIXN Airbus A350-900. Photo: Julian Schöpfer/Airways

Bureaucracy

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Before opening a new route, and 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.

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.

In the US, the DoT takes care of Essential Air Service (EAS) routes, which are subsidized by the government to ensure that small and underserved communities have regular air service. Many regional airlines in the US can fly from bigger hubs to smaller cities thanks to these government funds, thus improving the hub-and-spoke effect.

Airlines often have many aircraft in their fleet to operate their flights, but range and capacity are the decisive factors. Photo: Daniel Gorun/Airways

Choosing the Right Aircraft

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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 bigger 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-sized aircraft on long-haul routes. If you want to learn more about the A321XLR, read the August edition of Airways Magazine.

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 CAVID 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.

Short-haul aircraft can operate the shortest, low-demand routes, serving smaller communities. Photo: Michael Rodeback/Airways

Airport Logistics

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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 (LHR), are highly slot controlled, and air carriers sometimes wait for months or spend millions of dollars to buy these precious slots.

The water salute is a tradition when an airline opens a new route, like this Dreamliner in Fort Lauderdale (FLL). Photo: Keith Draycott/Airways

Scheduling the Route

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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, 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, cakes and drinks at the airport, and other special details. 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.

It is only after this long process that passengers can enjoy traveling to a new destination. Photo: Brandon Farris/Airways

Adapting the Operation

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After all those months-long and complex steps, the airline has finally managed to open a new route to serve a new destination. It can finally fly airplanes between two airports. However, the airline management team has work to do still.

The scheduling teams have to make sure there is an aircraft and a crew available to operate each of the flights. Moreover, the carriers are constantly monitoring the demand for each of their flights in order to adapt to the offer. If there is a lot more demand than what was first expected by the airline, it will raise the airfare to make more money out of every flight.

Sometimes, airlines change the aircraft type operating on a route if they see there is enough demand to support it. For example, Air France (AF) launched a new seasonal route from Paris (CDG) to Denver (DEN) in 2021, operating the Boeing 787-9 Dreamliner. This summer, the airline decided to operate the bigger Boeing 777-200ER on the route because there was enough demand to fill the aircraft.

While it does not always look like it, airline operations are extremely complex, and the process that airlines follow before opening a new route is extremely elaborate. There are thousands of airline employees working behind the scenes to constantly monitor their airline’s network, adapt the offer to the demand, schedule the flights, and basically, make the industry run like clockwork as best they can.

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Featured image: Ocean Hoevet/Airways

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