Following the depeaking example set in the U Smarket, Lufthansa has now set out to smooth the peaks and troughs at its Frankfurt hub
Over the past two years, the world has watched with interest as American Airlines took radical action to smooth out the peaks and troughs at its hubs in Dallas/Fort Worth (DFW) and Chicago O'Hare. One of the key questions it raised was whether the same "depeaking" experiment would eventually make its way across the Atlantic. There are now signs that it has. Lufthansa's latest summer schedule suggests that an interesting first step is indeed being taken in Europe.
Certainly, Lufthansa's peak smoothing is much more subtle than the full "rolling hub" concept brought in by American with its wholesale redistribution of flights. That saw the US major smooth out the peaks and valleys of its classic connecting banks, leaving it with greater operational integrity, although with the sacrifice of some connectivity. By contrast, Lufthansa has redeployed only a fraction of the capacity from the peaks, but, at the same time, it appears to have increased the level of connections.
The basic hub structure in Frankfurt remains substantially unchanged. The underlying six-wave system is still in place, with four main peaks at roughly around 9:00, 12:00, 17:00 and 21:00. The current summer schedule, however, sees the inbound peaks reduced by 22 flights a day and 35 services added to the troughs in between. On the outbound side, 26 flights are taken out of the peaks, with 38 added around them.
It is possible to measure how "peaky" a hub is by calculating the standard deviation of the inbound and outbound movements against the mean average. High values indicate a well-developed wave structure such as American operated at DFW before the restructuring, or indeed as Lufthansa runs at Munich. Low values are typical of schedules centred on point-to-point connections, with a more even distribution of traffic during the day. The "peakiness" score of Lufthansa's wave structure in Frankfurt is down from 1.02 in summer 2003 to 0.94 in this year's season, representing a drop of 8%. By comparison, American's corresponding figure in DFW went down from 1.38 in summer 2001 to 0.83 by summer 2003, a 40% drop.
However, Lufthansa has not only managed to smooth the peaks but, at the same time, to produce a 7.5% increase in the overall number of meaningful inbound connections generated during the day. From a passenger perspective, that means that on average each in-bound flight will have 5.6% more connections than before. By comparison, American's depeaking led to a drop of connectivity in the order of 32% at Chicago and 20% in DFW.
At first glance, the combination of smoother peaks and higher connectivity looks too good to be true, especially when combined with Lufthansa's target of greater operational efficiency. In fact, a closer look reveals that there are fewer meaningful connections at peak times, in line with the fall in the number of flights. The new connections have, instead, come on the shoulder of the waves, especially in the afternoon and at less congested times. As a result the pressure on operations at the airport has been eased at peak times.
Block-time reductions
Alongside this restructuring, Lufthansa has made a bold move to reduce the in-bound block-times of its intra-European fleet by a very aggressive average of more than 6 min, with maximum reductions in the range of 10-15 min. On the outbound side, reductions are limited to an average of only half a minute.
American reduced its block-times too. But despite the radical nature of its hub restructuring, it averaged only 3 mins on in-bound flights to DFW and 4 mins for Chicago. That is in sharp contrast with the levels that Lufthansa is now betting on.
There is also a cautionary tale in that American ran into massive punctuality problems last winter due to a combination of the new block-times and also a ramp-up in the number of flights as it made up some of the ground lost in the wake of the 11 September terrorist attacks. As the ramp-up began in the winter of 2002/3, punctuality initially remained at around the 80% mark, but a year later it showed a dramatic decline, falling to 59% during the 2003/4 winter season. However, it must be underlined that the depeaking action itself hardly had any effect on the punctuality compared with the impact of flying more services and on tighter schedules.
The aggressive reduction of block-times at Frankfurt will, nevertheless, put further significant pressures on operational performance at what is already a congested hub. And the relatively mild peak-smoothing introduced this summer will certainly not be enough on its own to offset this impact. However, the rumour in Frankfurt is that Lufthansa is well aware of the risk and is providing for additional ammunition to counteract the punctuality risk through a series of measures, from reducing turnaround times to optimising approach patterns. The industry will be watching closely.
The likely impact of the restructuring on productivity is difficult to assess, but the combined effect of Lufthansa's shorter block-times and smoother peaks should lead to a gain of around 3-5%.
Of course, loosening the wave constraints represents one of the key enablers in reaping this productivity increase. If the number of waves and the concentration of the flights on the waves had remained unchanged, then an increase in roundtrip productivity would only have resulted in aircraft sitting on the ground longer in Frankfurt waiting for the next wave. By decreasing the concentration of activities in the peak times, Lufthansa should be free to raise productivity across the entire system. In short, the gains will come from depeaking and shortening block times.
Lufthansa's rescheduling is a clear but relatively timid step towards depeaking, especially in comparison to American's action at DFW. But the move does allow for gains in aircraft productivity thanks to less congestion in the base and the ability to take full advantage thanks to a more flexible landing and departure times.
Shortening of the block-times could probably have been carried out within the old structure. In some ways it could be seen as the outcome of one of those periodic reviews of block and excursion times that all airlines undertake. But the fact that the ambitious new targets come on top of the depeaking should make their consequences marginally lighter to bear for the operations in Frankfurt.
In conclusion, the US depeaking concept does appear to have taken its first tentative steps across the Atlantic. As with the American experience, the concept looks to help ease operational bottlenecks, but unlike the US experience, the basic structure of the hub is not under discussion and the connectivity is not only safeguarded but improved. Reports of the hub's death appear to have been somewhat exaggerated.
BY PHILIPP GOEDEKING AND STEFANO SALA AT ROLAND BERGER IN FRANKFURT AND LONDON
Source: Airline Business
