ANP Strategies A Future Analysis of The Middle Eastern Aviation Industry

Hadi Al-Muwaness, Mohammad Emad, Nasih Thaufeeg, & Deema Al-Refaie
Mohammad
EAU0814477,Emad EAU0814503
EAU0814503, EAU0514285, EAU0214131
Nasih
Dr. Thaufeeg
Rekha Pillai EAU0514285
Deema Al-Refaie
GEN 3030 EAU0214131
Research Methods
23rd May 2017
ANP Strategies: A Future Analysis of the Middle Eastern Aviation Industry

ANP Strategies: A Future Analysis of the Middle Eastern Aviation Hadi, Emad, Nasih, & Deema
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Table of Contents
Table of Contents....................................................................................................................... 1
Abstract...................................................................................................................................... 2
Introduction ................................................................................................................................ 3
Model Specification .................................................................................................................... 5
Literature Review ....................................................................................................................... 5
Research Approach ................................................................................................................... 8
Data and sampling ..................................................................................................................... 8
Factors Impacting ANP Strategies ............................................................................................. 9
Findings ....................................................................................................................................10
Future Predictions .....................................................................................................................15
Recommendations ....................................................................................................................16
 Rejuvenation of secondary airports ................................................................................16
 A Contingency Plan ........................................................................................................17
 Industry privatization.......................................................................................................17
Implications ...............................................................................................................................18
Limitations.................................................................................................................................19
Conclusion ................................................................................................................................20
References ...............................................................................................................................21
Appendix ...................................................................................................................................24
 Survey Questions ...........................................................................................................24
 Interview Questions ........................................................................................................25
24/5/2017 1 Lecturer: Rekha Pillai

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Abstract
Airline Network Planning (ANP) strategies, which include P2P and H&S models, represent a
critical aspect of any airline’s business model, and have a direct bearing on the aviation industry
as a whole. ANP strategies directly impact customer satisfaction, technological developments,
and business models in the aviation industry making it a topic of great significance. Using a mix
of primary data from a survey and two interviews with industry experts, in addition to analyzing
secondary data and real life examples, this paper found that current market trends indicate a
shift to a P2P model and a heavy reliance on the H&S system from major players in the Middle
East. It also found that customers prioritize price and time suitability of the flight over the airline,
travel duration and airport when booking a flight. Having backup plans, developing secondary
airports and industry privatization can be suitable ways for the Middle Eastern aviation industry
to deal with a shift to the P2P model. This research can have implications for academic and
professional purposes as it can provide a different perspective to the future of the aviation
industry in the Middle East in regards of airline routing ad network planning

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Introduction
“Network planning lies at the heart of airline strategy” (IATA, 2017), this was stated by IATA
highlighting the importance of network planning strategies for any airline. Airline Network
Planning (ANP) strategies have always been an area of interest for aviation experts and
professionals because of its strong influence on airlines and the aviation industry as a whole. A
network planning strategy is simply the operational approach a carrier connects and serves
certain destinations by means of, and it is one of the fundamental parts of any carrier’s business
model and route structure. ANP strategies do not only define an airline’s business model, but
also impact customer satisfaction, aircraft manufacturers’ technological approach, and the
profitability of airlines and airports. There are two major approaches to network planning; Hub &
Spoke (H&S) and Point-to-Point (P2P), and therefore, in this research, ANP strategies refer to
both strategies mentioned. On a different note, the Middle Eastern market is witnessing growth,
taking advantage mainly from the H&S strategy. The three leading airlines in the region –
Emirates, Etihad, and Qatar Airways – have built their networks on the H&S concept benefiting
from their geographical locations and compensating for their small local markets (Dimitrov,
2011). Likewise, major airports in the region are also benefiting from the H&S concept exactly
the same way the airlines are by positioning themselves as hubs connecting East and West,
DXB is an obvious example.
The current trend in the whole industry today is not similar to the one in the Middle East.
Major aviation markets, namely North America and Europe, are moving towards adopting the
P2P model as the main network structure (Ball, 2005). However, a lot of airlines, especially the
ones flying long-haul flights, are still dependent on the H&S system because it is more practical
with the current technology and business logic. This has intensified the competition between
the two major aircraft manufacturers in the industry; Airbus and Boeing. Airbus’s A380 was
developed to support the H&S system as it enables carrying a big number of passengers to a
hub, while Boeing’s B787 Dreamliner supports the P2P system by offering comfortable,
reasonably sized, and cost efficient aircrafts to take passengers to the end destination directly
(Babej & Pollak, 2006).
What makes the topic of ANP strategies relevant is its importance and direct impact on the
aviation industry. In addition to the intense competition between Boeing and Airbus, what
makes ANP strategies so critical is the high commitment associated with them. An airline
cannot just simply switch networking strategies whenever needed, because when an airline
chooses a model to follow, huge investments must be made in terms of aircrafts bought, route

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structure, and paired cities agreements to name a few. So, network planning requires extreme
thorough planning and involves critical and risky decisions, making it an area of interest in the
industry.
Multiple studies have been done, mainly at the West, covering network planning systems
and how different airlines with different business models used either model to their advantage.
However, few have been done focusing on the aviation industry in the Middle East. Plus, to the
extent of the researchers’ knowledge, none have covered how changes in trends regarding
networking strategies of airlines and customer perception will affect the region’s aviation
industry. This research will try to cover this gab by studying how the shifts in ANP strategies will
reshape the aviation industry in the Middle East. In addition, most papers done on this topic
date back before 2010 and just recently this topic have recaptured the industry’s professional’s
interest again. Considering all the changes taking place and how the evolution of the aviation
industry is going, ANP strategies are becoming of importance again since they determine how
aviation companies function. Based on this research gap, the objectives of this research are:-
 To critically review and determine the types of Airline Network Planning (ANP) strategies
used by airlines and its impact on the aviation industry.
 Describe the key factors affecting Airline Network Planning (ANP) strategies in the aviation
industry.
 Identify the factors that led to the current trends in Airline Network Planning (ANP) strategies
in the aviation industry.
 Analyze passengers’ convenience and expectation in using different methods of Airline
Network Planning (ANP) strategies in the Middle East.
 Predict how Airline Network Planning (ANP) strategies will affect airline scheduling and
routing in the future and its subsequent impact on the industry in the Middle East.
 To discuss the changes in Airline Network Planning (ANP) strategies within the aviation
industry and make recommendations to aviation related businesses and organizations.

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Model Specification
As pointed out, ANP strategies generally refer to the two networking models airlines use:
H&S and P2P. These are two simple concepts that are widely understood between industry
participants, yet they have numerous implications on how the industry operates. The main
difference between H&S and P2P is in whether a trip is direct or not. In an H&S structure, a
flight lands in an airport – a hub – then passengers take different flights to resume their trips to
the final destination, just like what happens in a transit flight. Assuming a passenger is planning
to travel from point A to point B, in an H&S structure, the passenger will take a flight from A,
lands in a hub or point H, and then take another flight to point B. A P2P structure on the other
hand will connect destinations directly without stopovers. Using the same example, the
passenger will take a flight from A and land in the final destination B, skipping H. Figure 1
illustrates the two models clearly. There are different consequences and considerations with
each model that airlines and airports look into before adopting either model.
Figure 1
Literature Review
As mentioned, the literature on airline networking strategies is mainly done before 2010, and
there were clear differences with studies done recently and older studies in terms of topic focus.
Pels (2002) conducted a comparative study on the developments in network systems of the
European and American aviation markets. The research used secondary quantitative data and
found that the hub and spoke system is the dominant network system in markets that are highly
deregulated and privatized (Pels, 2002). On a similar note, Kraus and Koch (2006) assessed

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the opportunities and threats of transforming airports into hubs. By using trend analysis on
capacity supply and a competitive structural analysis of airports in South Africa, Doha, Tunisia,
Dubai, Paris and Texas it was revealed that in a liberalized, economically stable and
geographically well located region the opportunities of a hub outweigh the threats (Kraus &
Koch, 2006). With a more focused point of view, Hymann (2006) conducted a study on the
future of hub strategy in the aviation industry. The study used a quantitative approach using
statistical graphical representations. Using Zurich Airport as the main focus of the study and
comparing it to other secondary European hubs, it was revealed that secondary airports not
using a hub system are slowly losing shares in terms of international travel while traffic from
LCCs, airlines that favor the P2P system, is growing (Heymann, 2006).
Furthermore, Lordan (2014) conducted a study on network configurations of full service and
low-cost carriers. The purpose of the study was to investigate the relationship between the
route network configurations and the different characteristics of the airlines. The study was
conducted on 26 full service and low-cost carriers from Asia, Europe and US, which were
analyzed using empirical models. Findings from the study demonstrated that in Europe
complex network analyses can distinguish between full service and low cost carriers, and the
findings also indicated that airports also play a role in differentiating between the two business
models. Airports act as a hub for FCSs to connect their flights, while for LCCs the airports act
as centers for their maintenance operations (Lordan, 2014). In another empirical study, Ball
(2005) argued that passengers are more likely to choose P2P structures for shorter routes than
Hub and Spoke, as it is more productive and faster. The study was conducted on Southwest
Airline’s passengers using simple circular airline model. Findings predicted that airlines
following the P2P structure should gain higher profits than airlines following the H&S system
and around 60% of the market share (Ball, 2005).
In one of the few studies conducted on Middle Eastern carriers, Dimitrov (2011) performed a
study on route network strategies of the three biggest gulf carriers: Emirates, Etihad, and Qatar
Airways. The aim of the study was to display the strategy of the route network of the 3 airlines,
and to investigate whether they share any similarities in terms of the traffic integration and
distribution. The study was conducted on those 3 airlines using documents from the airlines
and IATA, and statements from the managements of their competitors. The results revealed
that the primary strategy used by the three airlines is the H&S strategy. It also showed that they
share similarities in terms of fleet, target markets, using code-share agreements to secure
feeder traffic, and in key characteristics of route network developments such as covering six

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continents and serving untapped destinations through central Asia and Europe (Dimitrov, 2011).
More recently, Berntsen, Schafer, and Wardak (2016), using numerical data of major European
carriers provided by Lufthansa System, compared the political, economic and technological
developments that affect ANP strategies. They explained that the recent patterns and
developments in politics, economics and technology have resulted in favorable opportunities for
LCCs, allowing them to operate a significant number of additional flights using a P2P system
(Luchtvaartfeiten.nl, 2016). Similarly, Gillen (2006) examined the growth of the H&S networks
and the emergence of LCCs after the deregulation of commercial aviation in the 20th Century.
The study highlighted the relationship between the two divergent business models – full service
and low cost – and the choice of ANP strategies. The study found that what affects the
productivity and cost effectiveness of each networking system is the way airlines integrate the
system into their business models, and that the network structure’s suitability is ultimately
dependent on market preferences (Gillen, 2006).
From a different perspective, Bilotkach (2009) looked at the two different network structures
from an airline passengers’ perspective, thus segmenting the passengers between non-stop
and one-stop services, and recognizing that the latter is a lower quality service. Using a
framework model, Bilotkach argues that airlines can set up a mix of both non-stop and one-stop
networks in order to achieve cost savings, and that network carriers can compete with non-stop
service providers by offering higher frequency services (Bilotkach, 2009). Relatedly, Eller &
Moreira (2013) did a study on the factors that affect the strategies to reduce airlines costs.
Through questionnaires presented to aviation experts and by using Analytic Hierarchy Process
(AHP), the route structure of an airline is one of the main important factor affecting airline costs
followed by types and characteristics of the aircrafts and cost of labor and management quality
(Eller & Moreira, 2013). The results of this study indicate the importance of route structure in
determining profitability.
By examining the research available on ANP strategies, there will be a noticeable lack of
research on the topic emerging from the Middle East or focusing on this region. Additionally,
the body of literature seems to ignore how the recent changes in ANP trends will impact the
industry in the Middle East and if the European and American model of shifting from H&S to
P2P will also apply in the Middle East. This paper will try to cover this gap.

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Research Approach
This research will be using an inductive approach. An inductive approach is concerned with
formulating a theory using primary and secondary data. A mixed approach using both
qualitative and quantitative data was administered, the quantitative data was collected from a
survey with 165 respondents and the focus of the survey was served in gaining insight into
customers' opinions, perspective, and deciding factors when booking a flight and choosing the
service provider when flying from, to, or within the Middle East. The survey focused on different
aspects involved in passengers’ flight decision covering flight purpose and preferences in terms
of cost, convenience, airlines and airports, and flight time suitability amongst other things.
The main aim of the survey was to see firsthand the factors that consumers consider
essential when flying. The sample for the survey was chosen using a random sampling
approach as it would provide a non-biased opinion on the market and is an uncontrolled system
which is relevant for the study. Once the results were gathered they were looked at analytically
and necessary information was interpreted from the data and used to establish the research’s
findings.
For the qualitative data, interviews were taken with two aviation experts working at Emirates
Aviation University; a program manager and lecturer at the university with experience in the
airline business referred to as expert 1, and a senior lecturer at the university with a managerial
experience working in DXB referred to as expert 2, both providing a professional position on the
research topic.
The interviews provided primary information from the perspective of manufacturers, airlines
and other companies in the aviation industry. The interviewees were provided with a set of
open ended question before hand to prepare for the interview, they were asked to provide
answers with examples from the real world and to provide their personal opinions on the topic.
After the interview, both perspectives were taken to obtain a general idea and relate it to
secondary data, following which a pattern was seen that would help in formulating future
predictions.
Data and sampling

The interviews were conducted on a one on one basis where two of the researchers
physically communicated the questions to the interviewee and collected necessary information
from them. The questions and their answers provided an insight on the current trends in the

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market, future trend and impacts of factors such as location and congestion on customer
satisfaction.
In the survey part, the sample for the survey was chosen using a probability sampling
approach as it is the best approach to represent the entire population. Under this, again, the
study followed a simple random sampling approach as this type of approach was best to obtain
the necessary information for this research especially with the current capabilities, also as it
would provide a non-biased opinion on the market and is an uncontrolled system which is
relevant for the study.
The survey was administered digitally through emails and social media, being administered
to a lot of people all over the UAE and Middle East. The 165 response number compared to the
potential participants, although adequate for this research, was still not what was expected. 300
responses were expected for the survey, but because of the limited reach that target was not
met.
Factors Impacting ANP Strategies

From the body of literature examined, a set of factors were identified that are directly
influencing ANP strategies trends in the industry. As the industry got gradually deregulated, it
has led to reestablishment of airline networks and business models, in addition to the
privatization of the airports where airlines are operating efficient networks yet still facing
problems with airports because of the prices which are not influenced by market forces (Pels,
2002).
One of the main factors is concerned with the efficiency and productivity of each model
according to the airline’s business model. Customers are more likely to choose P2P flights
because it is just simply more convenient. A connecting passenger can also be more severely
impacted by the delay of the inbound flight, and possibly miss the outbound flight, and this
makes it more difficult to operate an H&S system (Ball, 2005). Airlines realize that, however,
some still choose to operate with an H&S strategy because it better suites their business
models, and Emirates is a good examples. Some airlines, like Qantas, operate flights with
connections because of their geographical locations. The Australian airline Qantas, because of
the isolated geographical location of Australia, is somewhat forced to get into plenty of code
share agreements and partnerships in order to practically serve popular destinations in Europe
and North America (Qantas, 2016).

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Furthermore, political, economic and technological developments are additional factors as

they have played a role in influencing airline’s choice and customer perception on ANP
strategies. Advancement in the economies of some countries and the liberalization of major
markets has allowed LCCs to operate more flights using the P2P system. Airlines operating an
H&S model also benefitted from that, as it allowed them to connect more destinations and utilize
fourth and fifth freedoms thanks to multilateral agreements. Some political factors, or
complications, have also played a role in influencing ANP strategies. An example to that would
be the newly emerging Syrian airline Cham Wings. Despite all the political complications
happening in Syria today, Cham Wings was still able to grow its network and become a major
player in the Syrian aviation industry competing with the previous monopoly Syrian Air. Cham
Wings is not allowed to land in certain countries like UAE and Saudi Arabia, so it serves most of
its destinations through connections with other cities like Muscat and Kuwait Cham Wings
does not necessarily want to work with the H&S model, but it has to in order to serve certain
popular destinations.
Technological developments, mainly in the field of aircrafts, which allowed newer aircrafts to
fly longer and cheaper, and carry more passengers, further gave an advantage to both
networking models. Additionally, factors like the introductions of low cost carriers and budget
travelers have created a better environment for the development of primary and secondary
airports invigorating network developments and connecting more cities (Luchtvaartfeiten.nl,
2016). It appears that airlines are influenced by numerous factors when choosing which
networking model to utilize, and airlines try to align their chosen network planning model with
their business model, external environment, market status, and objectives.
Findings
The purpose of the survey was to understand customers’ perception on ANP strategies. It
served to give insight on what influences passengers’ choice when booking a flight, because,
and as explained earlier, a direct flight is a better quality service overall and passengers will
generally prefer it over indirect flights, however, airlines operating indirect routes are still getting
plenty of business and this survey will help to explain why. The survey focused only on
passengers who either live in the Middle East or regularly travel there.
The majority of the participants travel through air 1 to 3 times a year, making 65.5% of the
total respondents. For the rest, 20%, 8.5%, and 6.1% travel through air 0 to 1 times, 4 to 6

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times, and more than 6 times respectively. Unsurprisingly, 47.9% of the respondents travel to
or within the Middle East the most, whereas Europe, South and Southeast Asia, and North Asia
take the substantial parts of being usually traveled to after the Middle East with 20.6%, 18.8%,
and 6.7% respectively, while the rest of the world make up the rest of the respondents with no
presence for Central and South Africa. In order to compare the trips type trends of the
respondents, they were asked what types of flights they usually book, and an overwhelming
88.5% of the respondents usually book direct flights. This was explained by the next question
which looked at the usual flights duration of the respondents, and short-haul flights (less than 4
hours) and medium-haul flights (between 4 to 6 hours) made up 44.8% and 35.8% of the
responses correspondingly, while long-haul flights (more than 6 hours) were less than 20% of
the responses. The respondents also tend to fly more with FSCs than LCCs, with 66.7% of
them usually booking with FSCs. Visiting friends and relatives seemed to be the usual purpose
of travel of the respondents making up 58.8% of the responses, with leisure and business
making up 32.7% and 8.5% respectively. The purpose of all this information was to get an idea
on the types of passengers the respondents are to make more accurate conclusions and further
understand the reasoning behind the responses to the more important questions.
When the respondents were asked if they are willing to book indirect flights for a cheaper
price, 43.6%, which are the majority, said yes, showing that price plays a big role in passengers’
decision. Only 25.5% of the respondents said no, and 30.9% said that it depends on the
duration of the trip. More than half of the respondents who said that it depends cited that the
layout duration should not exceed 4 hours, with more than fourth of the respondents stating that
the layout duration should be less than 2 hours. Still, a surprising number of almost fourth of the
respondents were willing to wait more than 7 hours in a stopover for a cheaper flight. This is
understood since more than 90% of the respondents usually travel for VFR or leisure, and these
types of passengers tend to be flexible with their time unlike business travelers. In addition,
respondents seemed to prefer congested airports that offer good services over uncongested
airports with below average facilities with an overwhelming 85.5% choosing congested airports
with better facilities.
The survey also tried to identify the level if importance to passengers of five main factors
when booking a flight. The factors were price, time suitability of the flight, the airline, travel
duration, and the airport, and the respondents were asked to rank the factors in terms of
importance. The results were as follows: price is the most important factor, and then comes
time suitability of the flight and the airline, then travel duration, and lastly the airport. The

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findings of the survey indicate that passengers care more about the service itself than the
service provider. That means passengers are more likely to book cheaper flights and flights that
better suite their schedules with little to no regard to the service provider as long as the level of
service is acceptable.
According to these findings, it can be understood how airlines that choose either networking
model succeed. Most flights are operated following the P2P model as direct flights, and most
airlines follow this model. It is no secret that most airlines around the world struggle in breaking
even, let alone make profits, because operating direct flights as full service carriers can be
costly because of lack of revenue optimization in the P2P model and the inherent inflated costs
associated in the industry, even though the P2P model is cheaper than the H&S. This lack of
revenue optimization is the result of difficulty in balancing capacity and demand in P2P
structures, compared to H&S structures which depend on the demand of multiple destinations,
making it possible to offset the drop of demand from one destination by the another (Cook &
Goodwin, 2008). Nevertheless, multiple airlines have succeeded using a P2P strategy, and
those are mainly LCCs as shown in the literature examined. From every region, examples can
found of LCCs operating a P2P model that are representing serious competition to successful
FSCs operating an H&S model, like the East Asian Air Asia, the American Southwest, the
European Ryan Air, the Southeast Asian Indigo, and the Middle Eastern Air Arabia and Fly
Dubai to name a few. LCCs were able to capitalize on the advantages offered by a P2P
network while minimizing the shortcomings because of their business models and
understanding market preferences, and this idea is asserted by the literature examined, namely
Gillen’s paper. As shown in the survey, people care about price and time suitability of the flight
more than the airline and the airport. So, airlines offering lower prices with enough frequency –
which comes with the cost of providing less amenities, flying to secondary airports and offering
lower quality service overall – can increase demand to make it match capacity to further
optimize revenues. That, coupled with lower costs incurred by LCCs, can ultimately increase
profits.
The success of airlines following the H&S model, which is not preferred by the passengers
and directly lowers the quality of the service, can be partly attributed to better revenues and
capacity optimization. Airlines who offer indirect flight tend to fly long-haul, serve underserved
cities which do not have high demand, and offer extra amenities to their passengers. Although
this will increase their prices, it will also give them an advantage, and sometimes a USP, over

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their P2P competitors, possibly increasing revenues per available seat kilometer and decreasing
cost per available seat kilometer.
From the perspective of an airline expert, expert 1, an ANP strategy can effectively impact
customers’ satisfaction. The expert’s general focus was on ticket prices and frequency of flights
in addition to how these variables would affect customer’s perception and satisfaction, putting
an emphasis on the market of the country.
The expert started off by differentiating the flight distance and the relevant ANP strategies,
confirming the review of literature that H&S is used by long-haul carriers while short-haul
carriers prefer the P2P system. A distinction was also made based on the market stating that
markets such as the US will focus on P2P because of the high number of LCCs operating there,
while 6 freedom markets such as the Middle Eastern market are focusing on the H&S system.
The expert went on to say that he believes that there is going to be an overall switch from
H&S to P2P, although H&S can prosper on ultra-long haul flights where the aircraft will have to
perform necessary stopovers. But majorly it will still depend on the market, airlines will have to
build frequency and gain market share, the business model of the airline with the greatest
market share will be established in that region. The expert then went on to suggest that Boeing
will flourish as their focus is on flying P2P, saving costs for the airlines and setting up of multiple
airport operations. Three factors which according to him will be crucial in the future, in addition
to aligning with findings from the survey about customer preferences.
The expert when asked about the impact of the geographical location on ANP stated that
H&S has an advantage there, majorly due to the necessary technical stop that a flight might
have to make, corroborating it with an example of a flight from Glasgow to Bahrain that stops in
Dubai, also claiming that H&S is helping establish new routes such as the trans-Atlantic and the
kangaroo route.
When questioned about customer satisfaction, the expert stated that it comes down to two
factors, comfort for the passenger and the air fare. Some customers might pay more for greater
convenience but that is more of a psychological decision rather than an economic one.
Following this, an unconsidered variable was brought up, the expert emphasized on the main
aim of an LCC and explained why they would not focus on a hub and spoke system. “It’s
simple, they won’t do it because it will cost them money”, from an airline perspective aircraft
utilization and parallel factors such as quick turnaround time would be an issue in a H&S

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system. Relating it to flight timings, according to the expert, LCCs cannot fly long haul flights
because passengers would not want to fly a 14+ hour flight without any onboard services, in
addition to this it would be harder for the pilots because of the different configurations of the
LCC’s aircrafts compared to those of the FSC’s, “the concept of a true LCC is slowly dying”
were the expert’s final words on the matter.
When asked about airport congestion, the expert claimed that airlines fly to airports that have
spaces/slots and low aircraft congestion whereas passenger congestion is not considered a
major factor in such a situation. Stating examples such as Heathrow airport which is highly
passenger congested but many airlines still fly their primarily due to the third runway being
constructed there. On a similar note, Qatar’s Hamadan International Airport and Abu Dhabi
International Airport are two of five Middle Eastern hubs, these two airports have less
congestion and have the potential to compete with DXB and other major hubs around the world
due to a greater opportunity to grow and expand. But lack of congestion and having good
facilities does not necessarily mean that the airport will perform well, and gave Clermont-
Ferrand-Auvergne airport in France as an example claiming that “It is horrible”.
In the interview with expert 2, the expert stated that the purpose of implementing an airline
network planning strategy is to increase revenue and decrease the cost for an airline. Meaning,
it is primarily related to the business model or product strategy of an airline – P2P for LCCs and
H&S for FSCs.
Expert 2, in what was the main focus of his response, illustrated a brief history on how Airbus
and Boeing focused their aircraft manufacturing plans for the future based on the two models of
ANPs. In 1991, Airbus predicted that by 2015 there will be 30 hub airports in the world but
currently there are only 18 hub airports. Airbus predicted that H&S will be the future networking
strategy used by airlines and so aircrafts, mainly the A380, were manufactured to cater long-
haul flights, so airlines can benefit from economies of scale. On the other hand, Boeing
predicted that P2P will be the future ANP strategy and manufactured aircrafts, like the B787, to
cater short-haul flights with cost efficient capabilities. However, both aircraft manufacturers
wanted to play it safe, thus Airbus introduced A350/A320 for short haul flights and Boeing
introduced B737/B777 for long haul flights. This illustrated that both Airbus and Boeing do not
want a monopoly in the market or want to risk making critical decisions based on possibly wrong
assumption for the future which can very cause either manufacturer to go bankrupt.

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Expert 2 also specified that H&S can only be implemented when an airport and an airline
work together. It was described as “like a marriage” and gave examples like Emirates and
Dubai International Airport and Turkish Airlines and Ataturk Airport.
Expert 2 made no personal opinion on the future of ANP strategy and indicated that both
manufacturers are playing it safe and each of them has a backup plan as too much is at stake in
a multi-billion-dollar industry. Expert 2 has asserted the findings in the literature reviewed that
aircraft characteristics do have a significant role to play in airlines operations and profitability.
Future Predictions
Based on the findings from the survey, the interviews, and the observations from the
literature and industry trends, predictions about the future of ANP strategies can be made. The
aviation industry, generally speaking, seems to be slowly and increasingly leaning towards the
P2P model after being reliant on the H&S model, and it has been since Southwest introduced its
business model back in 1971. The P2P model used to be thought of as a less efficient model
that works only with LCCs flying short-haul routes, and to some extent that was true.
This is not the case anymore, the line between LCCs and FSCs is blurring, and both types of
carriers are appropriating from each other’s business models. For example, some LCCs are
starting to introduce more amenities onboard and FSCs are staring to further reduce prices to
the point that it nears LCCs’ prices. One of the main things that FSCs are trying to change is
there networking models. Since a direct flight, all things staying the same, is a better quality
service, airlines previously using the H&S model are aiming to incorporate more P2P flights.
This can be successful if the airlines managed to be more cost efficient, further optimizing their
networks and revenues, and take advantage of the latest technologies that will allow them to fly
longer, cheaper, and more comfortably for passengers.
This shift to the P2P model is mainly taking place in the American and European markets, in
the Middle East; the market seems reliant on the H&S model. This is clearly evident in the
leading city in terms of the aviation industry in the region: Dubai. Dubai Airports work around
the concept of H&S, as they can handle a huge number of passengers, can cater to a big flow of
A380s, and include numerous services and amenities to cater for a transiting passenger. Al-
Maktoum International Airport and the aerotropolis under construction around it; Dubai World
Central, is a good example of that (Dubai Airports, 2017). Another example is Emirates, which
operates a 245 aircraft fleet exclusively of A380s and B777s and waiting an order of 234

Industry
aircrafts (Nelson, 2016). Emirates and Dubai Airports seem to believe that the H&S model is
the future and are playing accordingly, and since they are two of the most dominant players in
the Middle Eastern market, this strongly suggests that the aviation industry in the region will be
following the H&S model for the foreseen future.
However, there is another prospect in which the H&S players in the Middle Eastern market
will be forced to change their strategy or lose market share. Emirates, and as expert 1
mentioned, is playing a risky gamble by following a strategy that will make it bitterly fail in case
its future predictions fell short. Even though the Middle East has been the fastest growing
market in terms of annual traffic for five consecutive years, recording 10.8% traffic growth in
2016, the traffic still made up 9.6% of the world traffic share after North America, Europe, and
Asia Pacific (IATA, 2017). This is a good share but not enough for airlines like Emirates and
Qatar Airways or airports like DXB to flourish and become industry leaders considering the size
and small populations if these operator’s countries. Major carriers and airports in the Middle
East depend on traffic from Asia Pacific, Southeast Asia, and Europe hubbing in the Middle
East. So if these markets made the shift to a P2P model and skipped hubbing, major airlines
and possibly airports in the Middle East will suffer. The shift to the P2P structure in already
taking place in Europe, and with Norwegian Airlines launching low cost transatlantic flights, it will
not be long for other European carriers to follow suit. For Asia Pacific and Southeast Asia,
GDPs are growing, income per capita is increasing, and airlines are privatizing and upping their
investments, all of which might very likely allow a shift to a P2P structure.
Recommendations
Major players in the aviation industry in the Middle East are walking on a thin line by heavily
relying on the H&S strategy, and the other players have an insignificant presence in the industry
that goes as far as their home countries. Improvements can definitely be made. Carriers, like
Emirates, that are relying on the H&S model should have contingency plans. Being able to be
adaptable to market changes, especially in an industry like the aviation industry that is so cost
intensive, is crucial for any company’s survival. Two of the three recommendations given are
focused around the market in UAE.
Rejuvenation of secondary airports

Since major hubs in the region are already establishing themselves around the H&S model,
secondary airports can be rejuvenated to back up the industry and work as an alternative in

Industry
case the H&S system failed. In a more focused point of view, Dubai has established itself as a
hub connecting East and West and has set both DXB and DWC for the long term. However,
there other airports in UAE that can rethink their approach and establish themselves as major
airports in the region, like Sharjah International Airport. A restructuring for Sharjah International
can be beneficial for UAE since it can be enhanced around the P2P concept and act like a
contingency airport for the country. UAE is now not only a place to stopover but a destination
for some, and SHJ’s facilities can be developed to suite these needs and the P2P model. As
the findings indicated, people prioritize price when booking flights, and SHJ and the airlines that
frequently use the airport, like Air Arabia, can provide a satisfactory quality service with
reasonable prices. Frequency is also an important factor and SHJ will need to expand the
terminal capacity and increase slots numbers to be able to cater for any increase in demand.
A Contingency Plan
As expert 2 suggested in the interview, even the two main commercial aircraft manufacturers
in the world also got backup plans. So it is important for cities such as Dubai to establish
effective strategies based on the changes in the market. The aviation industry in Dubai and the
Middle East, as clearly indicated, is built around the H&S system, but the current market trends
indicate that the world is slowly changing from the H&S system to the P2P system. Therefore,
the following strategies can be undertaken by Dubai to tackle the change in future trends in ANP
strategies.
Unlike other airlines in the world, carriers based in UAE have the advantage in low operating
cost because of low fuel price, low maintenance and fuel efficiency due to young and new
aircrafts, strong economy, etc. Therefore, the airlines in the UAE cab establish a low pricing
strategy in order to compete with the low cost carriers doing point-to-point flights. In the survey,
people preferred price. Emirates can, following what Singapore Airlines did, establish a
subsidiary airline that will be able to cater to a P2P market and establish a hybrid model in their
strategies. Emirates and Etihad can also invest in short-haul aircrafts such as A320 and B787
in their fleet composition.
Industry privatization
The industry in the Middle East is obviously dominated by few carriers with no strong
presence for other carriers that can potentially further strengthen the market and grab market
share. Even with the political distresses going on the region, numerous countries are
increasingly opening up and upping their investments in travel and tourism. However, some
countries in the region are still under tight government control and political restrictions which are

Industry
slowing down the industry’s growth. The region has a lot of potential for further growth, and
numerous airlines and countries in the region have undertaken recent changes that can push
the industry forward and offset any damages it will get if the H&S model failed. Middle Eastern
governments need to consider reducing the restrictions on travel and tourism and on foreign
and local investments to make the region more appealing and suitable to foreign travelers and
investors. A good way that tends to work when improving an industry after being under tight
government control is privatization. Privatization emboldens the industry’s profitability by better
catering to customers’ needs, and by promoting innovation and risk taking.
Iran, previously under numerous sanctions from the UN and NATO, is opening up after the
Iran Nuclear Deal in 2016 and European airlines like British Airways and Lufthansa are
launching direct flights to the country. Iran has also started opening up its economy to foreign
markets making it easier for people to travel there and experience its rich culture. Although Iran
still has a long way to go, the progress can become faster with privatization and foreign
investments in the industry, and by providing easier access. This can speed up the process and
address critical travel and tourism issues, like the lack of good hotels or difficult visa claim,
faster and better (Maxwell, 2016).
Royal Jordanian is a good example of an emerging Middle Eastern carrier. The airline has
been having better marketing campaigns and customer engagements and the response has
been pretty positive to its recent sarcastic social media ads about the American elections (Su,
2017). Royal Jordanian has the potential of becoming a market leader in the Middle Eastern
industry with privatization, especially since it works with the P2P model which would offer the
needed diversity in the region.
Implications
This research can serve both academic and professional purposes with the information it
offers. As demonstrated, networking strategies are extremely critical for any airline and have an
impact that extends beyond the carrier itself making ANP a topic of importance for the industry.
This research addresses the factors impacting ANP strategies like customers’ perceptions,
technological characteristics, and business model and thus providing valuable information to aid
in decision making.
By analyzing customers’ perception about ANP strategies through the survey and thoroughly
explaining each strategy and its characteristics, future researchers and academics personnel

Industry
will have a deeper insight and understanding about the topic while also benefiting airlines by
providing better comprehension about customers.
Moreover, the future predictions constructed provide strong assumptions and logical
arguments based on the findings, cases, and trends analyses that address likely future changes
in trends and possible options to deal with these changes to keep industry growth rates in the
Middle East rising.
Furthermore, as mentioned at the beginning of this research, most of the papers were done
before approximately 7 years and are not very focused on the Middle Eastern market; thus, this
research provides more current & specific information that would help future academics
endeavors as well as aviation professionals operating in the Middle East in making informed
business decisions.
Limitations
The shortcomings associated with this research are mainly a result to the researchers’
inadequate experience and limited reach. Because of the limited reach, the survey only
reached a limited diversity and number of people. The majority of the respondents had some
sort of a connection to the researchers which made the sample size relatively small compared
to the population. In addition, the survey’s limited reach did not make it possible to collect
responses from markets all over the Middle East and was mostly limited to the market in UAE
making the diversity of the respondents severely lacking. Lack of access to credible sources of
information was also a problem in the research process. All the sources used are of reliable
origins, however, better in-depth information could have been provided if access to sources like
governments’ records and more aviation related research journals was possible. Because of
the nature of this research context, lack of time was a shortcoming that limited the ability to
collect more comprehensive information alongside impacting survey sample size as well.
Future research can focus on studying the same topic of this research without the limitations
mentioned to get a more thorough outlook on ANP strategies. Studying the same focus of this
research with a focus on the Asian Pacific and Southeast Asian markets to relate the findings
with this research will provide a bigger picture about the trends in the industry and will help in
establishing more accurate future predictions.

Industry
Conclusion
The aviation industry has always been a risky industry where intensive planning and
informed decision making is required for numerous critical aspects of the business including
ANP strategies. The trends in networking strategies determine the future of the industry and
how it operates, and operators that are not flexible enough to adapt to market changes or did
not predict future shifts in trends are unlikely to survive. For the last couple of decades, the
H&S model has been the dominant ANP strategy in the industry, however, changes in trends
are being noticed and the future appears to favor the P2P model. Numerous operators
including airlines like Emirates, airports like DXB, and aircraft manufacturers like Airbus have
established their business models around the H&S system and expect it to be the prevailing
system in the future.
This inductive research collected a mix of quantitative and qualitative data from surveys and
interviews, and also looked at market trends, numerous studies, and real life examples to come
to its conclusions. The aviation industry appears to be shifting to the P2P model because
customers prefer it, technology allows it, and numerous successful business models have been
developed around it. Major players in the Middle East are still relying on the H&S model and
making serious investments around it. If market trends changed as expected, and carriers in
Europe, Southeast Asia and Asia Pacific started flying direct ultra-long-haul flights more
regularly, major players in the Middle East will be facing serious risks of losing huge market
share. Having backup plans, developing secondary airports and industry privatization can be
suitable ways for the Middle Eastern aviation industry to deal with a shift to the P2P model.
Studying market trends for ANP strategies in Southeast Asia and Asia Pacific can be a good
topic for future research endeavors and a suitable follow-up for this research as it will give a
more complete picture about the developments in ANP strategies in the world and impacts on
the Middle Eastern market can be measured more accurately.

Industry
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Appendix
Survey Questions
1) How often do you use air transportation?
a) Once every several years/ Never
b) 1-3 times a year
c) 4-6 times a year
d) More than 6 times a year
2) To which part of the world do you usually travel to?
a) The Middle East
b) North Asia
c) South and Southeast Asia
d) North Africa
e) Central and South Africa
f) Europe
g) The Americas
h) Australia
3) What type of trips do you usually book?
a) Direct trips
b) Trips with stopover (with transit)
4) What types of flights to you usually take?
a) Short-haul (<4 hours)
b) Medium-haul (4-6 hours)
c) Long-haul (6 hours<)
5) Which type of airlines do you usually use?
a) Full service airlines (Emirates, Etihad, Qatar Airways...)
b) Low cost airlines (Air Arabia, FlyDubai, Jazeera Airways...)
6) What is the usual purpose of your travel?
a) Leisure
b) Business
c) Visiting friends and relatives
7) Are you willing to book transit flights for a cheaper price?
a) Yes
b) No
c) Depends on the duration of the trip
8) If it depends, please specify the duration.
9) Which do you prefer?
a) Congested airports with good facilities and services
b) Uncongested airport with below average facilities and services
10) Rank the factors below from 1 (The most important) to 5 (The least important) in
terms of importance according to you when booking a flight:-
a) Price
b) Time suitability of the flight
c) Travel duration
d) The airline
e) The airport

Industry
Interview Questions
1. Which Airline Network Planning (ANP) strategy do you think is currently at an advantage in
the aviation industry, Hub and Spoke (H&S) or Point to Point (P2P)?
2. Which ANP strategy do you think is going to prosper in the future?
3. Do you think the geographical location of an airport will play a role in deciding an ANP
strategy? If so, which strategy do you think is the Middle East focusing on?
4. Do you think ANP strategies can effect customer satisfaction (direct and indirect flights)?
5. The current trend is that LCCs want to fly long-haul flights while FSCs want to reduce overall
costs i.e. new business models are being developed. According to this do you think there
will be a switch in ANPs in accordance to the changing market. LCCs will start following the
H&S and vice versa?
6. What is your opinion on the effects of each ANP strategy on airport congestion?
7. Statistics based on the two largest aircraft manufacturing companies – Airbus (A380)
predicts that H&S will be the main ANP in the future whereas Boeing (B787) predicts that
the trend will be P2P. What do you think?

ANP Strategies A Future Analysis of The Middle Eastern Aviation Industry

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Hadi Al-Muwaness, Mohammad Emad, Nasih Thaufeeg, & Deema Al-Refaie

23rd May 2017

ANP Strategies: A Future Analysis of the Middle Eastern Aviation Industry

Model Specification .................................................................................................................... 5

Literature Review ....................................................................................................................... 5

Research Approach ................................................................................................................... 8

Data and sampling ..................................................................................................................... 8

Factors Impacting ANP Strategies ............................................................................................. 9

Future Predictions .....................................................................................................................15

 Rejuvenation of secondary airports ................................................................................16

 A Contingency Plan ........................................................................................................17

 Survey Questions ...........................................................................................................24

 Interview Questions ........................................................................................................25

24/5/2017 1 Lecturer: Rekha Pillai

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24/5/2017 6 Lecturer: Rekha Pillai

24/5/2017 7 Lecturer: Rekha Pillai

Data and sampling

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Factors Impacting ANP Strategies

24/5/2017 9 Lecturer: Rekha Pillai

Furthermore, political, economic and technological developments are additional factors as

24/5/2017 10 Lecturer: Rekha Pillai

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24/5/2017 13 Lecturer: Rekha Pillai

24/5/2017 14 Lecturer: Rekha Pillai

24/5/2017 15 Lecturer: Rekha Pillai

Rejuvenation of secondary airports

24/5/2017 16 Lecturer: Rekha Pillai

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IATA, 2016. Fact Sheet Industry Facts. [Online] Available at:

IATA, 2017. Airline Network Planing. [Online] Available at:

Luchtvaartfeiten.nl, 2016. Development of Network Strategies in Aviation Fact Sheet. [Online]

24/5/2017 22 Lecturer: Rekha Pillai

Pels, E., 2002. NETWORK DEVELOPMENTS IN AVIATION. [Online] Available at:

Qantas, 2016. QANTAS DATA BOOK 2016. [Online] Available at:

24/5/2017 23 Lecturer: Rekha Pillai

24/5/2017 24 Lecturer: Rekha Pillai

24/5/2017 25 Lecturer: Rekha Pillai

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