Delta Air Lines

In nineteen seventy-four, Delta built a hub-and-spoke network centered on Atlanta. Instead of flying point-to-point like competitors, Delta routed nearly all traffic through one central airport. A point-to-point airline serving fifty cities needs over one thousand direct routes. A hub airline needs only forty-nine routes—each city connects to the hub and passengers transfer at Atlanta. Fewer routes meant fewer planes, fewer crews, and higher load factors per flight. Delta could serve small cities profitably because passengers from dozens of routes were funneled onto single connecting flights. The hub created pricing power. If you lived in a mid-sized southern city, Delta was often the only carrier with a connecting route. Limited competition allowed Delta to charge premium fares. Cost per available seat mile determines airline profitability. Delta drove this number below twelve cents by filling planes at load factors exceeding eighty-five percent. Each percentage point of load factor improvement spreads fixed costs of fuel, crew, and aircraft ownership across more paying passengers.