As I wrote a while back, the merger between US Airways and American Airlines puts US Air’s Charlotte hub in jeopardy. Apparent the General Accounting Office agrees.
Despite assurances by the airlines, this recent article notes GAO’s conclusions that changes in the business environment (in other words, any economic downturn) may spell trouble for the airport in Charlotte (CLT). Curiously, the article claims that CLT is the “world’s sixth busiest airport.” Really? Not sure where this came from but according to Wikipedia, they rank #23 for passenger traffic. Even in the U.S., CLT ranks only as the eighth busiest airport. And they quote Doug Parker (CEO of US) as saying, “One of the few holes in the American system is a Southeast hub, and Charlotte fills that void.” I am no geography genius but isn’t the Miami hub somewhere in the southeast? And if CLT is supposed to fill a void, just which airport hubs fill these same “voids” in the northeast and northwest?
Most agree that geographically, there will be three hubs in the eastern U.S.: New York (JFK), Washington, D.C. (DCA) and Philadelphia (PHL). JFK – the gateway to the west and international gateway to the east – is an obvious hub. The airline’s strength in DC is unique and while traffic is limited because of size and air restrictions, it is nevertheless a convenient major location for government, related contractors, other business travelers, and of course a popular tourist destination. As for PHL, well… three hubs separated by less than 250 miles?
By the way, Delta offered similar assurance that they would keep Memphis (MEM) and Cincinnati (CVG) after their merger with Northwest. Today, Memphis is de-hubbed (officially 09/13) and CVG is a skeleton of what it used to be. United has seven hubs but there is question whether they will continue to keep both Los Angeles (LAX) and San Francisco (SFO), even more so Cleveland (CLE) as well as O’Hare in Chicago (ORD).
Don’t get me wrong, I like all of these smaller airports. Well okay, PHL (where I was only a couple weeks ago) could use a shower, a shave, and some lipstick; but the other airports are wonderful, as are other smaller locations like Nashville (BNA) and Raleigh (RDU). Unfortunately, these airports have difficulty maintaining hub status, especially in downturns.
I have no doubt CLT and PHL are safe in the short run, especially Charlotte since the city’s former mayor was just confirmed as the new Secretary of Transportation. Nevertheless it would be surprising if the merged airline really keeps nine hubs operating at current levels a few years after the merger. Indeed, it would be unprecedented.
On a related note, GAO also said last week what most everyone already knows – this merger will reduce competition. While the airlines claimed there were only 12 overlapping routes, GAO correctly noted that when you include connections, there are really more than 1600 routes affected. Will this finding derail the merger? No, it was pretty much a done deal a couple years ago.