Charlotte-Douglas Airport (CLT) Expansion

[Lloyds5]

Clt29301, I am just starting to notice that AA's rhetoric towards CLT is now turning negative and I am getting the sense they are planning on using a number of excuses to cut international flying as well as pare back some domestic flying. I am not suggesting they are going to dehub CLT but I think they will adjust schedules. I note up to the merger it was CLT is great, CLT is a hub we love, etc, that's not what we are now hearing from AA, instead we are hearing don't raise the fuel tax, CLT has the lowest revenue per passenger out of all out east coast hubs,  we are still planning what CLT will look like. I have my opinions on why international will be drawn down and some domestic connections routed over DFW  but I don't like what I m hearing from AA. I am not suggesting they will grow in PHL but I think they will maintain a large portion of the international flying and use PHL as the main connecting point to Europe. I think the real growth areas will be MIA, DFW and LAX based on what I am seeing now......   O&D is a large part of the problem at CLT before the only real alternative in the country east of the Rockies was CLT and PHL for US Airways, now its JFK, MIA, ORD and DFW. So for example before a lot of the east coasts East west traffic was routed via PHL or CLT now that same traffic can be routed via DFW or ORD to reach the Midwest rockies or the west, same for Europe before the entire country funneled into PHL and to a lesser degree to CLT now the traffic flows can go via: LAX, DFW, ORD, MIA and JFK. So CLT's low O&D and competition from other hubs with much higher O&D will change traffic flows as there are other alternatives. I hope this answers your question. When I worked at Lloyds in London I worked on insuring commercial aircraft fleets hull cover but got to know the business fairly well. So I use that knowledge and the info I read about including financials and load factors to develop my opinions. I will be right about a lot of stuff and I will be wrong as well and I don't pretend  to know everything but I think we are going to see International drawn down(Europe, Brazil has already happened) and some domestic flying will be shifted via the western hubs. That's how I see it but CLT will still be a very large hub when the integration is complete in a rapidly growing part of the country.     

[15895]

I'll keep it as simple, short and painless as possible. I think;

- Charlotte airport will be busier than ever before. I will be surprised if its ever smaller than it is now.

- International flights will be London, Frankfurt, Munich, Madrid & Paris. I bet Dublin & Rome last 2-3 years and I bet Munich gets pulled in 7 years.

[clt29301]

I agree with you Airnos, I have not seen anything that would suggest shifting a lot of traffic to DFW, ORD, and PHL makes a ton of sense. And, as a result, Charlotte's traffic will remain at or near current levels. In investor presentations, AA talks about increasing revenue in large part be adding seats to current aircraft. In addition, they are taking delivery of new aircraft which produce higher margins, 42 787's by 2018, A350's thereafter. Of course network rationalization will occur but it will also occur in Chicago. Miami makes little sense as a domestic hub (i agree that it is a SA gateway), and PHL just is not a growth market overall and makes little sense to route southern traffic there to locations outside of the northeast.

Charlotte benefits are low cost, above averge growth, strong business service, over 7m residents within 100 miles and the only viable alternative in the south to ATL......one of the largest and fastest growing regions of the country. I understand the routing but ignoring the demographics just because it is easy to connect traffic through ORD is a poor business decision. There are a lot of hubs that have survived with less favorable demographics than Charlotte.

In the short term, I think it is easy for CLT to keep London, Frankfurt, Munich, Paris......long term, I could see us adding Rome and maybe a couple of other cities. Why, newer aircraft make smaller markets more viable And Charlotte/the Carolina's are just growing rapidly in population and business. And, does it really make sense to route the southern market to PHL for European service? If that is the only option, most in the south would opt for connecting in a more familiar airport, ATL (and Delta), not sure AA wants to give up a market of over 70m residents ( not including Texas) to Delta for international service.

[ChessieCat]

I'll keep it as simple, short and painless as possible too:

 

-- SkyTeam has ATL (Delta)

-- Star Alliance has IAD (United)

-- oneworld (AA) needs CLT as a fortress hub otherwise it'll have no presence in the southeast and a gaping hole between PHL and MIA

Edited August 20, 2014 by ChessieCat

[orulz]

I agree. To me, Charlotte (American), Atlanta (Delta), Washington-Dulles (United), and Baltimore-Washington (Southwest) are the apparent "gateways to the south" set to be the hubs for each airline connecting the smaller airports of the Southeast to the rest of the US. I think American would be making a mistake if they were to abandon Charlote. Not only would this be a huge hit for Charlotte but it would also be a huge hit for smaller airports throughout the southeast who would lose a significant chunk, possibly all, of their service since there is no other feasible hub not already claimed by another airline within practical range of the small turboprops that they often use for these smaller airports.

[ssh214]

I think we are all in agreement that Charlotte will never be let go of as a hub; I just think we all differ on how much international service we will have. To me it just doesn't make sense not to have international gateways out of your 2nd largest domestic hub, which I think Charlotte will always remain to be. But I really don't know at this point. I am hopeful that within the next five years though maybe we might get back at least Sao Paulo seasonally...

[HopHead]

Here we go...

[nashbill]

I realize Charlotte is a growing and vibrant city. I lived there for 20 years and watched it turn into financial power house. I grew up in the Pittsburgh Metro area. My father worked at the airport 5 miles away. I've read some of the comments and I'm thinking you are all looking thru rose colored glasses. Pittsburgh thought they would never be abandoned as a hub for USAIR. It started operations there with Alleghany Airlines or Agoney Airlines. They bought or merged with Piedmont and kept growing. Imagine the shock of some 10,000 or so employees when they anounced Pittsburgh would no longer be a hub. It of course was bsaed on money. I would not be so confident with American seeming to call the shots now. Pittsburgh's airports fortunes were tied to USAir. They are slowly coming back around, but of course will never be what it once was. Corporations generally do not have any remourse abandoning cities. Nashville was once a hub for an airline, but no more. Hubs are nice to live near but they can go away quickly. I hope they keep the hub there, I just wouldn't be so confident as sammh above said "I think we are all in agreement that Charlotte will never be let go of as a hub;"

[15895]

I'm 100% confident CLT will stay and remain #2

And any comparisons to Pittsburg or Nashville make zero sense.

I'm not looking through rose colored glasses. And I am certain I am right.

There are so many reasons that Nashville & Pittsburg situation has zero in common with Charlotte Douglas I could write a 500 page novel.

If US has merged with Delta... Then the Pittsburg scenario would be a decent comparison and yes, Charlotte would've been toast in ~5 years completely

Edit: I'll also add that Charlotte will never be let go

Edited August 25, 2014 by AirNostrumMAD

[Lloyds5]

The main difference between CLT and PIT are costs per enplanement CLT is less than $2.00 per passenger and Pitt is like $18.00. Of course the less flights airlines operate the costs go up as they are spread out over fewer  flights. I would never say never but I think its safe to say CLT is safe for the foreseeable future. What it will look like in 5 years  i, e.  how may flights per day, how many international destinations, etc. is the question we are all debating here. All the US/AA Hubs will look different in 5 years that's the only thing that's clear now

Edited August 26, 2014 by Lloyds5

[nashbill]

I am happy that Charlotte NC will remain a hub forever AirNostruMad.  I miss not having a layover almost anywhere I want to go.  I love Charlotte and plan on moving back.  By the way, it's spelled Pittsburgh.  Just a small irritant like the NC after Charlotte.

[ChessieCat]

The DOJ won't allow any more mergers among the Legacy airlines.  3 Mega-carriers + Southwest is enough.  The next step would be foreign airlines like IAG buying a 49% stake in AA.  But those airlines don't have the cash like the ME3, so we would likely see Emirates buying a major stake in JetBlue before anything else...

[ChessieCat]

Jerry World-- the gift that keeps on giving!

http://www.charlotteobserver.com/2014/08/28/5133704/airport-audits-identify-lax-oversight.html#.U_-MTvldUWY

[Deleted.]

Apparently somebody is petitioning to American Airlines to stop them dropping the Charlotte Sao Paulo route:

https://www.change.org/p/american-airlines-do-not-drop-the-charlotte-to-são-paulo-route

[ssh214]

Apparently somebody is petitioning to American Airlines to stop them dropping the Charlotte Sao Paulo route:

https://www.change.org/p/american-airlines-do-not-drop-the-charlotte-to-são-paulo-route

I know it wont change anything but I signed it...

[Miesian Corners]

Wonder if the Chiquita/Brazil fiasco will have an effect (that is, if the Brazilian company gets control of Chiquita and keeps the N.A. HQ in CLT)?  On the other hand, I just saw a blurb on BBC World News about how the Brazilian economy is now officially in recession.  

[LKN704]

I am still kind of shocked that they are dropping the route. It was so sudden, especially with GRU being a historic AA stronghold as well as a major oneworld hub. I thought that the merger would have actually helped the route. I find it funny that DTW can support a flight to GRU but CLT cannot, though I am sure DTW's auto connections help the route.

 

I have not seen the numbers for CLT-GRU, but I thought the route was doing well because of the recent A332 upgauge. Interesting to see that GIG will actually last longer than GRU.

 

I wonder if AA is only cutting GRU to redeploy GRU slots somewhere else (ORD?) and will restart CLT-GRU when more slots become available. Doubt it though.

[Berlin1926]

Wonder if the Chiquita/Brazil fiasco will have an effect (that is, if the Brazilian company gets control of Chiquita and keeps the N.A. HQ in CLT)?  On the other hand, I just saw a blurb on BBC World News about how the Brazilian economy is now officially in recession.

Did you catch the BBC One story on LHR and the debate about hub vs. o/d airports?

[ChessieCat]

Did you catch the BBC One story on LHR and the debate about hub vs. o/d airports?

I know this is off topic but yes, it's good to know that Boris Island won't be happening in the Thames River Estuary.  That was as idiotic an idea as they come.

 

The fact that LHR only has 2 runways and Gatwick only 1 is pathetic.  But slot restrictions do have a silver lining-- you don't see RJ's flying into those airports, you see heavies galore which is a spotters dream.  

[kermit]

Meanwhile down the road at RDU airport officials are "pushing for" direct flights to Frankfurt and Paris.

While I don't think such flights are likely (no connecting traffic to fill them I assume), it does point out that CLT faces some competitive pressure from places other than PHL, MIA and DFW.

http://www.bizjournals.com/triangle/morning_call/2014/09/rdu-could-have-nonstop-flights-to-frankfurt-paris.html?ana=e_trig_rdup&s=newsletter&ed=2014-09-05&u=jDmEk%20CKbYnAvaVfOFOlFGXcGSC&t=1409920913&page=all

 

EDIT: I can't spell German

Edited September 5, 2014 by kermit

[Miesian Corners]

I think the only way RDU is going to get service to those is for them to subsidize the flying (Pittsburgh and Allegheny County subsidize PIT's non-stop to Paris on Delta).

[ChessieCat]

Meanwhile down the road at RDU airport officials are "pushing for" direct flights to Frankfort and Paris.

While I don't think such flights are likely (no connecting traffic to fill them I assume), it does point out that CLT faces some competitive pressure from places other than PHL, MIA and DFW.

http://www.bizjournals.com/triangle/morning_call/2014/09/rdu-could-have-nonstop-flights-to-frankfurt-paris.html?ana=e_trig_rdup&s=newsletter&ed=2014-09-05&u=jDmEk%20CKbYnAvaVfOFOlFGXcGSC&t=1409920913&page=all

 

Delta was all set to launch RDU-CDG flights on a 752 before the 2008 downturn, then nixed it.  RDU is a focus city for Delta and this service would be the most realistic new TATL flight cause of the SkyTeam connecting options at CDG.  It would have to be subsidized as MC said.

 

I doubt RDU-FRA would happen considering United's IAD hub is so close, and RDU is not a focus city for them. Any UA 752 service would have to be subsidized like the CLT-MUC Lufthansa flight is currently subsidized by BMW.

 

The RDU-LHR flight on American is subsidized by GSK as you all know, plus the tech co's in the Triangle have a sizable amount of premium business travelers of course.

Edited September 5, 2014 by ChessieCat

[atlrvr]

... would have to be subsidized like the CLT-MUC Lufthansa flight is currently subsidized by BMW.

 

 

 

Is that truly what the arrangement is?  Subsidy, which I would define as guaranteeing revenue higher than would otherwise occur in the market.  I was under the impression that BMW had a contract in place, but it was at their advantage (guaranteeing seat availability at certain pricing).

[ChessieCat]

Is that truly what the arrangement is?  Subsidy, which I would define as guaranteeing revenue higher than would otherwise occur in the market.  I was under the impression that BMW had a contract in place, but it was at their advantage (guaranteeing seat availability at certain pricing).

 

Well if BMW locks up a certain amount of business-class and economy capacity at a group-rate price, that creates scarcity for everyone else and therefore LH can charge above what would have been the market price.   

[CltFlyer]

I don't think the Lufthansa flight is subsidized, i think BMW just uses the flight.