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Why American Airlines plans to focus its growth at its two largest hubs

American Airlines to focus its growth at its two largest hubs

2018 05 25

2018 05 25

Written by Conor Shine, Aviation Writer

 

As American Airlines continues to build out its network over the coming years, it’s planning to focus its growth at a pair of familiar locations — its two largest hubs at DFW International Airport and in Charlotte, N.C.

“With DFW and Charlotte, we’ve got tremendous ability with really cheap gates that are going to fit very well with the kind of capacity — when and if we add going out into the future,” Robert Isom, American's president, told analysts at a transportation conference in New York Tuesday.

In a world where getting access to gates at capacity-constrained airports in New York, Los Angeles or elsewhere can cost tens of millions of dollars, Isom said expanding at its two largest hubs is relatively affordable.

American announced in April it will add 15 gates at DFW Airport’s Terminal E that will be used for regional aircraft flying back and forth to smaller markets.

The Fort Worth-based carrier will spend $20 million to convert nine existing gates used for larger mainline aircraft into 15 regional-sized berths. That additional space will allow for as many as 100 more daily flights by next summer, bringing American’s total departures at DFW close to 900 on the busiest days.

American will also gain access to seven additional gates at Charlotte Douglas International Airport, its second largest hub, in fall 2019 following a $200 million concourse expansion. American currently has about 640 daily departures from the Charlotte airport serving 159 destinations in 25 countries.

It’s no surprise that a hub-and-spoke airline like American will be focusing much of its growth on its largest hub airports, where a greater concentration of flights help keeps planes full and drives airline profitability.

Even among its 10 hubs, DFW and Charlotte stand out for their profitability. American and its regional carriers maintain a dominant position at both, carrying 84 percent of traffic at DFW and 91 percent in Charlotte.

“It really outpaces what we do at a system average,” Isom said. “That’s a good indication ultimately that anything we put in — in the right manner — is going to be effective for us.”

Rival United Airlines is already underway with a plan to bolster its hubs in Houston, Chicago and Denver by adding flights and restructuring schedules to capture market share. United plans to grow its number of seats by as much as 6 percent in 2018, an aggressive target some industry analysts worry could put downward pressure on fares.

American plans to grow its network a more modest 2.5 percent in 2018, and Isom said Tuesday the airline will continue to be “really prudent” with its expansion plans in 2018 and 2019. But for the world’s largest airline, even a small amount of growth will have an impact.

“We are a sizable airline, no doubt about it,” Isom said. “A little bit of growth consumes gates and it consumes aircraft free time as well.”

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