Business leaders: US Airways merger may bring Charlotte more international flights
11/13/2013 7:07 PM
11/13/2013 7:34 PM
Charlotte business leaders are hoping US Airways’ pending merger with American Airlines will lead to more nonstop international flights, as the combined carrier will have a larger route network and more international destinations.
Latin America, Europe, even Asia: All are being tossed around as possible areas where the new American Airlines could expand its reach from Charlotte Douglas International Airport. The region’s mix of international businesses, including nearly 200 German firms and half a dozen from Brazil, make Charlotte an attractive city for overseas flights, business leaders say.
Businesses prize nonstop international flights. While most leisure travelers just want the lowest fare possible, business travelers value nonstop flights that save time and hassle.
“It is such a pain, as a former business leader, to jump from one airport to another,” said L.J. Stambuk, chief executive of the World Affairs Council of Charlotte. Such concerns helped prompt Chiquita Brands International to relocate from Cincinnati to Charlotte last year after Delta Air Lines cut back its flights from Cincinnati.
US Airways and American reached a deal Tuesday to settle an antitrust case brought by the Justice Department, allowing them to proceed with their planned merger. They aim to close the $17.2 billion deal in early December, creating the world’s largest airline.
Even as business leaders look to the opportunities ahead, at least one international nonstop flight could be at risk: Lufthansa’s daily trip between Charlotte and Munich.
Lufthansa and US Airways are both members of the Star Alliance of airlines, which means frequent fliers can transfer between the carriers using their miles. That makes it easy for Lufthansa to transfer its Munich-to-Charlotte passengers on to US Airways domestic flights.
But US Airways is leaving the Star Alliance to join American’s OneWorld alliance, meaning Lufthansa won’t be able to transfer its passengers seamlessly to the merged airline. Lufthansa might not keep the flight if too few of its passengers start and end their trip in Charlotte.
“Are those flights full of people from elsewhere in the southeast U.S.? ... Those are the kinds of flights that might be at risk,” said Seth Kaplan, of the Fort Lauderdale-based trade publication Airline Weekly.
Even if Lufthansa were to drop the Charlotte flight, the new American could resume the flights. Or a OneWorld airline such as AirBerlin might decide to fill the gap.
Andrew Nocella, US Airways senior vice president of planning and marketing, said this week that the new American might shift its international flying at Charlotte Douglas away from Germany and more towards Spain and Great Britain, since British Airways and Iberia are OneWorld partners. Charlotte’s two daily flights to Frankfurt could drop to one, for example.
US Airways has already expanded international service at Charlotte Douglas significantly. Since 2009, the company has added nonstop flights to Rio de Janeiro, Sao Paolo, Paris, Rome, Madrid and Dublin, and announced plans to add Barcelona, Lisbon, Manchester and Brussels next year.
Nocella said still more international expansion could be on the way for Charlotte Douglas.
“If they’re profitable, they’ll continue and we’ll do more of them,” Nocella told the Observer.
Business boosters have been promoting Charlotte’s international ties aggressively. A delegation from the Charlotte Chamber visited 15 sites in Germany last month in recent weeks, hoping to lure more firms. On Friday, German corporation Bosch-Rexroth, which has its U.S. headquarters in Charlotte, will pledge $100,000 to help students at Olympic High School with a new facility to help them land work in high-tech manufacturing.
The Brazilian ambassador, Mauro Vieira, was in Charlotte on Wednesday to promote the economic ties between North Carolina and Brazil.
“I think it’s very important to have nonstops,” said Vieira, who spoke at the World Affairs Council of Charlotte’s luncheon. “The easier you get somewhere, the easier for business.”
US Airways is the biggest carrier at Charlotte Douglas, accounting for about 90 percent of daily flights. After the merger with American, Charlotte will be the second-busiest hub city in the combined airline, second only to Dallas/Fort Worth.
Charlotte or Miami?
One candidate for expansion would be adding more flights from Charlotte to Central and South America. American, which has a stronger Latin American and Caribbean route network than US Airways, uses Miami International Airport as its gateway to those destinations. While Miami has a much stronger local demand for Latin American travel, Charlotte offers some advantages for connecting flights, analysts say.
“Miami is one of the most expensive airports in the county,” said Kaplan. “Charlotte is the least expensive major commercial airport in the country.”
Charlotte’s cost-per-enplaned passenger for the airlines is 96 cents, according to Fitch Ratings. Miami’s is about 20 times higher, at $19.72.
“The absolute biggest advantage we have is our cost structure,” said Charlotte Interim Aviation Director Brent Cagle.
Kaplan said the merged airline will have to consider whether shifting some of its Latin American traffic from Miami to Charlotte makes sense, as well as evaluate whether to start new flights to destinations such as Buenos Aires from Charlotte.
The biggest region to which Charlotte lacks direct flights is Asia. Merging with American makes that more likely, Kaplan said. Japan Airlines, which has a joint venture with American, operates Boeing 787s, a lightweight, midsize, long-range plane designed for international flying.
“Charlotte’s exactly the kind of place those planes work,” said Kaplan. “A place where you might not be able to fill a giant widebody aircraft with traffic to Tokyo, but you might be able to fill a plane with less than 200 seats.”
Bob Morgan, president of the Charlotte Chamber, said he doesn’t think his group can do much to lobby for expanded international service. Rather, he said attracting more international businesses will lead to more flights.
“It’s really not a question of recruiting these things,” he said. “What we can control here is we keep selling Charlotte. We keep attracting foreign companies so we increase demand.”
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