Senators and Representatives from Florida don’t seem to be too concerned with the pending merger of American Airlines and US Airways. They seem to feel that their airports are safe from any disruption. But that was when American Airlines (AA) was ruling the roost. Now, US Airways executives will be taking over the executive suite and they do things differently.
Even I thought that the most likely scenario for the New American Airlines would be to move its international flights from Charlotte, NC, to Miami. On the face of it, the move seemed to make sense — consolidate the international base where the majority of AA flights were handled.
However, there is a reason that US Airways is making record profits and AA is mired in bankruptcy. That has to do with knowing how to save money. Doug Parker and his team of Scott Kirby and Robert Isom know how to do just that.
If their playbook in the future is as it was in the past, Charlotte, rather than losing international flights, may see an increase. Here’s the new calculations.
Should the merger go through, the New American Airlines will not be married to Miami airport with no other base for its South American routes. It will have Charlotte. But would Charlotte be a better South American gateway? It could be.
Charlotte Airport is the lowest cost major airport in the country. The airport’s frugality is a reflection of the current US Airways management and soon-to-be AA management. They know how to save money.
In some cases, landing a plane in Miami can cost many more times the cost of landing in Charlotte. That is a big reason to move to Charlotte — to save money, lots of it. It is no wonder that Fort Lauderdale claims almost all the low-cost airlines headed to South Florida. Southwest and the other low-cost carriers find Miami just too expensive — the New American Airlines may also for much of its traffic.
The second reason has to do with customs and border protection (CBP) operations at Miami. Ever since the CBP began releasing hourly statistics on immigration throughout at the major gateways in the country, Miami has stuck out like a sore thumb. There are regular four-hour waits to clear customs on weekends.
In Charlotte, customs and immigration seem to be a breeze. Maybe it is the fact that the Miami airport personnel are shared in some ways with the cruise ship terminal, or perhaps it is only mismanagement, but there is a big problem.
The union grip on airport services in Miami is, I believe, far stronger than that of the unions working at Charlotte. These work rules are something that make airport costs far more expensive and more difficult to change.
So, the New American Airlines management will find itself with an interesting decision. Miami has more prestige and plenty of connecting flights (but not that much more than Charlotte) and it costs significantly more to land and service aircraft.
Miami has some of the worst customs and immigration holdups in the country. Charlotte does not.
Miami has entrenched unions and a difficult regional and city government that has already built, torn down and then rebuilt the airport over the last decade. Charlotte has had steady management with only recent tension between the city and the state.
I wouldn’t be putting my eggs into a Miami basket when Charlotte has a better and more affordable operation. It seems a bit premature, without something in writing for the Florida representatives to sign off on this merger carte blanche.
As for Orlando, it will probably see a cutback and some dislocations at that airport should AA and US Airways merge. There are 25 city pairs that will be duplicated between the two merging airlines.
These routes are also prime candidates for “rightsizing.” That means on each city pair flights may be reduced to increase load factors. Plus, the ground operations of these two airlines will be combined — that means layoffs and perhaps some related bankruptcies as ground operators who support one or the other airline will find themselves losing a big customer.
These mergers are not so simple. Though the airline executives claim that they will not lay off any airline staff and may hire more, you can bet that there will be layoffs somewhere. Figuring out where they will be is the trick.
Big, expensive airports (even hubs) may be one casualty; the others may be significant large non-hub airports that have service from both of the merging carriers.
A warning to politicians: Be careful of what you support. There can be a bevy of unintended consequences. Another rule might be: whenever an airline promises anything, get it in writing. Cincinnati, St. Louis, Pittsburgh and Memphis sure wish they did.