2

Free stories left to read

Airline Weekly subscribers get unlimited access to daily news and weekly issues.

North America

American’s Philadelphia Hub Could Benefit as Airline Unwinds JetBlue Alliance

Ted Reed
July 17th, 2023 at 8:15 AM EDT

American Airlines tails at Philadelphia

Even in the midst of a summer of insatiable transatlantic travel demand, traffic at American Airlines’ primary transatlantic hub in Philadelphia remains nearly a quarter lower than it was in 2019. But airport officials are confident that capacity will be restored as soon as the carrier can get enough aircraft.

“We are optimistic,” Philadelphia International Airport CEO Atif Saeed said. “Primarily it is staffing and equipment that American got rid of and now is waiting to replace. We are waiting for them to get over the hurdles that naturally came after the pandemic.”

Philadelphia Airport Chief Revenue Officer Jim Tyrrell added: “You have to remember that during the pandemic, American retired all of their [Airbus] A330s, Boeing 757s and 767s. We had over 20 transatlantic destinations, including boutique destinations like Budapest and Prague. But then Covid hit. The airline took the opportunity to retire older inefficient aircraft. They never thought they wouldn’t be able to replace them due to supply chain issues.”

Today, American has just 265 peak daily summer departures from Philadelphia, down from 410 in 2019.  Many of the boutique destinations such as Dubrovnik and Edinburgh are gone. American’s 24 A330s, which flew most of its transatlantic routes from former US Airways hubs in Charlotte and Philadelphia, are gone, as are the 757s and 767s. American has also cut regional flying at Philadelphia amid rising costs and a captain shortage. But American views the cutbacks in Philadelphia are temporary. 

“Philadelphia is a key hub for American and continues to play an essential role in connecting our customers to the world’s best network,” an American spokesperson said. “We expect to grow Philadelphia’s schedule back to 2019 levels in the next few years. We are pleased to be working with the City of Philadelphia to invest in projects at Philadelphia International Airport that benefit our customers and team members.”

During a March session with American employees, Brian Znotins, American’s vice president of network and schedule planning, declared: “Philadelphia is still our primary European gateway.” Although American also flies transatlantic from New York’s John F. Kennedy airport, Znotins said that, “JFK is built for the locals. We don’t have a lot of connectivity in JFK. We can’t serve the country to Europe with JFK flying. In Philadelphia, we can serve the country to Europe.”

Znotins said Philadelphia will be a major beneficiary of the new long-range Airbus A321XLR that American expects to begin taking delivery of in the first quarter of 2024. “As we take the XLRs, those are for Philadelphia,” Znotins said. “We’ll see a lot of those XLRs going to PHL, and we will add more widebodies there as well.”

The future of American’s northeastern U.S. presence is less clear since Judge Leo Sorokin of U.S. District Court in Boston ruled its alliance with JetBlue Airways violated antitrust law and ordered it to end. The airlines will begin winding down the partnership on July 21. The move essentially assures that the New York area will be dominated by Delta Air Lines and United Airlines for the foreseeable future.

American has not commented specifically on how Sorokin’s ruling will impact its network strategy. However, the airport officials said they hope the carrier will want to rely even more on Philadelphia for international service.

“I agree we could stand to benefit as an airport,” Saeed said. “Looking at different variables, we have transatlantic from here and as equipment becomes available, it makes sense for it to come here. I don’t mean that we exclusively benefit, but the potential is high.”

Philadelphia faces intense airport competition. The level of international competition is particularly high with Newark airport just 100 miles to the north, and Baltimore-Washington 100 miles to the south. Saeed came to Philadelphia in December after eight years in various positions at Minneapolis-St. Paul International Airport. “MSP had a large catchment area with very little competition,” he said. “Our airport competes with many other large hubs.” 

Newark presents an elevated challenge because United has stacked its schedule with boutique European destinations this summer. These include Malaga, Nice, Palma de Mallorca, Ponta Delgado in the Azores, and Tenerife in the Canary Islands.

This summer, American is serving 25 international destinations from Philadelphia. Excluding Canada and the Caribbean, destinations include Amsterdam, Athens, Barcelona, Paris, Dublin, Rome, London Heathrow, Madrid, Venice, and Zurich. In 2019, American had 34 international destinations from Philadelphia, including all of the current markets plus Berlin, Dubrovnik, Edinburgh, Prague, and Shannon.

Tyrrell noted that on Tuesday, June 27, American’s flight to Athens had a 99% load factor, Rome had 97%, and Lisbon and Venice had 95%. Additionally, he noted, London is always high and daily flights on Doha on Qatar Airways are an airport bright spot with “loads through the roof, 90% if not higher,” he said. Qatar began Philadelphia service in 2014. Additionally, Lufthansa serves Frankfurt.

Airport data show that traffic fell 22% to 2.4 million passengers from May 2019 to May 2023. Domestic traffic was down 22.5% while international was down 20.3%. 

Among Philadelphia’s backers are the bond rating agencies. In June, Fitch Ratings affirmed its A rating on approximately $1.45 billion of airport revenue bonds, while S&P Global’s assigned an A plus rating, up two notches from the A minus rating the airport received in 2021. Fitch said its A rating “reflects PHL’s role as the main air service provider to a large and stable service area that generates a solid base of origination and destination (O&D) traffic, offset by a high degree of concentration in American Airlines.”

Meanwhile, airport officials are looking ahead to 2026. That’s when the U.S. will turn 250 years old and historic Philadelphia will be at the center of the celebration. Events will include the an All-Star baseball game, FIFA World Cup soccer games, and others planned by the city. The airport has a $935 million project in place for improvement over the next 3-5 years, including: walkways and improved air conditioning in the terminals, roadway work, and upgrades to cargo facilities and the airfield.

Another initiative at Philadelphia that recently drew attention: Landline buses operating American “flights” to and from Allentown, Pa. and Atlantic City, N.J., began arriving at the hub inside security. “It went off without a hitch,”  Tyrrell said. “We think we are the first in the world to do this. Once you book this flight on a bus you are in the American Airlines system.”

Ted Reed
July 17th, 2023 at 8:15 AM EDT

Tags: North America

Photo credit: American Airlines tails at Philadelphia International Airport. Philadelphia International Airport

Up Next

1
Asia-Pacific

Qantas: From Perth to Paris

In part one of this week's podcast, Gordon Smith and Jay Shabat discuss Qantas' latest ultra long-haul endeavor and ask what it tells us about the carrier's wider commercial strategy.…
2
Air France

Air France’s Olympic Headache

Gordon Smith and Jay Shabat examine why this summer’s Olympic and Paralympic Games in Paris are likely to be a financial drag on Air France.

3
North America

More Headwinds for Southwest Airlines 

In part one, Gordon Smith and Jay Shabat discuss why Southwest has cut its revenue outlook so drastically for the current quarter. In part two, we take stock for our…
4
Asia-Pacific

Why is Korean Air so Profitable? 

In part one, Gordon Smith and Jay Shabat discuss the factors delivering consistently strong results for Korean Air. In part two, we reveal the global airlines that were the most…
5
North America

What’s Going on at Southwest Airlines?

In part one, Gordon Smith and Jay Shabat discuss a fascinating week at Southwest, as the low-cost carrier navigates the challenges of a very vocal new activist investor. In part…

Special Offer: Choose From Quarterly or Annual Subscription Plans

2 of 3 free stories left to read

Already a subscriber? Login