American Airlines' dip in Austin service could mark opportunity for competitors
Several gates may be up for grabs
https://www.bizjournals.com/austin/n...mpetitors.html
By Mike Christen – Staff Writer, Austin Business Journal
Nov 14, 2023
Prime real estate is up for grabs at Austin-Bergstrom International Airport as all airline operators renegotiate agreements to lease gates.
The negotiations are happening as one of the largest airlines that operates from the Austin airport plans to shrink the total number of destinations that it directly serves from the Texas capital, which could create an opportunity for other carriers to fill the void in the coming year. American Airlines Group Inc. (Nasdaq: AAL) earlier this month confirmed it plans to pull 21 of the 46 destinations that are currently offered from ABIA.
The Fort Worth-based airline leases five gates for preferential use — meaning the airline has exclusive rights to use them — and two of the airport’s 11 shared gates, according to airport representatives.
It appears that American Airlines will maintain its agreements until they expire next year, meaning it will continue to have the exclusive rights to five gates. ABIA officials confirmed that negotiations are currently taking place for a new set of agreements for all carriers that are set to take effect on Oct. 1, 2024. It remains undetermined how long the lease agreements would be; however, ABIA representatives said these agreements range from five to 20 years across the industry.
It's unclear whether American will continue to hold the same number of leases when the new agreements take place. Representatives of American Airlines did not respond to requests for comment. If American Airlines decides to lease fewer gates, then an opportunity would open up for another airline to expand at the Austin airport.
ABIA, which has a total of 34 gates, also maintains multiyear use and lease agreements with Southwest Airlines Co. (NYSE: LUV), United Airlines Holdings Inc. (Nasdaq: UAL), Delta Air Lines Inc. (NYSE: DAL), JetBlue Airways Corp. (Nasdaq: JBLU), Spirit Airlines Inc. (NYSE: SAVE) and Alaska Airlines Inc. (NYSE: ALK).
“These use and lease agreements establish airline payments, their rent, fees, charges and calculation methodologies, as well as their use of gates and other airport-owned facilities like office spaces," said Sam Haynes, ABIA’s communications manager. An airline may qualify for a preferential use gate if the airline’s average gate utilization is at least 800 seats or seven departures per day, Haynes said.
ABIA anticipates a 7% decrease in daily departing flights in the months ahead because of American Airlines' cutback in service.
In February 2024, American is set to fly to 33 destinations with an average of 56 daily departures. That is 18 fewer flights per day than during the same month in 2023 when the airline had 74 daily departures, according to scheduling data shared by ABIA.
"It's minimal impact," Haynes said. "We are still busy."
This year, the airport remains on track to surpass the 21 million passengers that passed through the facility in 2022. That means that, even though American is cutting back, demand for flights here is still record-breaking strong.
ABIA recently experienced its busiest day on record on Oct. 23, the day following the annual Formula 1 race at the Circuit of The Americas, when a total of 43,243 passengers were screened through security.
But the scene isn't all rosy at the airport. Virgin Atlantic recently cut a nonstop route from Austin to London, citing a softened tech sector.
Currently, American is the airport's second busiest airline. In 2022, it served about 26% of all passengers in and out of the facility — a total of about 5.4 million passengers. It is only second to Southwest Airlines, which operated about 38% of all flights out of ABIA in 2022, carrying more than 8 million passengers, according to the airport’s monthly activity report.
As Austin's largest passenger carrier, Southwest has been steadily growing its service and accommodations in recent years. It has more than a four-decade legacy of offering flights from Austin.
The Dallas-based airline might be the most likely candidate to use the opportunity to expand its local presence, but representatives are coy about the opportunity when asked publicly.
“Austin became the ninth Southwest city in September 1977 and we’ve worked consistently since to offer a hometown airline schedule that serves Central Texas air travelers, and those who visit the heart of the state through ABIA with an unmatched combination and value and hospitality," stated Brad Hawkins, a spokesperson for Southwest when asked about the possibility of the airline expanding its offerings in Austin. "Across those nearly five decades, other carriers have fallen in and out of love with Austin. Our nearly 1,000 People based around our operation at Bergstrom, and their colleagues around the country are all proud of our consistency of investment in being a faithful community partner in Austin.”
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