A merger between Continental and United Airlines may have little impact on their respective hubs; but smaller spoke airports could feel the impact through reduced or consolidated operations.
United has hubs at its home base, Chicago, Illinois, as well as Washington, DC, Denver, Colorado and San Francisco, California. Continental has hubs at its Houston base, along with hubs in Newark, New Jersey and Cleveland, Ohio.
"There's not that much route overlap," says Henry Harteveldt, VP Forrester Research of the two carriers. "They don't have as much head to head competition. Until they consolidate the schedules you don't really know."
Continental and United are both members of the Star Alliance, which attempts to consolidate member airlines into a single space, or terminal at an airport. "Continental moved into the United Terminal at O'Hare," he points out. "United is a small player in Houston and Newark. Continental is not a big player in the San Francisco market."
Harteveldt sees Continental's Cleveland hub in line to "take the biggest haircut of all the hubs in the system". Cleveland, which opened as a Continental hub in 1987, is "duplicative" of Chicago, he points out.
There is some concern," said Tory Richardson, Executive Director Fort Wayne/ Allen County Airports Authority who also serves as chair of the Small Airports Committee for Airports Council International - North America. "It's a little early to tell what the impact could be but the concern is still there. Most of the time, in a consolidation we see an impact. Some airports will benefit and some will be affected negatively."
Richardson said that the Fort Wayne airport is a feeder for United's Chicago hub which he expects will continue. A year ago, the airport lost Continental service to its Cleveland hub. Airports won't know where they stand until they see the integration plans, he says.
Some markets, such as New York's LaGuardia, Washington, DC and Phoenix airports are places where some operations could be consolidated. "I'm not saying there won't be airport downsizing but I don't think it will be extreme," says Harteveldt.
A recent study by Fitch Ratings cites that airline consolidations will have "mixed credit effects on US airports".
Airports with larger underlying markets with a high percentage of O&D traffic and limited competition from nearby commercial airports will be the least affected by legacy mergers. Smaller market airports are at higher risk for changes in utilisation, either with expansion of service or losing some or all of its connecting operations according to Fitch.
"Traffic demand and financial considerations will be the key drivers of the airlines actions," said Seth Lehman, senior director of Fitch Ratings. "Regardless of where the economy is, service shifts have a varying degree of impacts on the operations from as little as one airport gaining or losing service to as many as dozens of airports being impacted nationwide."
Harteveldt says that a merger has potential to be beneficial for all involved. "With United and Continental, the airlines are relatively strong financially. For an airport, if mergers end up with airlines that are more financially stable, it's better."
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Source: Air Transport Intelligence news
