Airlines And Airports Are On A Buying Binge

O’Hare Airport has a yoga studio. So does San Francisco Airport. And if you’re not exactly the downward dog poise type, you can always simply fall asleep inside nap-by-the-hour suites at the Dallas/Fort Worth Airport.

Maybe you’ve read some of the same headlines we have lately. “Airports Race To Upgrade” or “Airlines Go On A Record Shopping Spree.” The motivation for airports is to keep their airlines happy. For the airlines, new aircraft designs save big money on fuel.

 

NEW DIGS

Take, for example, Charlotte Douglas Airport. The merger of US Airways and American Airlines accounts for 90 percent its daily flights. Construction projects planned or underway at CLT total nearly $1 billion.

Elsewhere, other airports are spending billions on construction projects:

  • In addition to those Minute Suites, DFW, American’s biggest hub, is in the middle of a $2.3 billion terminal renovation, adding improved baggage systems, more concessions and an in-house kennel.
  • Los Angeles International Airport’s modernization plan includes a $1.9 billion new international terminal, a $229 million renovation of its Terminal 5 and a $270 million upgrade of escalators, elevators and moving walkways.
  • At New York’s JFK International Airport, Delta Air Lines is building a new, $1.4 billion terminal to replace outdated facilities. The airport has also upgraded its terminals for American and other carriers.

 

NEW PLANES

Meanwhile, Airbus and Boeing will deliver nearly 1,500 new planes to U.S. airlines over the next decade. Several hundred smaller regional jets are also on order with other manufacturers. Domestic carriers spent $11.6 billion last year on capital improvements — including new planes — up from $5.2 billion in 2010.

By and large, there are two big reasons for making such purchases now:

  • The new planes are designed to save fuel. U.S. airlines burn through 16 billion gallons of jet fuel a year. A decade ago, they were paying 84 cents a gallon. Last year, U.S. airlines paid more than $3 a gallon, for a total of $50 billion.
  • Low interest rates and new Wall Street financing deals mean even American Airlines could borrow $2.7 billion to buy new planes when it was in bankruptcy court.

Yoga studios and new planes are all good and well, we’re sure. Less glamorous are purchases of GSE that may naturally follow. We heard some positive news about the industry that we reported last year after our trip to inter airport. Here’s another interesting tidbit we recently noticed. While GSE is typically the decision of private ground service providers or airlines, a big trade show coming for AAAE features more and more GSE exhibitors.

Speculations aside, let us know if you’ve heard more positive, substantial news.

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