Airlines And Airports Are On A Buying Binge

Feb. 20, 2014
But what about GSE?

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, particularly hubs in an age of consolidation, is to keep their airlines happy. For the airlines, new aircraft and engine designs save big money on fuel.


Take, for example, Charlotte Douglas Airport. Always an important spot for US Airways, but now 90 percent of the airport’s daily flights are accounted for by the world’s largest airline created with the the airline's merger with American Airlines. Construction projects planned or underway at CLT total nearly $1 billion.

The renovations outside and inside highlight a push at the nation's biggest hub airports to add capacity and amenities:

  • 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 called Paradise 4 Pets.
  • Los Angeles International Airport's multibillion-dollar 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  • At New York's JFK International Airport, Delta Air Lines is building a new, $1.4 billion terminal to replace outdated facilities.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.


Meanwhile, Southwest Airlines, JetBlue Airways, Spirit Airlines and just about every other U.S. carrier has a large order in place. Nearly 1,500 new planes will be delivered to U.S. airlines by Airbus and Boeing 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, paying more than $3 a gallon, U.S. airlines spent $50 billion on fuel.
  • 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 up for the American Association of Airport Executives features more and more GSE exhibitors.

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