Winging It: Cities with major-airline hubs lure firms, boost local economy

Posted: July 07, 2008

Airline hub airports are places travelers love to hate when they're socked in by snow or thunderstorms. With flights delayed and canceled, a big hub can become a prison, although the food and shopping are usually better. (I'm not sure whether prison beds are better if the airport equivalent is a few square feet of worn carpet for those stranded overnight.)

But business and government leaders in cities with major-airline hubs - including Philadelphia - are willing to put up with occasional TV news footage of the unfortunate huddled masses forced to wait out the storm. The leaders tend to have only good things to say about what a hub can do for the local economy, both as a generator of direct airline and airport jobs and a draw for companies that operate nationally and overseas.

"No region can claim to be a global player without a hub operation," says Mark Schweiker, president of the Greater Philadelphia Chamber of Commerce and chairman of its CEO Council for Growth. "Residents and fliers both know it."

The importance of being a hub jumped out for me a week ago Friday. AT&T Inc. shocked the city of San Antonio with an announcement that its largest corporate citizen by far would move its headquarters to an even larger Texas metro area, Dallas. AT&T grew out of the former Southwestern Bell by acquiring most of the local-service phone companies in the West and South, and then bought its former parent and adopted the old name.

AT&T said in a news release that in addition to Dallas being more of a high-tech center, "air travel to and from Dallas will be more convenient, time-efficient and cost-effective." The company said those things would have growing importance "as the airline industry continues to consolidate and reduce hubs and flights amid higher fuel prices and industry economic pressures."

AT&T pointed out that Dallas/Fort Worth, American Airlines' headquarters and primary hub, has daily nonstop service by 21 carriers to 35 international and 133 U.S. destinations. Southwest Airlines' hub at Dallas Love Field has flights to 64 U.S. cities.

People are often surprised to learn that the city of San Antonio is the nation's seventh-largest, bigger than the city of Dallas. But San Antonio is only the 28th-largest metro area, compared with No. 4 Dallas-Fort Worth, a notch above No. 5 Philadelphia, according to 2007 U.S. Census Bureau estimates.

San Antonio has 18 airlines serving its airport, but nonstops to just 39 U.S. destinations and six foreign cities, all of them in Mexico.

A combination of factors working together, as they do for Philadelphia and Dallas, makes for a good place to operate an airline hub, according to aviation consultant Richard Golaszewski, executive vice president of GRA Inc. in Jenkintown.

A large population, including plenty of business travelers, provides a hub airline with ample "origin-and-destination" passengers, meaning those who start or end trips at the hub. With hundreds of daily flights by the hubbing airline, the higher the average fare will be because low-priced carriers usually can offer only limited competition. While high fares may deter vacationers, they are less important to big companies such as AT&T that want their people to travel efficiently.

"It depends not so much on absolute size as on the mix of traffic," Golaszewski said.

Or as consultant Robert Mann, head of R.W. Mann & Co. in Port Washington, N.Y., put it: "Hubs depend on huge numbers of leisure travelers spending modestly, or modest numbers of business travelers spending hugely on business and first class."

Philadelphia's leaders want to see US Airways' hub grow for another good reason: They see what a burgeoning airport can do for real estate and other business development for miles around.

Some of the more robust development in the Chicago area these days is near O'Hare and Midway airports, both of them hubs, Mann said. An incredible amount of sprawl in all directions around the Dallas/Fort Worth airport followed the move of American's headquarters there from New York in 1978, he added. The development that eventually followed the opening of Washington's Dulles International Airport in Northern Virginia in the late 1960s is another example.

Schweiker says the region's business community has high hopes for much the same to happen around Philadelphia International. Both business and government leaders, he said, believe in the vision of urban planner John Kasarda, creator of the concept of the "aerotropolis," or a city unto itself that generates as much economic development as actual flights do.

Key to that happening, of course, is for US Airways or another airline to continue operating a thriving hub here. And in the next few years that, unfortunately, depends on the industry finding a way to cope with the soaring cost of oil, something no grand vision may be able to overcome.


Contact Tom Belden

at 215-854-2454 or tbelden@phillynews.com

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