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Meeting in St Louis is a bit more difficult. Another former US airport hub

5-Mar-2010

Continuing our look at former hubs in the US, we move to St Louis (STL). While the end result, loss of hub status, was the same outcome seen in Pittsburgh (PIT) and Cincinnati (CVG), the circumstances and trajectory were quite different — as is the current situation.

View the other reports in this series on former US hubs:

These articles feature in CAPA's America Airline Daily report - your one-stop shop for American aviation news, data and analysis.

A Look Back

In 1904, when the World’s Fair was held there, St Louis was the fourth most populous city in America, bested only by New York, Chicago and Philadelphia. As symbolised by its iconic arch, it was the gateway to the West and a prime starting point for many headed in that direction.

Fifty years later, mid-century, it had become an important air hub as well, and the civilian airport shared its runways with the McDonnell aircraft plant, located across the field from the passenger terminal. During the 1950s the airport contracted with well-known architect Minoru Yamasaki to design a modern terminal that was opened in 1956. A bold move; St Louis was the first airport to engage an architect with a global reputation to design a new facility and led what was to become a national, and then global, trend. Later in the decade, airlines at Idlewild (now JFK) saw STL as a template for the design of their signature terminals.

1980 Again

In PIT, of the nine carriers serving the city in 1980, Nordair, Piedmont and Braniff served only one destination and American only two. Allegheny dominated the city’s service, with 55% of its weekly flights.

In the CVG article, a similar table did not include numbers of flights, but simply destinations served. Of the 27 cities, Delta served 12, with American, the next most prominent, serving five.

In STL, there are more competitors with three or more destinations (seven) and TWA has less than 40% of the scheduled flights to the destinations shown. The actual percentage is probably even somewhat lower, as the very short flights operated by Ozark to points under 200 miles were not tallied, so while all the TWA services are shown, not all weekly departures are.

An accidental hub?

Therefore, even though TWA had a strong presence at STL prior to the establishment of its hub, it did not begin that process from a position of great strength. Also somewhat unusually, TWA never had any infrastructure base at STL. Its initial corporate headquarters were in Kansas City but moved to New York in the 1950s, leaving MKC as its primary maintenance base. Consequently, while St Louis was its primary (along with JFK) operational point, the city had no other corporate tether for the airline.

As a matter of fact, Kansas City was TWA’s initial choice as a hub and the airport was expanded to accommodate the airline. But the terminal design was linear, providing quick access to gates without any corridors — excellent for passengers, but virtually unworkable as security mandates increased. The airline and the city reached an impasse as to the facility’s replacement and the carrier gradually relocated its primary operations to STL.

St Louis weekly nonstops: Feb-1980

STL

TW

EA

AA

OZ

DL

TI

FL

AL

RC

NW

 

ABQ

1

                   

ATL

 

7

 

3

             

BNA

2

   

2

             

BWI

1

   

1

             

BOS

3

 

2

               

BUF

   

2

               

CLT

 

2

                 

CHI

     

9

10

           

CVG

4

 

2

               

CLE

2

 

3

               

CMH

3

 

2

               

DFW

   

4

6

 

2

         

DAY

2

           

1

     

DEN

3

         

4

       

DTT

3

 

2

               

FLL

1

   

1

             

HOU

2

 

3

3

 

2

         

ICT

3

                   

IND

3

           

3

     

MKC

10

   

2

   

2

       

LAS

3

                   

LEX

           

2

       

LIT

       

3

           

LAX

4

 

4

               

MCO

1

1

 

2

             

MEM

       

5

     

5

   

MIA

3

2

 

1

             

MKE

     

4

             

MSP

1

   

3

         

3

 

MSY

     

2

1

           

NYC

8

 

1

               

OMA

2

4

                 

PHL

3

                   

PHX

4

 

3

               

PIT

2

           

4

     

PDX

 

1

                 

RNO

 

1

                 

SAN

 

1

                 

SAT

 

2

                 

SDF

3

1

1

               

SEA

2

3

                 

SFO

4

 

2

               

SLC

1

1

1

               

SYR

 

1

                 

TPA

2

2

 

2

             

TOL

1

                   

TUL

3

 

1

               

TUS

1

                   

WAS

7

 

2

1

             

Total

98

29

35

42

19

4

8

8

5

3

251

%

39.0%

11.6%

13.9%

16.7%

7.6%

           

TWA’s ongoing struggles

But in the next 20 years, things changed much more radically in St Louis than was the case in either PIT or CVG. First, TWA had had a complex history dating back to the time of Howard Hughes’ ownership and his fights for control in the 1960s. Second, being one of the two US carriers with European routes prior to deregulation, it greatly expanded its international service and even dabbled in the pacific market for a time. By choosing to grow internationally, its domestic reach was less developed than many of its US competitors.

This growth was accelerated by the takeover of its St Louis rival, Ozark, in 1986. Ozark had been a second level carrier prior to deregulation, but the 1980 chart shows that it was already at that time challenging TW on trunk routes in the Midwest and to Florida. Though a robust market, STL was ill-suited to having two competing hub carriers and the spreading presence of Ozark on key routes meant less feed for the larger TWA. The solution was to have TW buy OZ and regain its singular hold on the St Louis hub. But, as we have seen time and again, US airline mergers often fail to deliver the promised benefits.

Even more interesting, however, was the fact that in 2000, TWA’s primary competitor was Southwest. The airline had begun operations at STL in 1985 and was, by 2000, a formidable challenge to many important high-volume destinations. St Louis was one of the few hub cities that had a significant WN presence before the retrenchment began post 9/11. The others were Phoenix, where Southwest has emerged as the winner and Houston, where Southwest’s operation were divided between the city’s two airports.

Ownership woes

In 1985, Carl Icahn bought a controlling interest in TWA and then took it private, creating massive debt for the airline. As a means to generate cash, he sold London Heathrow slots to American, as well as other assets, but these moves were unable to stave off a 1992 bankruptcy. TW emerged in 1993, owned by employees and creditors but severely wounded by the constant upheaval and loss of key route assets.

St Louis nonstop services: 2000 and 2010

STL

2000

2010

ABQ

TW

WN

ATL

TW/DL

DL/FL/AA*

AUS

TW/WN

AA*

BWI

TW/WN

WN

BHM

TW/WN

WN

BNA

TW

AA*

BOS

TW

AA/WN

CUN

TW

US/F9

CID

TW

 

CHS

TW

 

CLT

TW/US

US

CHI

TW/AA/UA/WN

UA*/AA/WN

CVG

TW/DL

DL*

CLE

TW/CO

CO*/WN

COS

TW

 

CMH

TW/WN

WN

DFW

TW/AA

AA/WN

DAY

TW

 

DEN

TW/UA

WN/F9/UA*

DSM

TW

AA*

DTT

TW/NW

DL/WN

ELP

TW

 

FAY

TW

 

FLL

TW

WN

FSD

TW

 

FMY

TW

AA/WN

FWA

TW

 

GRR

TW

 

GSP

TW

 

HFD

TW

 

HNL

TW

 

HOU

TW/CO/WN

CO*/WN

ICT

TW

AA*

IND

TW/WN

AA*

JAX

TW

AA*

LAS

TW/WN

WN

LAX

TW

AA

LEX

TW

 

LNK

TW

 

LIT

TW/WN

WN

LON

TW

 

MCO

TW/WN

WN/FL/AA

MEM

TW/NW

DL*

MEX

TW

 

MIA

TW

AA

MKC

TW/WN

WN

MKE

TW

F9/FL/AA

MSN

TW

 

MSP

TW/NW

DL/WN/AA*

MSY

TW

AA*

NYC

TW/CO

AA/CO*/DL*

ORF

TW

 

OKC

TW/WN

WN/AA*

OMA

TW/WN

WN

ONT

TW

 

PAR

TW

 

PBI

TW

 

PDX

TW

 

PHL

TW/US

WN/US*

PHX

TW/HP/WN

WN/US

PIT

TW/US

US*

RDU

TW

AA*

RIC

TW

 

RNO

TW

 

SAC

TW

 

SAN

TW

 

SAT

TW

AA*

SBS

TW

 

SBN

TW

 

SDF

TW

WN

SEA

TW

 

SGF

TW

 

SFO

TW

UA/AA

SHV

TW

 

SJC

TW

 

SJU

TW

 

SLC

TW/DL/WN

DL

SUX

TW

 

TPA

TW

WN

TUL

TW/WN

WN

WAS

TW/US

UA*/AA

YTO

TW/AC

AC*

By 1995, it had become apparent that TWA was once again in dire straits, despite the advance purchase of 110,000 tickets by St Louis businesses to show support for the home town carrier.

Even though the prepackaged bankruptcy lasted only eight weeks, the carrier soon had to deal with the crash of flight 800 enroute from New York to Paris. From that point on, the airline continued a downward spiral that ended in its final bankruptcy in Jan-2001 and takeover by American Airlines.

Continuity was promised, but…

Initially, American expressed its intention to retain STL as a hub as it was ideally situated between the carrier’s existing Chicago and Dallas operations. But that plan soon fell afoul of the realities that emerged following 9/11 when the last thing any carrier needed was yet another hub.

This change was a major blow to the state of Missouri, which in 2000, observing the fact that TWA’s viability was unlikely, devoted considerable effort to studying the effects of the loss. In January 2001, the research and planning department of Missouri’s Office of Economic Development issued a report entitled Economic Impact of the TWA and American Airlines Merger in Missouri, which looked a various scenarios.

Their conclusion was that a complete loss of all TWA presence (hub in STL and Maintenance base in Kansas City) would ding the state’s employment by an initial loss of almost 33,000 jobs and USD876 million in wages. Peering into the crystal ball the researchers saw that by 2010, 10,000 of those jobs would be regained. Overall, it opined that “In general, the state's economy would slowly recover from the direct and indirect job losses attributable to TWA closure.”

The other option that was explored was the loss of the Kansas City facility but the continuation of St Louis as an American hub. Obviously, this shifted most of the impact to Kansas City where recovery was projected to be slow. As the lesser of two evils, the state supported the takeover.

However, the total loss outcome was the one that over time materialised, despite the promises of American. By 2003, AA was furloughing former TWA employees and retiring TWA equipment. Few have ever been recalled.

Of course, the events of the past two years have made any real assessment of the actual outcome impossible as the overall economic collapse has far overshadowed any residual effects of the 2001 research.

Building for a future that never arrived

In 1998, the airport had dedicated a new terminal for the use of Southwest and announced plans to spend roughly a billion dollars on a new runway, the construction of which also began in 2001. However, by 2006 when it was opened, the landscape had been drastically altered by the gradual disappearance of American, leaving the airport with a larger than necessary infrastructure.

But the good news…

In 2009, Southwest announced that it would ramp up operations at STL and significantly increase its presence. So, unlike PIT and CVG, St. Louis has been able to maintain much of its network, albeit not as a hub and absent its previous links to Europe.

Overall, in the face of a very “fluid” service pattern, STL has retained more flights and more diversity than is now evident at PIT and CVG. But that has still not set well with the city or its airport, as evidenced by this 2009 statement made by the airport’s director, Dick Hrabko, “we have argued with American for some time now about the usefulness of St Louis as a hub. It’s difficult to understand why they would abandon a hub here and make it a spoke. But this is a crazy time, and things are changing.”

The mayor also weighed in by saying that, “by eliminating what was left over of the St Louis hub it took over from TWA, American will be walking away from more than 620,000 passengers a year. And they will walk away from approximately USD108 million in system revenue.”

American has seen things differently and proceeded with its planned cutbacks. Meanwhile, the other Dallas based airline, Southwest, noted that it is “poised to respond to opportunities better than most.”

St Louis pax and aircraft movements: 1985 to 2009

Year

Total Pax

Aircraft movements

1985

19,942,401

364,445

1986

20,352,383

398,958

1987

20,362,606

360,742

1988

20,170,060

379,863

1989

20,015,015

380,008

1990

20,065,737

391,534

1991

19,151,278

367,960

1992

20,984,782

382,337

1993

19,923,774

398,750

1994

23,362,671

433,737

1995

25,719,351

474,414

1996

27,274,846

474,929

1997

27,661,144

484,288

1998

28,700,622

471,481

1999

30,188,973

474,166

2000

30,558,991

456,827

2001

26,695,019

452,866

2002

25,626,114

420,904

2003

20,431,132

312,439

2004

13,396,028

266,898

2005

14,697,263

268,801

2006

15,205,944

244,328

2007

15,384,557

235,100

2008

14,431,471

234,834

2009

12,796,302

*

The table shows the arc that developed at STL from the mid-80s until last year. Unlike both PIT and CVG, the STL numbers never grew in quite the same spectacular manner. From the 1985 figures to the peak in 2000, the passenger volume increased by about 50%. But it was a decade-long process and there were only two years when the airport handled over 30 million passengers. This was far from an “explosive” growth and, as we have seen from the airlines present in 2000, already contained a significant Southwest contribution.

The who affected the what and the how

TWA’s rocky history is reflected in the numbers, which, while moving upward, also display considerable fluctuation. From 2004 onwards, American began to retreat from the airport and the downward spiral has continued — exacerbated by the fuel spike and economic crisis of the past two years. Absent any significant connecting traffic, we can reasonably assume that the passengers currently generated are representative of the overall O & D market of the region.

Looking at the current capacity share, Southwest leads, with American in second place. Those relative positions are likely to remain in place but given AA’s ongoing reductions in both service and aircraft size, contrasted with WN’s stated intention to grow, the percentages may continue to move in Southwest’s favour.

Domestic capacity share

Airline

Capacity share

Southwest Airlines

40.0%

American Airlines

29.5%

Delta Air Lines

12.0%

US Airways

5.4%

United Airlines

5.1%

Continental Airlines

2.7%

Airtran Airways

2.6%

Frontier Airlines Inc.

1.7%

Cape Air

0.6%

Multi-Aero, Inc. D/B/A Air Choice One

0.2%

Trans States Airlines

0.2%

The destination chart is telling in that all ten of the cities listed are hubs for one or more carriers, indicating that much of the traffic is in transit. And, the fact that CHI and DFW, both AA hubs, rank number 1 and 2 indicates that American probably still may dominate as a connecting carrier. One would assume that AAdvantage is the most dominant legacy mileage program based on past history, so that passengers requiring connections may be partial to AA for that reason.

Southwest slightly dominates the seat offer to Chicago, but to Midway rather than O’Hare. To Dallas, both operate nine daily frequencies but, again, to different airports. And the same is true to Houston with CO to IAH and Southwest to Hobby. While offering more frequencies, CO flies only RJs, indicating perhaps the intent to offer maximum opportunities for feeder traffic, while Southwest is likely more interested in point-to-point passengers on its B737s.

Top 10 domestic destinations from Lambert St Louis Airport

Rank

City

1

Chicago

2

Dallas/Fort Worth

3

Atlanta

4

Minneapolis/St Paul

5

Denver

6

New York

7

Houston

8

Phoenix

9

Washington

10

Detroit

Outlook: St Louis fulfilling a need, but hub status unlikely to be revived

St Louis has much in common with PIT and CVG, but with some important differences as well.

  1. While TWA dominated the city for a time, its was among the weakest of the legacy carriers, operating the fewest hubs and often on the brink;
  2. Southwest has been a challenger and a factor in the market for decades;
  3. The city is not pleased with American’s reductions and appears to be stung by its ongoing loss of hub status;
  4. Nonetheless, St Louis has fared better in terms of keeping its domestic network intact, due to the strong Southwest presence, as well as a continued WN commitment to the airport;
  5. American’s disinterest is providing opportunities for other legacy carriers as well. American’s sole MD-80 non-stop to San Francisco (in 2000 TW operated 5) has just recently been countered by the start-up of a United airbus flight. Additionally, Southwest operates two one-stop flights to Oakland, undermining the monopoly once held by TWA and then by American;
  6. The significant presence of Southwest has had the effect of keeping fares generally low;
  7. Non-stop international service has been lost and will be difficult to restart since its dominant legacy carrier continues to diminish its feed.

Like Pittsburgh and Cincinnati, St Louis has most likely seen its day in the sun as a hub and that status is unlikely to be revived. But it has kept a robust network of service that apparently meets the community’s needs. In today’s environment, that is achievement enough.


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