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787 and A350 deliveries open up new small airport opportunities for European airlines

The development of the new generation widebody aircraft, such as Boeing’s 787 and Airbus’ A350,  may soon lead to direct services from European hubs to a growing number of secondary cities in North America. 

The EU-US open skies agreement opened up the market to a large degree, but hub economics mean that most EU airlines still focus their large widebody operations on the major gateways. In practical terms, once they land at the main US hubs, access to airports beyond remains restricted.

It will be some time before European airlines can operate from and to secondary cities at both ends of the route, but operators of these more fuel efficient and smaller widebodies can offer direct flights from their hubs in Europe to US cities that were once only ‘beyonds’. 

Criteria for choosing US cities are likely to include population, importance as a tourist destination, airport size and the presence of network carriers to add feed (possibly in preference to LCCs). Cities such as San Antonio, Nashville, Memphis, New Orleans and even Honolulu may be under consideration in the coming years.

According to data from OAG for Sep-2014, there are 44 airports in the US and Canada with direct flights to/from Europe. All but four of these feature among the 100 largest airports by total seats in the two countries. 

San Antonio in Texas is the largest US city by population not to have direct European services from its airport. San Antonio was ranked at 18 in the most popular US cities for international travellers in 2013, according to hotels.com (one of only three top 20 US tourist destinations with no direct flights from Europe). 

The airport is dominated by domestic traffic and its only international destinations are in Mexico. The leading airline is Southwest, but the airport is also served by all the network majors. As the fourth largest city in the US, San Antonio would seem to be a prime candidate for direct flights from European airlines, although British Airways already serves the smaller Texas city of Austin, which is only 70 miles (113km) from San Antonio, with a double daily 787-8 service from London Heathrow

California’s San Jose is the 10th largest city in the USA and the second largest not to have direct European services. Its airport, where Southwest is again the leading airline, is dominated by domestic routes. Nearby San Francisco and Oakland airports offer a number of direct European connections and this helps to explain why there are none at San Jose. Nevertheless, the size of the wider Bay Area and San Jose’s proximity to Silicon Valley could support direct transatlantic flights at some stage.

Indianapolis, ranked at 12 by population in the US, is its third largest city with no transatlantic service, but its relative proximity to Chicago O’Hare (less than 180 miles or 290km) and low profile as a tourist destination mean that it is unlikely to be a priority for European airlines.

Other US cities in the top 25 by population that have no direct service from Europe include Jacksonville (Florida), Columbus (Ohio), El Paso (Texas), Memphis (Tennessee) and Nashville (Tennessee). New Orleans does not rank in the top 50 by population, but is a top 20 US destination for international tourists and has no direct transatlantic services.

Among these, possibly the most likely to attract direct connections from European airlines are Memphis, Nashville and New Orleans. Memphis and Nashville are important tourist destinations, both having connections with the music entertainment industry, in addition to being large cities (ranked at 20 and 25 in the US by population). Nashville International Airport is the seventh largest airport in the US and Canada not to have direct service to Europe. 

Nashville’s schedule is dominated by domestic flights and its leading airline is Southwest, followed by oneworld’s American/US Airways and Delta. The airport offers significant connections across the US. The size of the city and the importance of its airport could make Nashville one of the more attractive prospects for direct flights from Europe, particularly oneworld’s British Airways.

Memphis is a larger city than Nashville, but its airport ranks as only the 29th largest among those in the US and Canada with no European services (ranked by seats). Nevertheless, it is bigger than many airports that do offer such flights and is the world’s largest cargo airport. Its passenger schedule is 100% domestic and SkyTeam’s Delta is its leading passenger airline, followed by US Airways/American.

New Orleans is the 51st US city by population, but its airport is the 10th largest in the US and Canada not to have European services. It is also an important tourist destination, with musical and cultural attractions. Its passenger schedule is almost 100% domestic, with Toronto its only international destination. 

Southwest is the leading airline at New Orleans, with around two fifths of seats, but legacy network carriers also have an important presence. US Airways/American and Delta both have around one fifth, a little ahead of United. New Orleans is an important destination in its own right and also has connections to 38 other US cities. New Orleans would also seem to have some appeal to European airlines for direct services.

There are 59 airports among the top 100 in USA and Canada with no direct European flights, according to OAG data. The top 10 among these are shown in the table below.

Honolulu, St Louis and Kansas City, in addition to the airports already discussed, are the other most interesting and likely candidates for direct European connections at some stage.

Honolulu, in the Pacific island state of Hawaii, is the fourth largest US/Canada airport with no direct European service. It is also the only Top 10 US tourist destination (as identified by hotels.com) with no European flights. Primarily a leisure destination, it is one of the top tourist destinations in the US, but its lack of direct European flights probably reflects the niche-like nature of demand and Honolulu’s distance from Europe. 

Demand is unlikely to fill the larger long range widebodies of the current generation, but direct services from Europe to Honolulu could be feasible with new generation aircraft types such as the 787-8 and the A350-800.

St Louis is ranked at 58 in the US by population. Its airport is the biggest in the state of Missouri and also serves the surrounding metropolitan area (which includes part of south-eastern Illinois). The airport’s biggest airline is LCC Southwest and the area does not rank highly for European tourism. On the other hand, the nearest transatlantic airport is Chicago O’Hare, some 250 miles (400km) away. 

Again, Southwest is the leading airline at Kansas City, but all the major network carriers are also present. Kansas City is number 37 in the US by population and less than 240 miles (385km) from St Louis. There could be a case for choosing one or other of St Louis or Kansas City for direct flights from Europe.

Clearly there are currently a number of large US cities and major tourist destinations with no direct European services. It is striking how many of these cities have Southwest Airlines as the number one airline at their local airport and European airlines may initially prefer to select airports where they have alliance partners who can provide additional feed. Nevertheless, there are already a number of US airports where Southwest is the leading airline and European airlines successfully operate direct flights, such as Las Vegas and Baltimore/Washington

In many cases, the routes may be viable without feed from a formalised partnership. At Oakland, where Southwest has 73% of seats, Norwegian Air Shuttle only last year opened direct 787 services from Oslo and Stockholm (the only European services to the airport).

With the 787 already in service and more recently the first of the A350s (the first European airline, Finnair, takes delivery in Oct-2015), it is clear that the old hub economics are changing. Seat cost savings claimed by the manufacturers to be of the order of 15% to 20% mean that thinner routes bypassing the main gateways can be commercially viable, particularly if the destination airports can also offer competitive fees. 

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