Philadelphia International could’ve become the ‘ugly stepsister hub’ after American-U.S. Air merger

There was a time when the merger of two airlines meant the death of an airport hub, and some folks wondered whether the merger of American Airlines and US Airways – five years ago this month – would seal Philadelphia International’s fate in a bad way.

After all, Delta did close its Memphis hub in 2013, after taking over Northwest Airlines in 2008. And, United Airlines shuttered Cleveland as a hub in 2014, after its 2010 merger with Continental.

“For a while I was concerned that when American and US Airways merged, that Philadelphia would become the ugly stepsister hub" and see passengers moved to New York’s JFK, said Jeffrey Erlbaum, president of the travel agency ETA Travel in Conshohocken. "But I think they’ve been true to their commitment to keep Philadelphia as an international hub.”

Five years after the deal that created the world’s largest airline, Philadelphia International Airport has emerged as American’s “transatlantic gateway” and won new jobs, even though it is a slightly smaller operations hub than it was before.

“On one hand, Philadelphia clearly has not been a standout focus of growth for American,” said Seth Kaplan, editor of Airline Weekly. “But on the other hand, compared to the doomsday scenario back then, things aren’t nearly as bad as they could have been.”

PHL is one of two major American Airlines hubs, along with Phoenix, that shrank under the merged airline, while Los Angeles and Chicago have grown the fastest, Kaplan said. The number of scheduled departing seats out of Philly -- on the combined American-US Airways -- fell 5.5 percent between 2013 and 2018, according to Kaplan’s analysis of scheduling data from the firm Diio.

But with 421 daily departing American flights, PHL ranks as the fourth or fifth largest of American’s nine hubs (depending on the time of year, it trades places with Miami). It has launched routes to European cities including Budapest and Prague, while service to Dubrovnik, Bologna and Berlin is coming in 2019.

Since the 2013 merger, American has invested $200 million in making improvements at PHL, such as adding new restaurants and installing 1,000 iPads in Terminal B, and revamping and expanding Terminal F.

Another difference between this merger and others: It has resulted in more jobs, not fewer. American has added 15,000 jobs, and more than 1,000 of them are in Philly. The company’s workforce here numbers 8,700, and it has brought on new flight attendants, pilots and mechanics, as well as customer service and fleet service agents.

“These are jobs that would not exist absent the merger,” said Jim Moses, who was named vice president of Philadelphia hub operations in August, and led American’s operations in Los Angeles before that. “The fact that we’ve hired more than 1,000 people speaks to our commitment to Philadelphia.”

Although American did go through a period of trimming flights out of PHL, Moses said: “Over the last year and a half we have built Philadelphia back up again.”

Sending connecting flights to PHL is “part of how we’ve strengthened our hub here,” Moses said. About half of the airline’s transatlantic passengers from PHL connect from elsewhere, and about half of those fliers start their journey in Philly.

“We can rely not only on the originating traffic, but also a great connecting network of traffic that comes through Philadelphia,” Moses said. “So, we’re able to build upon both.”

One simple advantage that Philly gives American: the airline accounts for a majority of the airport’s traffic, about 70 percent. “An airline is not going to make outsize profits in a place where it’s 10, 20, 30 percent of the marketplace,” said Airline Weekly’s Kaplan

“American doesn’t have Philly to itself," Kaplan said, “but it has a much stronger position there” compared with New York, for example.

For passengers, “competition has a big impact” on fares, said Erlbaum. Flying from Philly to Boston can be “very cheap,” he said, because American has competition from Jet Blue on that route. But, “where American is the only carrier going to a place, fares tend to be a bit higher.”

Philly-based fliers will sometimes want to weigh the convenience of flying from PHL, against a cheaper fare out of Newark or New York.

If you want to go nonstop from PHL to Paris during peak travel season in July, a standard coach fare on American is $1,262, and a basic economy fare (which comes with some more restrictions) is $1,172, according to prices Erlbaum checked over the last week. Out of Newark, the least expensive standard coach fare runs $846 on United and $700 on Norwegian.

From New York’s JFK, a ticket cost $967 on Air France and on XL France Airways it cost $497.

Looking back on the merger, Erlbaum said the integration of the two airlines' ticketing and technology “went as smoothly as it could possibly go” from a passenger perspective. And Philadelphia -- while losing service to certain destinations, such as Tel Aviv in 2015 -- got more options, as well.

“I think Bologna, people are really excited about," he said. “Italy is, by far, my biggest leisure destination for clients going to Europe.”