scaledesigns wrote:muralir wrote:scaledesigns wrote:
That is true, but they can't spin the fact that ORD is down 10,000 domestic pax per month compared to 2019 and the southern hubs are almost at 2019 domestic levels. Everyone has the same problem with the decline of business travel including the southern hubs. Could it be that it is alot cheaper to operate from the southern hubs than ORD....Yes it it!!!
The out of town poster was right and wrong. There is a decline at ORD, but not because people don't want to connect and come here.
No, everyone doesn't have the same problem with decline in business travel. It depends on how much business travel existed in the first place. Business heavy airports will be affected more than leisure-heavy airports. I honestly don't know what percentage of Chicago's travel is business vs. leisure. My point in bringing it up is that there are several factors that affect passenger traffic, and if you're going to assert that landing costs are the main factor, then it's on you to explain why other factors are not equally or more important.
Another factor to consider is transit traffic vs O&D. During the pandemic, most airlines consolidated a lot of flying into their hubs, and lots of P2P flights were changed to hub connecting flights to save money. As a result, airports that are more dependent on transit traffic are probably having a rebound in traffic faster than airports more reliant on O&D traffic. O'Hare, as big of a transit airport as it is, has a higher percentage of O&D traffic than places like ATL and DFW. So while traffic is returning, if more of that traffic is directed to hub-and-spoke connections, then airports more reliant on transit traffic will see a correspondingly faster / larger rebound.
You seem to keep jumping to landing fees as the sole factor, without any acknowledgement of other factors in play. If landing fees were the sole consideration, every airline would move to Gary or Rockford or Milwaukee. And JFK, EWR, and IAD would be ghost towns. For that matter, O'hare's 2019 traffic should be lower than it was. It's not like landing fees were more competitive then they are are now.
All your points are well taken, but landing fees are only part of the cost. ORD's per pax costs are some of the highest in the nation for a hub. All the large southern hubs are much lower including Atlanta. If I was an airline with limited crew availability to operate flights I would pick the cheapest hub to operate from and feed pax into them also wich is what they are doing. That problem will continue for several more years, but if ORD wishes to increase and take on ATL, DFW ect they will have to be more in line with those hubs costs. If they don't want to take on those hubs and be the biggest why did we bother to spend billions of dollars with this huge expansion?
ORD's per pax costs are definitely high right now and expected to go higher with the completion of the terminals. And I agree, that is an important consideration for flights, especially marginal ones where the profit may only be $20-30 per seat in the first place. But it's not the only one. Even from a financial consideration, the streamlining of operations where flights won't have to be towed from T5 reduces costs. Reducing weather delays, reducing delays from gate availability, decreasing taxi times with all of the taxiway work being done, these all go to reducing costs for airlines. They probably won't compensate entirely for the increased pax costs but they do make it better than it initially appears.
What's more, ORD's peer airports are also expected to increase their per pax costs pretty significantly. ORD has traditionally been in the middle of costs. Places like JFK are much higher, and ATL is much lower. It so happens that ORD will likely finish their terminal stuff sooner than the others -- not to mention the runway work for the past decade -- and so temporarily, ORD's ranking will be much higher than usual. But JFK is in the midst of a large-scale terminal reconstruction program, LAX just completed their TBIT satellite and is working on a massive plan to reconfigure their roadways, EWR is building a new terminal. Denver is expanding their concourses and renovating their main terminal, etc. etc. All of these airports are expected to raise their landing fees and their overall per-pax costs significantly over the next decade, while ORD's should stabilize within a few years (once all the borrowing is done for the terminal project). The only major airport that's not planning to raise their costs significantly, I believe, is ATL, as they don't have much expansion plans on the table. With that, I expect that within a decade or less, ORD's costs will go back to being average/above-average compared to peers rather than abnormally high. That's still a disadvantage, of course, but not as bad as it might first seem.
And finally, I think you neglect the non-cost side of the equation: when ORD is done with its terminal expansion, it will have more runways than any civilian airport in the world, and a massive amount of new terminal space and gates. Among US airports, I can't think of any that have added, or will add in the next decade, as much capacity as ORD. If you're United and looking to expand, regardless of the marginally higher cost, you have no choice but to do it at ORD given that EWR and SFO and even IAD are so capacity constrained. The only airport with significant spare capacity is DEN, which is why they've gotten so much new traffic. Airports are a bit of a "build it and they will come" phenomenon (not always, witness the mid-America airport
. When airlines want to grow, the airports with spare capacity is where the growth goes, regardless of whether some other airport might be more "optimal" financially or not. Despite the high prices, airlines are still clamoring for gates. Not just United and American, but international carriers, ULCCs, heck even Delta wants to add a few flights after they move to T5. It really doesn't seem like the per-pax costs are hindering the airport's ability to fill itself to the brim.
