How Far Do We Go to Protect Our Own Assets?

In this case, let’s look at the upcoming (in progress?) merger between American and USAirways as an example. Each airline operates a reasonable number of flights at a number of airports across the country. But with nine hubs in this merge, someone is bound to lose. The problem comes down to the cities that have those airports.

For instance, the two largest hubs – Dallas/Fort Worth (786 combined flights at the merger announcement) and Charlotte/Douglas (653 flights) both have bonds outstanding. This is really no surprise, as most airports have bonds issues, for anything from parking decks to new terminals. But if an airport is shuttered, or even loses a lot of flights, as Pittsburgh did previously, then those bonds may have a tough time being repaid.

It is unlikely that either Charlotte or Dallas will lose out, as they are the largest hubs by far. Chicago O’Hare is big for the new American, too, with a combined 478 flights, so I don’t see any problem there. Not to mention the central location.

But a lot of people are pointing fingers at Philadelphia (459 flights) because of the proximity to Washington Reagan (272 flights) and the New York metro (a combined 297 between JFK, La Guardia and Newark). Or maybe they just don’t like Pennsylvania.

I don’t know – it seems to me that moving those 459 flights to other airports will be difficult, especially since there are plenty of people originating (or landing) in the New York metro, and some of the slots there are capacity controlled, and the same is true about Washington.

There was a report saying that cost could affect the Philadelphia airport more than anything else. That means that the only option would be to move some of the traffic to Charlotte. While possible, the airport can’t handle all of it, so I don’t know that it will happen. Maybe European traffic to Charlotte, and any Caribbean traffic to Miami would take care of a bit of load, but I doubt Philadelphia would go away entirely.

Ultimately, though, the question becomes just how many of these assets can we protect. It’s not saying that doing so is a bad idea. It is saying that not everything can be protected. While I feel bad for the people of Pittsburgh, who may have lost a good asset, and I will feel bad for the people of Philadelphia if the same happens, or even for the same if it happens here in Charlotte, to say that nothing can ever go away once created is suicide.

There has to be a time when we make the smart decision. The very same thing can also be looked at when it comes to professional sports (notably football). The deal that the City of Charlotte just went through with the Panthers is not at all unusual. But do we really need this sort of thing? Los Angeles has been without the NFL for nearly 20 years. Has it hurt them? Sure, you may argue that it is LA. But can it be argued that the only reason is that they are LA?

Update:: It looks like there are others thinking about the same thing.