"American Airlines on High Alert...." (Another HB2 Tirade)

[zethya]

"American Airlines, a major employer in Charlotte, is on “high alert” that state lawmakers will target tax breaks on jet fuel in response to the company’s opposition to House Bill 2, the state’s new LGBT law...."
 
Read more here: http://www.charlotteobserver.com/news/local/article78441862.html#storylink=cpy
 
Really doubt NC - and particularly Charlotte, will shoot themselves in the foot and let this get anywhere. 

 

[FWAAA]

Just wait until the boycotts start hitting home in CLT. California deposits all unemployment compensation into free checking accounts with free ATM card withdrawals at BofA. If NC doesn't repeal that law, someone in California is going to argue that CA should stop doing business with BofA. Won't matter that BofA is opposed to the bathroom law, only that it maintains a large headquarters in NC, a discriminatory state.

I'm sure there are other examples.

Even if NC were to repeal the fuel tax exemption, the hit to AA probably wouldn't be more than $15 million to $20 million a year. An annoyance, to be sure, but easily affordable.

 

[nycbusdriver]

 
"American Airlines, a major employer in Charlotte, is on “high alert” that state lawmakers will target tax breaks on jet fuel in response to the company’s opposition to House Bill 2, the state’s new LGBT law...."
 
Read more here: http://www.charlotteobserver.com/news/local/article78441862.html#storylink=cpy
 
Really doubt NC - and particularly Charlotte, will shoot themselves in the foot and let this get anywhere. 
 

 
It's really simple.  CLT has a major airline hub that is in scope far beyond what a city its size would normally merit.  The reason is that CLT keeps the costs extremely low for AA (and previously PI and US) to operate there.
 
Raise the costs of doing business at the CLT airport, and watch the airline service begin to evaporate.  AA really does not "need" CLT anymore the way PI and US did.  The only thing keeping it vibrant is their low costs.

 

[PHX-F/A]

They'll use the hub until its no
longer profitable.  Look no further than PIT to guess what could happen.

 

[jimntx]

I suppose we could always give Nashville another shot at being the Southeastern U.S. hub.  They have a nice airport that they built for us last time.

 

[1AA]

This reminds me of the 80's and 90's. AA had too many hubs. Nashville and San Jose. Raleigh was shrunk and lost hub status mostly from Miami. History will repeat itself again. This time which hub(s) will be next? Any glitch in CLT with the state or airport authority and it may too see the same demise as SJC, BNA & RDU.

 

[ChockJockey]

I suppose we could always give Nashville another shot at being the Southeastern U.S. hub.  They have a nice airport that they built for us last time.

 
Maybe, but it would cost many millions to set it up and all it takes is some ambitious scrub legislator to get uppity and righteous and introduce legislation about bathrooms or cakes or flags and you've got the same problem all over again.  In TN that wouldn't take very long at all.

 

[jimntx]

Might not be as expensive as you think.  You are aware that AA had a hub at Nashville in the past?  There is probably a lot of "infrastructure" still there.  You could use all the same flight numbers just change the destination code to BNA.  Oh, and add hourly Eagle flights to CLT.  
 
However, your point about off-the-wall politics is well-taken.  Maybe we ought to put the southeastern hub in Chicago.  It's southeast of Winnipeg.

 

[28L_or_10R?]

Unless I'm mistaken the agreement to renew the CLT lease for 10 years included the provision of no fuel tax. A decision by the state to repeal the tax abatement would be a violation of the contract. American Airlines could easily go to court and have the lease renewal thrown out. Good-bye CLT. Would North Carolina do this? Sure they would and they would go down acting like the Christian martyrs. All over an issue that never existed. Should have focused on their horrible infrastructure, schools and coal ash.

 

[jimntx]

The argument could be made that the tax abatement clause was invalid in the first place because the city of Charlotte promised something they couldn't deliver because the fuel tax abatement was a state of North Carolina issue.  What's interesting here is that either side could use the argument.  The city could say that the contract is not invalidated because the clause was not "legal" to begin with.  And, AA could say that the contract is invalid because an important clause of the contract is invalid.

 

[ograc]

 
It's really simple.  CLT has a major airline hub that is in scope far beyond what a city its size would normally merit.  The reason is that CLT keeps the costs extremely low for AA (and previously PI and US) to operate there.
 
Raise the costs of doing business at the CLT airport, and watch the airline service begin to evaporate.  AA really does not "need" CLT anymore the way PI and US did.  The only thing keeping it vibrant is their low costs.

 
Similar circumstances led to the downsizing in PIT. Raise the cost and CLT loses it's competitive advantage over other airports. Pittsburgh International... a beautiful, state of the art, terminal. Operating now at maybe 1/3 of it's revenue generating capacity. Hopefully, CLT Officials do not want to make the same mistake that the Allegheny County crooks made.
 

 

[jimntx]

Let's not forget that it may not be up to CLT officials.  If the Legislature repeals the fuel tax abatement and the governor signs it (not outside the realm of possibility if he wants to "punish" AA for being publicly against HB2), CLT officials will have no choice except to collect the tax or pick up the tab for the increased taxes.

 

[FWAAA]

The fuel tax exemption is great pocket change for AA, but it's not why the CLT hub is open, and its repeal (which is unlikely) will not cause CLT to close.

Could another SE city host a hub? Sure, if enough hundreds of millions (or billions) were spent. BNA has several empty gates, but not the 30-50 that a hub would require.

RDU has torn down the concourses used by AA for its old hub and rebuilt new concourses designed for O&D and not for connections. RDU has almost as much O&D as CLT, but building 30-50 or more gates would be expensive.

I don't see BNA or RDU funding the construction of new terminals (again) for a theoretical AA hub. Both cities probably learned their lessons last time.

In short, the fuel tax issue is a tempest in a teapot. It repeal won't kill the CLT hub and its continuation won't prevent some right-sizing at CLT in the next couple of years.

 

[eolesen]

In a worst case scenario, CLT could become a spoke with negligible impact. Just make sure there's almost-hourly service to PHL, MIA, DFW and it would all be just fine in the long run...

 

[CaptainBigWood]

Doug Parker speaks of  CLT as it's most profitable hub.  Not likely to go away with the confused bathroom crowd.