It’s clear that we in the US have entered a self-inflicted economic downturn. While there is plenty that is not clear regarding how bad it will be and how quickly things will improve, every airline’s management team has to be sitting around right now thinking about how they are going to deal with this unfortunate development. Broader capacity cuts are likely coming at some point, but where that capacity comes from will, as always, be interesting. For me, Chicago is the most fascinating city to watch, because there is a lot of game theory going on there at the moment which has led to big growth as of late.
Frankly, I’m surprised we haven’t seen more cuts already. Consumers are increasingly anxious about the present situation — the Consumer Confidence Index hit a 12-year low in March — and if consumers aren’t confident, they will cut back on spending. It’s not all bad news for the best-positioned airlines like Delta and United, however. As the March release noted, “The decline was also broad-based across income groups, with the only exception being households earning more than $125,000 a year.” In other words, premium may hold up better.
Even if premium holds up, there is going to be an impact on every carrier. The massive tariffs that were recently implemented will not help demand. Yes, reduced trade is generally bad for business and bad for airlines, but it’s more than that.
Further, because of the huge expected impact of these tariffs, consumers have to rethink how they prioritize spending. A smart consumer is moving up purchases of cars, electronics, and clothes before the tariffs jack up the price. Airfare is not going to be hit by tariffs, so that means people may shift their already-reduced spending plan away from travel.
With that backdrop, you’d think airlines would have already pulled down flying, but they have not, at least not significantly. I could have sworn Delta said it was loading a capacity cut at the end of March, but that has yet to materialize. Right now, of all the 16 markets that have more than 2 million domestic seats scheduled this summer, only three are down year-over-year. Take a look at July 2025 vs July 2024:
Data via Cirium
Of course Charlotte stands out on the down-side, but it’s the mighty Chicagoland area that really pops at the very top. This July, seats are expected to be up nearly 10 percent vs last year. That seems insane, but there is a reason for this. It’s a reason I covered back in February.
You’ll remember that O’Hare has a convoluted way of figuring out how to allocate gates. It may be convoluted, but United studied up and did the math. It began playing the game last year, and now it is expecting to gain six more gates in the annual allocation as a result of its work. American, meanwhile, had not restored service post-pandemic and appeared to have been caught off-guard by this move.
Because of United’s efforts to maximize capacity while American was looking elsewhere, it has set something in motion that will likely end with United continuing to take more and more gates over time. But to do that, United has to keep pumping capacity into the airport. American could have decided to give up, it could have opted to maintained, or it could have decided to try to fight. It chose the latter option. American is now pouring capacity into O’Hare to try to prevent losing more gates.
Here you’ll see total domestic seats departing Chicagoland for each of the big three players in the market:
Data via Cirium
You can see how United started running away from the pack in summer 2021, and then you can see how this year is when American realized what was happening. What this means is that in July, American domestic seats from O’Hare are up a staggering 24 percent year-over-year while United continues to increase pressure by increasing 13 percent. Southwest is relatively flat, but we all know it has plenty of strategic decisions to make separate from this downturn.
The end result here is that there’s a ton of capacity in this market that’s chasing what is likely to be declining demand. The difference in this market is that the capacity coming in isn’t really tied to demand. It’s these external factors that are pushing airlines to make different decisions.
Who will blink first? I can’t imagine it’s United. It has its eyes set on winning more and more gates. It would be shocking for the airline to give that up unless it’s a catastrophic demand in decline like you get from a pandemic. Meanwhile, American is in catch-up mode. If it gives up, it might make sense, but is it really willing to cede Chicago to United? Only American knows that answer. And Southwest, well, it’s a wildcard. I suppose it depends on what the board wants to do there.
In other cities, capacity can easily go up and down with demand, but Chicago is different. For that reason, it’ll be the most fun to watch.
65 comments on “I’m Watching Chicago as Airlines Think About Cutting Capacity”
I’m curious what up/downgauging we’ll see in CHI this summer. I think the AULA process at ORD somewhat accounts for aircraft size, but will we see UA/AA get creative maintaining departures while cutting seats? (Then again, you have to put those bigger aircraft somewhere…)
CF,
How do you think this will affect the planned new International Terminal?
Angry Bob – I don’t expect it to impact that at all. I assume they will keep pushing ahead with it unless something dramatic happens, like American closing its hub.
Is it really clear that we have entered a self-inflicted economic downturn? The DJIA is at 38,000. It’s been less than a week.
The complete lack of self-awareness from coastal elites never ceases to amaze me. Here in the Heartland, where half of people don’t care about the stock market because the jobs that would have allowed them to care were exported to China and Mexico, people are cheering.
It’s OK. When social security and medicaid are gutted and what jobs still exist are fully automated, that vast sea of humanity in the “heartland” which is so used to complaining about everyone being on the government teat yet taking big gluttonous drinks itself will suddenly realize the gravity of the situation they’ve brought upon themselves. The only difference is then it will be my time to not give a rat’s ass. Let ’em eat cake.
Can we nominate this for a Cranky Award for Most Dramatic Response?
I second the motion.
Mmm… delicious salty tears
It’s self inflicted because it wasn’t caused by a pandemic, a banking crisis or some other shock to the system. It literally didn’t have to happen like this. And we will always have trade deficits with some counties – it isn’t economically viable to make everything here. Finally, these harsh tariffs will affect low and lower middle income people the hardest since they are more likely to buy goods from China and the tariffs will eat up a larger percentage of their income. That will and probably has affected air travel demand. I’ve been on three flights over the past month that a year ago would like would’ve been full. They were between 50-75% full this year.
My thoughts exactly. And this fixation on tariffs implies a lack of understanding as to what’s really happening. That aspect is a negotiation tactic meant to reinvigorate manufacturing and other business in the USA. Much like the early 80’s, following Carter’s disastrous handling of the economy, certain short term measures have to be undertaken in order to set up long-term success. Such is the case here. Too bad the TDS prevents some people from attempting to understand this.
Chicago will be fine and air travel demand will be fine. Any drop-off will be very temporary at worst. Within 2 years, there will be significant growth as was the case in 2019. At this rate, more so.
“Is it really clear that we have entered a self-inflicted economic downturn? The DJIA is at 38,000. It’s been less than a week.
The complete lack of self-awareness from coastal elites never ceases to amaze me. Here in the Heartland, where half of people don’t care about the stock market because the jobs that would have allowed them to care were exported to China and Mexico, people are cheering.”
It’s comments like this that show a lack of self awareness. Just because you & others don’t have money in the stock market doesn’t mean you aren’t effected by what goes on. As for cheering on the destruction, be careful what you wish for as what goes around comes around.
“Is it really clear that we have entered a self-inflicted economic downturn? The DJIA is at 38,000. It’s been less than a week.
The complete lack of self-awareness from coastal elites never ceases to amaze me. Here in the Heartland, where half of people don’t care about the stock market because the jobs that would have allowed them to care were exported to China and Mexico, people are cheering.”
It’s comments like this that show a lack of self awareness. Just because you & others don’t have money in the stock market doesn’t mean you aren’t effected by what goes on. As for cheering on the destruction, be careful what you wish for as what goes around comes around.
You mean the coastal elites whose tax dollars pay for the welfare of the red “heartland” states? Those jobs are not coming back to the US. Tariffs will only hurt the very people who you claim are cheering.
You’re “cheering” other people are losing their jobs and their lifetime savings? Real stand up ideology you have there
Really, because my Midwestern farmer relatives are certainly concerned about crop prices tied directly to tariffs. Maybe you’re an “urban elite” that doesn’t get outside the city much?
“Really, because my Midwestern farmer relatives are certainly concerned about crop prices tied directly to tariffs.”
The market for your relatives goods may have shrunk as many countries are refusing to buy US goods.
So from your “heartland” fly-over country vantage point, who are you cheering for, Musk or the “truly a moron” Navarro? Can’t be both, right?
Do you not have a pension or 401k? Or did you not realize those are tied to the stock market? You don’t have to be a day trader or “coastal elite” to be impacted.
If you really have a job that doesn’t have those, then you’re probably living paycheck to paycheck and are going to feel it more than most when your trip to Walmart gets a whole lot more expensive.
Those jobs you speak of left the country thanks to lazy American workers and crappy products which were cranked out of those factories for the last time in the 1980s. Those jobs will never come back. The skill set doesn’t exist in the US and demanding that corporations bring production back will not solve the problem. This is why you are looked down upon.
Jamie Dimon: A recession seems “probably” likely.
Delta: This could lead to a recession
Larry Fink: We’re probably in a recession.
Tom in the Heartland: Coastal elites aren’t self-aware, we don’t care about the stock market, and we don’t understand that a decline in stock prices will lead to job losses.
The US is headed for a prolonged, deep recession with a high level of unemployment (double-digit, likely), rampant inflation, and very likely will default on its massive debt, with China’s most likely response to Trump’s madness by dumping its US Treasury holdings. America will shift to poverty the likes it has not seen since the Great Depression. Stagflation will endure for years. As to the US airline industry, which makes no money actually flying passengers, not even Delta, bankruptcies and further consolidation looms large, with deep cuts coming that will look and feel like the early days of the pandemic, only this time without a government bailout. The US can’t afford that any more.
And all this, why you ask? Because 78 million morons in America thought Donald Trump was the optimal choice. They deserve the mess that has been created.
I will bet you $100 that the opposite will happen. Maybe you need a more diverse mix when it comes to your news sources, rather than the same Trump haters.
Have you checked lately? Even some of the biggest voices on Trump’s side in the media are starting to ring alarm bells including Fox News.
Those same voices, who did not raise a concern with bigger stock drops combined with epic inflation some 2-3 years ago? Personally, I’m going to sit out the nonsensical hysteria. The damage of the post 2021 inflation explosion is still the real concern from my perspective, as wages have yet to make up for it. That too will recover, but it will take time. The current “controversial” policies are part of that strategy. None of these things play out during the course of a single news cycle, which is why there’s so much ignorance out there.
The reality will come out somewhere in the middle. There is likely to be a recession, and unemployment will go up substantially, even if it falls short of double digits. Consumer confidence is now the lowest it’s been in 15 years, even lower than it was during the pandemic, and people are already reducing discretionary spending. When consumers reach this level of pessimism, a recession becomes a self-fulfilling prophecy.
Even if some companies want to move manufacturing to the US – and that’s debatable, the difference in labour costs is just too great in many cases – it takes years to build new facilities. And a lot of those facilities will be more automated than the foreign factories they replace, so job creation will be a smaller fraction of what the Trump supporters think it will be. In the meantime, consumers will be hit by rising prices.
Even many analysts who support the Trump moves concede that there will be a period of higher inflation and unemployment, although they disagree about the severity and duration of the downturn.
The “good” news is that the policies are so ruinous that they won’t be allowed to stand. Wall Street affects Main Street, and the runway for onshoring domestic manufacturing is way longer than the election cycle. So the worst parts wil be dialed back, Trump will declare victory, and on we’ll go.
The vast majority of economists- folks who actually are knowledgeable about the topic have resoundingly stated that the trade war approach is a flawed strategy. The fact that the President is more interested in settling scores, making decisions off the cuff, makes the situation even worse.
I’ll take that bet, win-win for me: If it doesn’t happen, then we really avoided an unprecedented catastrophe. If it does, I could use $100.
Why is there a big drawdown in Charlotte?
My thought as well. Maybe the covid boom in South is slowly cooling down. Dallas drops from No 1 to 4 in the chart, Houston decreases as well. Hope CF has more insights.
Eric – Great question. I took a look first at all the airlines. JetBlue exited while Delta, Frontier, and Spirit are down. Southwest is up, but look, that’s all just noise anyway. American domestic seats in CLT are down 6.3% while the total domestic market is down 6.6% from CLT. So this is an American story, unsurprisingly.
A big chunk of this is downgauging. Domestic departures are down only 3.1% for American. There are 37% more departures on ERJ-145s this year while CRJ-700 and CRJ-900 flying is down. My guess is this is a direct result of Air Wisconsin flying ending for AA. It had to replace those 50-seaters with two-cabin airplanes in Chicago, so Charlotte gets more 50-seaters.
That’s certainly part of it. But there is also a slew of markets with 1 less flight (or more) per day, places like Lynchburg, Cincinnati, Myrtle Beach, Syracuse, etc. My guess is that Charlotte is just a little overheated, so they’ve decided to focus summer resources elsewhere.
Thank you!
Any idea where the 6 gates would come from? AA or Spirit or another carrier? And how would UA even operationalize this?
For example, let’s say 1 gate is from Spirit and 1 from Southwest, would they just slide all the carriers down a couple gates? I can’t imagine UA gates a random gate in T5 or end of T3.
Eric – https://crankyflier.com/2025/02/06/united-says-it-grabs-six-more-gates-at-ohare-not-entirely-clear/
Although the past week has been one of enormous economic uncertainty, stock market futures are positioned for a strong day of recovery on hopes that trade deals might come with multiple countries. There will clearly be damage for airlines even in losing a week or more of good summer booking activity as consumers and businesses try to figure out how to adapt to whatever is happening – and ultimately will happen.
Competitive markets including Chicago are certain to see some level of restructuring esp. given that AA and WN settled 2024 with net income margins below 2%. Markets that involve AA and WN – as well as most of the rest of the industry that lost money in 2024 – will see attempts by DL and UA to consolidate their market positions just as DL did in BOS, NYC and LAX during covid recovery.
Each domestic market and the difference between international and domestic markets will be clear during the next round of recovery. Add in that the future of NK is uncertain and up to 5% of the US’ capacity could impact financial results for the rest of the industry.
As CF has noted in the past, UA needs to win in Chicago, Houston and Denver because it currently has no super hubs as AA and DL have while WN has multiple middle of the US “hubs” where it does control the majority of traffic – even if it does not win the metro areas in Chicago, Dallas or Houston.
UA is not only spending enormously on airport expansion but also has tens of billions of aircraft on order on top of needing to settle with virtually every unionized workgroup so cost control will be a major issue for UA as it seeks to generate revenue.
Let’s see if the stock markets return anywhere close to where they were before all of this volatility was introduced and where prices might go. We’ll get a look at what DL thinks of it all when they report in hours and then will get a steady diet of updates from other airlines.
Given that the airline industry was given tens of billions of dollars in money during covid, there is bound to be a shakeout of the industry in the next few years. Chicago might be the most significant but it also might be relatively minor in the scope of all of the changes.
Stock market is up today as of noon ET, likely recognition of the overreaction of the last few days and some short positions being closed out. Not seeing any indications that this is just a dead-cat-bounce
Consumer confidence is already at the point where a recession is a self-fulfilling prophecy, although a sharp cut in interest rates could help there and offset some of the inflationary impact of the administration’s tariff policy.
UA has to win any battle in Chicago while AA doesn’t, while Southwest has the option of retreating back to Midway if it doesn’t want to play this game, and also has the handicap of not being able to materially downgauge.
there remains high degrees of volatility in global stock markets… and they won’t stabilize until it becomes clear how countries and companies will fare under whatever tariff structure falls into place along w/ the resultant trade negotiations.
All of that instability costs companies and consumers and airlines are always first and usually most impacted as travel spending is one of the first expenses to be cut. Given the timing of all of these change, the summer travel season COULD vaporize very quickly.
UA needs to win in Chicago and is the financially strongest of the 3 big carriers there – but UA has an artificial cost advantage with its labor costs that is bound to end when UA’s non-pilot workers decide they want to get paid like the rest of their big 4 airline employee peers.
UA is more dependent on winning Chicago but the “prize” will be shouldering a higher cost of the rebuilding of ORD’s terminals – which will make it the most costly interior US hub in the US on a cost per enplaned passenger basis.
AA needs to be relevant in Chicago to hold onto enough of the local market while routing as much traffic as possible through other hubs. WN has to right size its network – including at MDW – for the amount of higher revenue traffic that WN needs to carry. WN just doesn’t do well in other airline hubs and they are largely irrelevant in the ORD market even if they stay in there with a handful of flights.
The underlying economic situation could turn around as fast as it fell apart with announcements of major trade deals and investments in the US.
AA and WN were already weak going into the trade wars while UA had aggressive expansion plans that will cost enormous amounts of money no matter how all of the trade stuff turns out. If a significant downturn in international traffic takes place, UA is the most exposed.
CF is right to watch Chicago in that it pits 3 of the big 4 with the Baltimore/Washington area as significant with the same 3 players.
It is perhaps more noteworthy that DL used the post covid recovery period to solidify its position in its hubs including growing in NYC, BOS and LAX. For Delta, AS’ SEA int’l expansion and any potential carrier changes at LGA and JFK are all it needs to deal with.
Shortly before 1pm PT and the indices are
Dow -2.03%
Nasdaq -3.37%
SP500 -2.83%
I guess the forecasts for today didn’t quite work out as intended :)
that is why the markets are open all day.
And even another day tomorrow isn’t going to reintroduce stability to the markets.
The point is simply that the stock market decimation of last week was entirely caused by market fear about what will happen to trade and the economy. We have yet to have a single company provide definitive impact to their financials. Delta might be the first airline to do so tomorrow – or they might not.
The President has an agenda. There are lots of people that thinks it is a bad idea or, even if it is a decent goal, it is being implemented in a very chaotic manner.
Airlines – which is what we care about here – are highly vulnerable to economic downturns. Chicago is one of several highly complex markets with three major carriers competing.
Chicago won’t be the only market that is negatively impacted if the economy falls apart or even if a double digit decline in foreign visitor arrivals develops.
but for the reasons CF outlined, Chicago is worth watching because there just might be more movement in Chicago than in other markets.
My post was basically responding to CraigTPA’s post saying
“Stock market is up today as of noon ET.”
The market is up until it’s not, and drawing conclusions such as “(it’s) likely recognition of the overreaction of the last few days” make little sense in the current situation.
And they closed down, proving the point. (I said they were up, not that they’d stay up. And the futures market is signaling another drop at the open today.)
This morning we received our first news of an airline revising financial expectations, withdrawing their previous guidance for fully year 2025.
Guess who it is?
Yep. Delta.
https://www.investing.com/news/stock-market-news/delta-says-it-will-not-reaffirm-annual-guidance-amid-tariffdriven-uncertainty-3976027
Yes, it’s a “will not reaffirm”, not an actual downward revision, but if a company is expecting good, or even unchanged, news, they’ll just reaffirm the previous guidance. DL didn’t do that, clearly leaving room for a downward revision.
In the statement, Bastian said “growth has largely stalled” and that planned capacity growth will be reduced in the second half, but that current indications are that performance will still be “solid”.
And I’d expect this, Delta has a solid operation and balance sheet. But if even Delta is having to cut capacity growth plans, it doesn’t bode well for other airlines, especially since the American consumer has yet to actually feel the impact of tariffs on prices. And China announced a new tariff increase on US imports this morning, so it’s still early days.
Maybe Cranky needs to open up a second 2025 prediction window?
Hi Oliver,
within the past 2 hours, a couple billion dollars of wealth that was wiped out last week have been re-added to investor pocketbooks as Trump announces a pause in tariffs while negotiations go on for most countries. We aren’t where we were before tariffs were announced but a measured approach to tariffs and negotiations over time is what investors and consumers want.
DL actually was moving toward flat capacity growth for the year but who knows where this all goes. The summer was already solid – according to them – and they are acting on reducing off-peak domestic capacity in the second half of the year.
and China is in the crosshairs now. Airline stocks are up dramatically today since US airlines have relatively little exposure to China. Manufacturing companies have a little time to think through next steps but many manufacturers simply will face higher tariffs if they rely heavily on China production.
The airline industry – and Chicago – may not be that much worse off this year after all
Another cause could be the American upgauging on many of the routes which used to be served by Air Wisconsin. Many of the CRJ-200 routes are now served with the CRJ-700 by SkyWest or the E170 by Envoy. This would mark a notable increase in capacity as well.
Rather than engage the few cultists on here who would like to see how their maga talking points exist outside of the echo chambers of Twitter ill ask a real question on this- what does this mean for the fate of Dulles and its renovation plans, considering it a) is reliant on inbound foreign travel, b) is tied directly to the fate of the dmv and federal government in demand, local economy, ownership funding, moreso than other international airports, and c) could potentially have a name change that would almost definitely have the Metropolitan Council of Governments having no interest in supporting?
Mike – It’s hard to imagine this will have any significant impact in the long run, but it could shelve projects in the short term, I suppose. Any name change would have no impact at all. But reduced demand and therefore revenue would require them to update their plans at MWAA. Still, though we are clearly going into a downturn, nobody has any idea how long this will last and how deep it will go yet. I can’t imagine anyone making capital decisions on long term projects right now.
I get Cranky’s point, but I’ll add my own two cents. At first glance it may mean nothing to change the name of Dulles airport to Trump, however this is only on the surface though as it projects an image that is viewed negatively globally.
The change in world sentiment towards the US in light of this administration isn’t a temporary blip, but a permanent shift toward other alliances & trade deals in witch the US will be in on the margins at best or excluded from completely. This change will impact the entire country, but especially those who are living in the “heartland” & think this is how a president should negotiate.
United would also be put in a bind, as having the hub there may lead to significant negative impact given 3 of its largest hubs are in blue parts of the country.
CF, question about what you’re saying with the gate reallocation at ORD…
From my understanding as long as AA fully utilizes the usage of their gates they do have going forward (2025 onward), they shouldn’t lose any more gates, notwithstanding the reallocation that’s happening now. What I’m saying is that in 2026 and onward as long as AA uses their gates fully it should be able to maintain them irrespective of UA’s growth. If UA over uses their gates and petitions for more it would then have to come from an operator that’s under utilizing them. If everyone is fully utilizing their gates and UA is over using them, then UA wouldn’t have any where to go.
I don’t believe UA will get gates just because they use them more, it has to be in concert with other airlines under utilizing their gates. Otherwise nothing changes.
Please correct me if I’m wrong, I’ve read your prior article about this. As a Chicago flyer I don’t want to see United dominate O’hare. We benefit from the UA/AA competition.
Don’t think that’s correct. If United over utilizes its gates and American simply uses its capacity (an oversimplification, but I get what you’re trying to say), then United will gain gates over time and squeeze American out. United drew first blood because it will presumably get 6 gates later this year and that was the most impactful chess move.
Further, in a previous article Cranky wrote regarding LAX, he linked to an article that projected cost per emplanement (CPE) and ORD was at something like $50 in 2030 because of all the capital improvements they’re planning. This will have the net effect of squeezing additional low cost carriers out similar to LAX. It will be interesting to see how much blood AA/UA can squeeze out of the locals and connecting traffic allowing AA/UA to effectively have a duopoly (and price accordingly).
Driller has it right. This is a long game, but United made the big move, and it was fairly brilliant in hindsight. There aren’t many places where gates can come from. This year I imagine it’ll be a split between American and Delta, but Delta isn’t likely to be a big source of gates going forward. That was a one-time thing thanks to the initial grant in the expanded international Terminal 5. So, going forward, think of it like this. In 2024, American had about 72% as many departures as United. In 2019, it had about 79%. So, United was able to get 6 more gates and American will lose something, let’s just call it 3. In 2025 so far, American is showing operating 76% of United departures. That is an increase thanks to finally increasing utilization, BUT United won’t get its new gates until Oct 1. So, American might claw a little back next year.
But then in 2026, United will have the benefit of those 6 extra gates for 9 months. That means it can further expand its lead over American. It might result in only ones and twos changing hands each year, but this sets something in motion that’s hard to reverse if United keeps its foot on the gas.
Chicago politics being what the are, what are the chances that American pays (err, “convinces”) enough politicians/bureaucrats/voters/etc to get the gate rules changed in a way that favors them more than the current system, or that waters/slows down the gate reallocation process?
I’m not from the area, and don’t know the relative lobbying efforts or perceptions of AA & UA in Chicagoland, so I’m not saying that that WILL happen or is even likely to happen, just that it wouldn’t surprise me if it WERE to happen.
If you’re losing the game, pay off or threaten the referees until the rules get changed in your favor. Sadly, sometimes it seems that that is the American (as in country, not airline, no pun intended) way in the world of corporations and politics.
Kilroy – I would imagine that United has a lot more juice in the Chicago political system since it is based there.
ORD is building facilities that will not be able to effectively compete for flow traffic.
MDW is and will be a much lower cost airport to connect.
DTW and MSP carry more connecting traffic than any carrier at ORD and will have CPEs one-third of ORD’s and that will be true for the super hubs at ATL and DFW.
Note that UA says that the way it will grow its domestic capacity by winning over basic economy passengers from the failed ULCCs. UA can’t talk about ULCCs not being able to compete in coastal hubs and then rationally say it will build connecting traffic over hubs that have much higher CPEs than the competition.
UA desperately wants to squeeze AA out of ORD so it can raise local fares enough to compensate for the high CPEs on connecting traffic but AA has no viable alternative for a Midwest hub. They will stay and fight for the local market; they likely haven’t made money at ORD for years – it has never been mentioned in the same breath as DCA, DFW and CLT which AA says are its most profitable hubs.
winning ORD will just mean that UA assumes a higher percentage of the expenses for the new terminal. and if AA decides to file chapter 11 at some point in the future after the new terminals at ORD are built, UA will be left holding the bill.
Thanks for the feedback…
At some point each airline will shrink to the point where their respective operations will over utilize the gate space they have available profitably. A new homeostasis point will be achieved as everyone will “over utilize” their gates to the point that UA can’t grab anymore. The key metric at that point is what the resultant market share at ORD will look like. If UA takes a lot more market share in this process, it would give them pricing power that would make the other carriers struggle to be profitable in the long run, hence making ORD a hub for AA difficult.
I think AA’s timing showing up this year with the huge growth is partly the result of improved debt picture and recovering pilot supply for its regional operations. Aircraft manufacturing is still holding AA back, considering they’ve decided to retire a lot of their WB fleet during Covid.
IMO, this gate allocation deal is no good for Chicago travelers. If UA succeeds in making ORD its fortress hub it’ll pull back service and jack up fares. Chicagoans benefit from the duopoly at ORD and the city should give AA more time to recover their operations from the COVID induced balance sheet and supply issue problems, and to grow back more sustainably.
Taxiway construction this summer and the layout of the respective terminals don’t allow AA to utilize their gates as efficiently as UA thanks to the alleys versus fingers layout. If we go into the a recession it’ll further complicate the fight for gate allocation.
Starting to look like a dead cat bounce at 2:45pm
Does this mean UA is definitely getting the six extra gates? If yes, who is losing them? I was surprised to see DL has ten gates in ORD, considering it’s a (large) line station for them. I remember when this first came out a few months ago, but I thought there was still some uncertainty over whether UA would actually gain the gates.
Was April 1 the final decision date?
Mark – I have not heard any definitive announcement yet. I’m going to poke people and ask.
When DL was in T2/Concourse E, they had inherited gates E7 thru E17 from NW during merger. Gates E8 & E10 were used by UA (former TW gates leased from NW). In October 2022, DL relocated to T5/Concourse M and have exclusive rights to gates M2 thru M11 (M1 Common Use Gate, No M12 Gate & M13 Gate is Bus Shuttle). UA received gates E7 thru E14, E16 & AS received gates E15 & E17
All gates in T5/Concourse M except those used by DL are Common Use
NOTE: More recent ORD Terminal & Gate Realignment
Spirit, Denver Air Connection & Southern Airways Express Ticketing are all in Terminal 2
JetBlue is gate G2
Spirit gained gates G4, G6, G8 & G10 from AA
AA gained gates L2C, L5, L7 & L10C from Spirit
Denver Air Connection now uses gate G15
Southern Airways Express now uses gate F4
This brought to mind the AA (via AS miles) + WN round trip AUS-ORD I have booked for late May. Sure enough, it’s cheaper in Rapid Rewards points than when I first bought it. Makes up for the extra 1k points I had to transfer when WN swapped point pricing overnight on another recent booking.
Wouldn’t be surprised if WN is out of ORD entirely by this time next year, and MDW is disproportionately 737-700 to keep frequencies competitive (which would be a significant capacity drop vs. where things are now).
“Further, because of the huge expected impact of these tariffs, consumers have to rethink how they prioritize spending. A smart consumer is moving up purchases of cars, electronics, and clothes before the tariffs jack up the price. Airfare is not going to be hit by tariffs, so that means people may shift their already-reduced spending plan away from travel.”
I’m sorry, but from what I’ve observed from watching human behavior over the decades, there are almost no consumers this “smart.” They may cut their spending — especially if their jobs seem in jeapordy or their savings have evaporated — but no one is allocating between tarriffed goods and air travel.
I largely agree – there could be some short-term reallocation as consumers speed up purchases to avoid tariffs on a few specific items (mobile phones, for one), but there aren’t a lot of people who are both very price-sensitive and have the ability to move up a car purchase on short notice.
Air travel will rise or fall based on overall consumer confidence, employment levels, inflation, and all the usual factors, tariffs will only come into play insofar as they affect inflation, particularly for necessities. As (and if) the picture clears, airlines might also be affected by how the tariffs affect their costs, and a lof that will in turn be offset by soft global oil prices, the markets are still pricing in expectations of at least a sharp downward revision in 2025 growth globally, if not recession.
I say “if” the picture clears because I’d bet a hundred bars of gold-pressed latinum that Trump is not going to be able to leave rates alone on the non-retaliating countries for even the stated 90 days. Someone – Macron, von der Leyen, Lula, Count Binface, Larry the Cat, who knows – will say something that upsets him and it’ll be off to the randomness races again.
https://www.reuters.com/business/autos-transportation/us-auto-sales-set-modestly-rise-first-quarter-tariffs-signal-bumpy-ride-2025-04-01/
Thanks! I didn’t see this article.
Even though Reuters described the change as “modest”, it’s larger than I anticipated.
I’d love to see more data on how much of this is consumers trading in cars that are leased or still not fully paid off and just exchanging a new payment for an old one, versus customers taking on more debt. I suspect dealers are also offering better trade-in valuations to improve used car inventories as the tariffs reduce the number of low-priced new cars, the article mentions that the number of models available at very low prices will drop substantially because of the tariffs.
Wow. United played their hand well with covid. Now they are doing it again with orders and capacity.
Glad some level heads are in charge at UAL and continuing expansion plans instead of joining the ‘the sky is falling’ crowd.
According to Crain’s Chicago Business the following gate allocations will occur;
*United: 6 new gates, Terminal/Concourse location TBD
*AA: 6 gates lost, Terminal/Concourse Location TBD
*Delta: 3 gates lost in Terminal 5/Concourse M. No change of Terminal
*Southwest: 3 assigned gates, Terminal/Concourse TBD (most likely T5). Currently in T5/Concourse M
*Alaska: 1 of 2 gates lost, Currently in T2/Concourse E. Terminal/Concourse TBD
*Air Canada: 1 of 2 gates lost, Currently in T2/Concourse E. Terminal/Concourse TBD
AA is crying foul and protesting. Affected Airlines have until April 30th to accept or reject the new gate assignments. Chicago Dept of Aviation will public new gate assignments no later than June 1st. Assignments would go into effect no later than Oct 1st
SOURCE: Crain’s Chicago Business