Move over Los Angeles, DFW International Airport is poised to become the gateway to the Asian Pacific for American Airlines.
Fort Worth-based American Airlines is moving much of its Asian traffic from the Southern California international flying hub to DFW, a move that could open more opportunities for North Texas to access business and leisure destinations but disrupt how much of the country gets across the Pacific.
American is making the move after decades of considering LAX its trans-Pacific hub to fly to destinations such as Hong Kong, Beijing, Tokyo, Seoul and even Auckland, New Zealand. But the landscape is changing with the growth of traffic across the Pacific.
“Dallas certainly doesn’t have the best geography for an Asian hub,” said Brian Znotins, American’s vice president of network and schedule planning. “But it does have some advantages in connecting people in the Southeast [United States] to Asia.”
American made the decision in June when it was trying to piece back together an international schedule that had been decimated by the COVID-19 pandemic, which first hit Asia and quickly affected travel to Asia from the U.S.
It was overshadowed at the time by the massive restructuring airlines were undertaking to survive the global health pandemic, including efforts to trim payrolls and convince passengers it’s safe to fly. While it could take years for international air traffic to recover to previous levels, American is starting to show why making DFW its trans-Pacific hub makes sense.
Growth at DFW
American’s emphasis on its DFW hub started even before the pandemic.
Last year, it fulfilled a plan to put 900 flights a day out of DFW, its fortress hub that can connect to nearly any other location it serves in the country. About 26% of all of American’s traffic goes through DFW, almost twice as much as what goes through its next biggest hub in Charlotte, N.C.
That makes DFW an attractive launching point for Asia because it would be a single stop for most of American’s U.S. travelers, said Nico Mirman, a Dallas-based aviation consultant with Ailevon Pacific. DFW is also a convenient connecting point for travelers from Latin America, Mirman said.
“What American is probably thinking is to capitalize on the huge amount of connectivity that they get here,” Mirman said. “That’s something Los Angeles cannot offer for them.”
DFW has room to grow, too. The airport property is roughly the size of the island of Manhattan. There are plans for a new $3 billion terminal F at DFW that would give 24 more gates, mostly to American Airlines. While the pandemic put those plans on hold, airport officials expect the project to only be pushed back, not scrapped.
So when international travel does recover, Znotins said, the focus will be on adding destinations in Asia through DFW.
Those long-haul flights can be very profitable for airlines, at least under the right circumstances. According to aviation data firm OAG, the three most profitable flights out of DFW Airport are a Sydney flight operated by Qantas and American’s Tokyo-Narita and London Heathrow flights. The DFW-Narita route brings in nearly $200,000 per flight. The DFW-LAX flight, the most frequent route from DFW, only brings in about $32,000 per flight.
DFW has already shown its value as a launching point for Asia travel with flights to six destinations in China, Japan and South Korea. Another flight to New Zealand was delayed because of the pandemic.
Znotins said the region’s status as a business hub means a steady stream of trans-Pacific travel from companies such as Toyota North America and 7-Eleven, both of which have parent companies in Japan. As of spring 2019, 242 Japanese firms had regional offices and operations in North Texas, twice as many as in 2014, according to the consul general of Japan in Dallas.
Among the nation’s 10 largest airports for international traffic, DFW is growing faster than any other, adding about 10% more international travelers between 2018 and 2019. About 9.5 million international travelers landed and departed at DFW in 2019.
However, the designation of trans-Pacific hub might not mean that DFW gets as much traffic across the ocean as LAX did. American also formed a partnership with Alaska Airlines in February and, as part of that, it created a new route from Seattle to Bangalore, India. That gives American another West Coast launching point.
Sudeep Shah, owner of Richardson-based travel agency Travel King International, said it’s easy to get anywhere in Asia because of American’s flights to Hong Kong and Tokyo from DFW.
“There are a lot more places in Asia that you can get to from DFW with only one stop,” he said.
Moving away from LAX
“In a lot of ways, this is more about reducing L.A. than boosting DFW,” Znotins said. “Every Asian carrier feels the need to serve L.A. and that creates overcapacity. Even going into the pandemic, we were losing money on those L.A. flights.”
In June, American said it is permanently removing flights from LAX to Hong Kong, Beijing and Shanghai in China.
Of the 70 airlines that serve LAX, 21 are based on the other side of the Pacific, including nine in China. Only three airlines that regularly fly to DFW are based in Asia — Japan Airlines, Korean Air and Qantas in Australia.
Until recently, American signaled that it was heavily invested at LAX, breaking ground in 2018 on a $1.6 billion expansion of two terminals that are still under construction. Znotins said LAX is still an important hub for American, but just not as much for flying to Asia.
“LAX is becoming very expensive for airlines to operate from and it’s extremely competitive, and that tends to lower airfares,” said Henry Harteveldt, a travel consultant based in San Francisco. “It’s a matter of American focusing on where it can have the best return on a very expensive asset.”
Every major airline in Asia wants to fly through Los Angeles, the second-largest airport in the U.S. Southern California is also a major hub for Pacific business partnerships and a large Asian population. All those factors make LAX very crowded, even if demand is high for travel to Asia.
American has a similar strategy on the East Coast, moving out of the crowded JFK International Airport in New York and making Philadelphia the primary hub for European travel.
LAX has other drawbacks. Passengers with connecting flights in different terminals often have to go outside and re-enter security screening lines. The airport is also nearly at capacity, making it hard to expand.
American Airlines also has several network alliance partners flying between LAX and Asia, including Japan Airlines, Cathay Pacific and Qantas.
If passengers want to travel through Los Angeles, American Airlines can still fly them there from other parts of the U.S. and then transfer them to a partner airline without the hassle of customers needing to buy separate tickets or transfer bags between carriers, Znotins said.
A long international recovery
While the COVID-19 pandemic rages, DFW’s designation as a trans-Pacific hub is academic.
American Airlines still isn’t flying direct flights to China from the U.S. Most flights are being routed through Tokyo or Seoul. American has cut down on its international capacity by 68%. Much of the international flying happening right now is short-haul trips to Latin American and Canada.
Only four long-haul international airlines are flying to DFW, said DFW Airport CEO Sean Donohue.
International travel is expected to recover more slowly than flying within the U.S. as long as COVID-19 and its economic repercussions are a factor.
“I would guess that it’s going to be several years before there are new markets for American or other carriers,” Donohue said.
But American’s choice of DFW as its trans-Pacific hub means North Texas travelers will have direct access to Asia, he said.
“From a long-term perspective, it gives us the strength of the service,” he said. " We are going to have service to the key major Asian business destinations."
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