Editor’s Note: This article was first published in Skift Airline Weekly on July 23, 2018.
In 1980, just as the U.S. airline industry was deregulating, Florida was the country’s seventh most populous state, with about 10 million people. Today, with 20 million people, it ranks No. 3, behind only California and Texas and slightly ahead of New York. Last year, Florida welcomed a record 117 million visitors, including 14 million from outside the U.S. This helped the state’s economy surpass $1trillion in gross domestic product, larger than the economies of Switzerland, Saudia Arabia, or Argentina. The state’s 18 major airports handled 87 million passengers. Is Florida an important market for airlines? Better believe it.
Consider the world’s largest airline, American. More than a fifth of its seats touch Florida, according to Diio Mi schedule data, with no indication of any strategic desire to lower that figure. American, of course, has one of its primary hubs in Miami, the state’s busiest airport measured by flights if not seats—Orlando’s seat capacity is a bit higher. Miami is the foundation for American’s industry-leading presence in Latin America and the Caribbean, capitalizing on the city’s large immigrant population and status as a base for companies doing business in Latin America.
For American, Miami’s giant tourism sector is a secondary driver of traffic. Florida, in general, grew in importance to American when it merged with US Airways, a carrier whose Charlotte hub was a top gateway for northeastern and midwestern tourists flying to Florida. Today, American continues to grow its Florida footprint, adding new Caribbean destinations and frequencies from Miami this winter, while perhaps plotting further expansion as a new U.S.-Brazil open skies agreement takes effect, and as LATAM becomes a joint venture partner. Miami, to be clear, lost some of its strength for American during the Brazilian recession, the collapse of Venezuela’s economy and other setbacks in the region. But trends have stabilized.
With larger transatlantic and transpacific networks anchored at hubs elsewhere in the country, Delta doesn’t depend as much on Florida as American. But with about 12 percent of its systemwide seat capacity touching the state, it’s hardly unimportant. Delta doesn’t have a hub in Florida, but Atlanta is the world’s busiest airport in large part thanks to Delta’s massive volumes of Florida traffic flowing through it. Delta’s New York hubs too, and even its Detroit and Minneapolis hubs, produce a lot of travelers headed to Florida for vacations, family visits or wintertime residence. Delta long ago ran a mini-hub in Orlando, which today retains nonstop service to not just its main hubs but also cities like Los Angeles, Indianapolis, Cincinnati, Nashville, Cancún and even São Paulo and Amsterdam. As it grows aggressively in Boston and Raleigh-Durham, some of that growth comes from new Florida flying—it now offers five Florida routes from Raleigh, for example.
Among the Big Three, United is least exposed to Florida, with just 7 percent of its seats there—it generally flies to Florida’s top cities from just its hubs. Still, that’s a lot of seats, and a lot of extremely busy markets like Newark-Orlando, with as many as 11 flights per day each way on certain days during peak season. Houston, meanwhile, is a major gateway between Florida and much of the U.S. West, including California.
With 17 percent of its seats touching Florida, Southwest has almost the same degree of reliance on the state as American. It didn’t even serve Florida for the first 20-plus years of its life, finally entering in 1996. But boy did it ever enter. Today, Orlando is its ninth busiest station systemwide, with Fort Lauderdale and Tampa also ranking in its top 20—Southwest, in turn, is the top airline by scheduled seats at Orlando and Tampa. It’s No. 2 at Fort Lauderdale, and every bit as strategically important as the other two: It’s the base for much of Southwest’s short-haul international expansion into the Caribbean and upper South America. Last year, Southwest opened a five-gate international concourse at Fort Lauderdale. It’s now adding some new transcontinental flying from Orlando. Just as American became even more Florida-oriented after buying US Airways, Southwest became even more Florida-oriented after buying AirTran.
If the entire Florida market were to someday sour, the Big Three and Southwest, with their diverse network exposure, would endure. Enduring would be much harder, however, for four smaller U.S. carriers. Frontier, not long ago almost entirely unexposed to Florida, became very exposed after transforming into an ultra-LCC—it now schedules 35 percent of its seats to or from Florida. Orlando is now its second busiest airport. For JetBlue, Florida accounts for a massive 45 percent of total seat capacity. Orlando, its No. 4 airport overall by seats, is a critical focus city, and No. 3 Fort Lauderdale the epicenter of much of its recent growth. Spirit, which is based in Fort Lauderdale, has a similar level of Florida exposure, battling Southwest and JetBlue, plus American at nearby Miami, for southeast Florida traffic to the Caribbean and short-haul South America. It’s now embarking upon a major Caribbean/Latin American expansion from Orlando too.
No airline, though, is more Florida-focused than Allegiant, with a whopping 58 percent of its seats touching the state during the past 12 months—it’s even building its own resort near Fort Myers and Sarasota, an area it serves via the airport in Punta Gorda, where it’s often the only carrier. For much of the year, Orlando’s Sanford airport is Allegiant’s single busiest market, ahead of even its hometown Las Vegas. It’s big in Fort Lauderdale too, and in St. Petersburg near Tampa and Destin near Pensacola. Sun Country, by the way, also has lots of Florida exposure. Smaller Silver Airways is basically an all-Florida airline.
Florida’s importance to the U.S. airline sector is no accident. Carriers are growing there because the state’s tourism, population and economy keep growing. As a rare market that mostly peaks in the winter, it can help airlines allocate planes and other resources more profitably throughout the year. As a top tourist destination, it can also help airlines boost the value of their loyalty programs—earn enough miles, and a vacation to South Beach or Disney World is yours.
These are good reasons for non-U.S. airlines to be in Florida too. The market is certainly important to Canadian carriers. Miami and increasingly Fort Lauderdale and Orlando are critical for many Latin American and Caribbean carriers. LATAM flies to Miami from no fewer than 15 South and Central American cities. Avianca links Miami with nine Latin cities. And Azul and Gol both offer lowish-cost Florida service.
The Europe-FLA Connection
Perhaps less appreciated is the significance of the Florida-Europe market. Leisure-oriented transatlantic players, including Virgin Atlantic, Thomas Cook, Air Europa and Lufthansa’s Eurowings, all have Florida-heavy long-haul networks. Fort Lauderdale and Orlando are essential to Norwegian’s long-haul strategy, with Tampa flights starting soon. Its Icelandic rival Icelandair is in Florida (although Wow Air tried and failed to make Miami work).
So are just about all other European long-haul carriers, from the Big Three to SAS, Finnair, Alitalia and TAP Air Portugal. Miami, for one, can generate some premium demand too, from wealthy leisure travelers and corporate fliers from sectors like entertainment, finance, fashion and real estate.
Reaching even beyond Europe proper are Aeroflot and Turkish Airlines, which both serve Miami. So do Qatar Airways and Israel’s El Al, making Miami one of the most international airports in the world. Emirates flies all the way from Dubai to both Fort Lauderdale and Orlando, sharing traffic with JetBlue. But one thing Florida does not have is any nonstop passenger service to East Asia—not a single scheduled seat. Perhaps American or Japan Airlines—both equipped with long-range but not-too-big Dreamliners—will give Miami-Tokyo a try—this would be a hub-to-hub trunk route for their joint venture.
Asia or no Asia, Florida today has more airline seats for sale than any other state but California, which has almost double the population. Even after a rough hurricane season in 2017, tourism to Florida grew 4 percent last year, and it rose another 7 percent during this year’s first quarter. Overseas visitors, however, are declining.
Not Just a Disney Factor
Orlando is Florida’s busiest airport (a bit busier by 2018 scheduled seats or 2017 traffic than Miami). Disney and other theme parks are of course a big reason. But the city itself and surrounding areas are seeing some of the fastest population growth anywhere in the U.S. The region is also home to many aerospace companies given its proximity to NASA’s facilities in Cape Canaveral. The airport, in fact, saw a 32 percent spike in seat capacity from 2010 to 2018, according to Diio Mi schedule data. At the same time, nearby Orlando Sanford, thanks to Allegiant, saw its capacity growth triple since the start of the decade.
Miami, by contrast, saw just 16 percent growth in that same period, held down perhaps by high airport costs but also the vagaries of the Latin American market. Florida’s two largest Gulf coast markets—Tampa and Fort Myers—have each grown seats by about 20 percent since 2010, with Allegiant driving alternative airport growth in both areas, at St. Petersburg and Punta Gorda, respectively. Palm Beach and Jacksonville, meanwhile, are barely any busier now than they were eight years ago. Sarasota is less busy—Southwest abandoned it after buying AirTran, which had been the airport’s second busiest carrier.
Then there’s Fort Lauderdale, in some respects the brightest star in the Florida constellation. Its stunning 57 percent growth in seats this decade came partly at the expense of nearby Miami and Palm Beach. But central to its growth story is the three-way battle there involving JetBlue, Southwest and Spirit, the airport’s busiest carriers by seats in the 12 months through July, all of this enabled by the 2014 opening of a second runway. During this year’s peak first quarter, Southwest’s Fort Lauderdale seat counts rose 24 percent year-over-year. Allegiant’s Fort Lauderdale seats grew 23 percent. Traffic next year will likely shrink, however, as the airport closes its older runway for maintenance during the summer.
Will there be any losers in the brutally-competitive Fort Lauderdale battle? For now, everyone there seems to be managing, as they seemingly are throughout America’s third biggest state. And what if there’s a recession? Well, leisure traffic was what held up best during the last downturn. A bigger threat to tourism is safety and security—another bad hurricane season, or another mass shooting, could dissuade some tourists from visiting Florida. Climate change, to which coastal cities like Miami are highly vulnerable, is a longer-term risk to the state’s status as an airline supermarket. Would that pose a big problem for America’s airlines? Better believe it.