Hollywood Star: Why Los Angeles LAX is suddenly among the fastest growing big airports worldwide

Global passenger statistics for the first nine months of 2014—the latest full period available—show Istanbul’s main airport atop the year-over-year growth ranking for the 15 busiest airports on the planet. No surprise there. But No. 2 on the list?

That (according to Airports Council International data) would be Los Angeles LAX, which, in addition to its sudden growth surge, happens to be the busiest origin-and-destination airport in the world—in other words, not counting connecting traffic. In 2014, the airport’s total passenger volumes reached 71m passengers, up 6% y/y at a time when the four largest U.S. airlines were growing at a substantially slower pace. For LAX, 2014 was a record year, finally surpassing its old record set back in 2000. That 6% growth rate outpaced growth at all three of the New York-area airports, all three Washington, D.C.-area airports, both of Chicago’s airports and Atlanta, Dallas-Fort Worth, Denver, San Francisco, Miami, Houston Bush, Charlotte, Las Vegas, Orlando and Phoenix. Among America’s major airports, only Seattle (up 8%) grew more quickly than LAX.

Now the obvious question: Why does the “City of Angels” have such a growth halo?

One reason: a competitive war. Throughout the U.S., examples of LCCs attacking legacy hubs abound. Those alter competitive dynamics in important ways, but they often add only modest amounts of total new capacity—all the eye-popping new Spirit and Frontier service at Atlanta, for example, will account for about 2% capacity growth there this year, according to an Airline Weekly analysis of Diio Mi data. But in Los Angeles, there’s a war between two goliaths: American and Delta. For the latter, Seattle gets the most headlines because of the aggressive assault on Alaska Airlines. But Delta’s presence in Los Angeles is expanding with great rapidity too—it offered 23% more flights and 18% more seats in 2014 than in 2013. Long a laggard along the west coast, Delta knows it needs to be strong in America’s second largest metro area to be a truly global player. In the past two years, it has added shuttle service to San Francisco, shorthaul international service to Mexico and Central America (some in conjunction with its partner Aeroméxico) and flights to popular western destinations like Portland, Boise, Jackson Hole and Spokane. In the fall, it took over one of…

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Europe is a labor battleground once again, this time featuring Norwegian and its pilots warring over pay and benefits. It comes as many European carriers seek labor savings via lower-cost production platforms, in some cases separately-branded LCCs, and in Norwegian’s case new crew bases and operating licenses in lower-cost jurisdictions.

For Norwegian’s rival SAS, the method of choice is a transfer of some production to a newly acquired regional carrier. Scandinavia’s biggest airline knows it needs to do something, because although competitive pressures have eased somewhat in recent months, unit costs aren’t falling fast enough, and unit revenues remain chronically vulnerable to Europe’s undisciplined shorthaul combat zone.

Speaking of undisciplined, ASEAN airlines are trying to recover after overdosing on capacity, with Malaysia Airlines preparing for major reforms. And even in the vastly more disciplined U.S. market, several U.S. airlines report capacity running ahead of demand, especially but not only on international routes.

Is the golden age of the Gulf carriers a thing of the past? U.S. airlines are attacking them in the power corridors of Washington. Lufthansa is marching Eurowings straight into Dubai. And although the Gulf Big Three are silent regarding traffic and revenue trends, traffic and revenue pressures are no doubt escalating, made no easier to manage by hundreds of new widebodies still streaming in.

Will this have implications for the aircraft market? That’s a hot topic for the ISTAT conference now underway in Phoenix.

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