Continental Airlines announced a major expansion at Cleveland Hopkins International Airport and will use a $16 million incentive package from the state of Ohio to grow capacity there by 40 percent through 2009.
Of the largest U.S. carriers, Continental and Southwest Airlines have been responsible for most domestic capacity growth in the past year, and some of their legacy competitors have reduced U.S. capacity.
While still growing, Continental and Southwest are tempering their rates of expansion. Southwest in July reduced its capacity growth outlook from 8 percent to 6 percent this year and next in an effort to grow profits amid a slowing economy
(BTN, July 9)."Continental has been bucking the legacy carrier capacity shrinkage trend by growing at 5 percent to 7 percent," UBS airline analyst Kevin Crissey noted in a research note last week. "However, management recently announced a slower growth rate for 2008." Continental in a Securities and Exchange Commission filing this month said it expects to grow mainline capacity by 3 percent or 4 percent in 2008.
A Continental spokesperson said the carrier's Newark hub also would see additional capacity. The spokesperson said that as the carrier refreshes some of its fleet at Newark with larger aircraft, it would shift smaller aircraft to Cleveland, noting capacity is expected to increase at both airports.
"We'll continue to build our business at Newark and have a clear strategy to update the aircraft there," a Continental spokesperson said. "We're reallocating 37- and 50-seat regional jets from Newark to Cleveland, and on a one-for-one basis we'll replace them with the 74-seat Bombardier Q400 as well as other mainline aircraft in our fleet." The spokesperson said the aim is to grow Newark without adding congestion to an already overburdened system.
"If you look at their network as a whole, the balance of their hub structure is completely saturated," said Robert Mann, head of airline consultancy R.W. Mann & Co. "The Newark facility is completely saturated and, of course, the Newark/New York airspace is completely saturated. Houston is completely backed up, so this gives them the opportunity to grow at Cleveland."
Continental already has embarked on the Cleveland growth plan, boosting capacity to Los Angeles, Orlando, San Francisco and Seattle. By year-end, it expects its Cleveland capacity to be 10 percent greater than in 2006, and expects to add 50 new flights, largely served by regional jets, and 20 additional nonstop destinations by next summer.
By June 2008, "Continental expects to be providing 300 daily departures from Cleveland, up from the 242 daily departures in June 2007. Total nonstop destinations served from Cleveland will grow from 80 today to 100," the carrier stated.
Continental next year plans to launch routes from the airport to more than one dozen new destinations, including Birmingham, Ala.; Charleston, S.C.; Green Bay, Wis.; Memphis, Tenn.; Omaha, Neb.; Savannah, Ga.; and Tulsa, Okla. The carrier also plans to launch service to Paris Charles de Gaulle International Airport in May. Continental said it expects to announce additional cities it will serve from Cleveland.
"Beginning in 2009, a number of additional mainline aircraft also will be allocated to support the growth," Continental said in a statement.