MIAMI— When American Airlines and US Airways agreed to merge, the new airline decided to house its joint headquarters at American’s facilities in Fort Worth, Texas. The choice left some uncertainty overhanging the eternally sun-bathed Tempe, Arizona, where US Airways formerly called home. However, Friday might have seemed a bit less sunny out in the desert, with American Airlines ultimately resolving some of that uncertainty by announcing its intentions to vacate US Airways’ old headquarters building.
American spokesman Andrew Christie downplayed the exit, emphasizing that ending the lease “doesn’t affect jobs in Phoenix – just where they’re located.” The airline plans to “accommodate the work groups at other American Airlines buildings in Phoenix and Tempe including the Flight Training Center, Rio West Business Park, the 52nd Street building and Sky Harbor,” he explained.
Tempe Mayor Mark Mitchell similarly attached little importance to the announcement, calling American “a great community partner” and expressing confidence that the building will find another tenant. He cites “tremendous demand right now for high-quality office space in Tempe,” and claims several companies have expressed interest in filling the vacancy already.
Nonetheless, American’s departure from downtown Tempe comes after the company proclaimed a commitment to keeping the facility only a few years prior. The airline at the time spoke highly of the facility’s importance, even given it would no longer wear the headquarters title. But as the company signed new five-year leases at other sites in the area, it left the former headquarters building untouched. That property came under new ownership in 2013, which might have fueled American’s choice to vacate it individually while remaining in other nearby buildings. The airline maintained an option to terminate the lease on December 31, 2016, which it would appear to have exercised.
Leaving the highly visible former stomping grounds of US Airways raises some questions about American’s long-term commitment to the region. Many have considered American’s grand plans for the Phoenix area suspect from the start. After the merger, the unified airline supports a large number of hubs, more than most other airlines. The proximity of Phoenix Sky Harbor (PHX) to American’s other strongholds at Dallas-Fort Worth International Airport (DFW) and Los Angeles International Airport (LAX) ignites some speculation that Phoenix might be the first domino to fall.
If American eventually decides to dial back operations at Sky Harbor, it would not represent the first airport to endure cuts following a merger. After joining with Northwest, Delta drastically scaled back activity in Memphis and Cincinnati. More recently, Cleveland bore a similar fate, suffering from severe cuts after United linked up with Continental. American itself used to maintain hub operations in St. Louis and Pittsburgh – both of which are now distant memories. The trend of funneling traffic into a few primary hubs speaks to airlines’ preference for the hub-and-spoke model, which generates efficiencies brought about by economies of scale. With the consolidation among the industry over the past several years, fewer airlines need fewer hubs, leaving airports deemed less significant as victims of trimming away cost bulge.
American’s timing here also carries some significance, with US Airways set to operate its last flight in October. The airline probably feels the time is right to vacate US Airways’ headquarters as it finally begins to publicly operate as one unified, consistent entity. American also plans to replace signage at Sky Harbor and around the Phoenix area, featuring the American Airlines name.
The departure from US Airways’ Tempe headquarters stands most immediately as a practically-driven move, one that will cut excess costs with ample space to accommodate employees elsewhere, but only time will tell if this marks the beginning of the end for the airline out in the desert.