MIAMI — British Airways is eyeing further expansion in the American market, with Cleveland, Columbus, Indianapolis, Nashville, and St. Louis all vying to be the next US destination for the European giant. A year after British Airways launched service to Austin, Texas, the five aforementioned airports are all trying to land a nonstop connection to London through a combination of marketing and incentives according to a recent report in the Columbus Dispatch.

London is the largest long haul international markets for each of the five cities, which all have similar levels of origin and destination (O&D) demand to and from London. They are all similar as well to Austin, which now receives daily nonstop service to London Heathrow on a 214–seat Boeing 787-8. The entrance of the small and fuel efficient 787 in British Airways’ fleet, and the anticipated redeployment of pre-merger US Airways Boeing 757-200 fleet by the new American have combined to generate substantial optimism amongst the five cities in question that they would gain nonstop service to Europe from American or British Airways.

While it may still be some time before British Airways actually launches service to these destinations, we took a look at the underlying data for each of the five markets to try and draw out the chances of each airport for expansion.

The following table presents several key demand characteristics for the five markets in question.

British Airways Market Table US Expansion

The first column presents publicly released origin and destination (O&D) data for the year 2011 between London and each of the five cities. The data is presented in per-day-each way (PDEW) format, which is the average number of passengers traveling between two cities in each direction. The second column presents O&D demand between the five cities and Europe, the Middle East, and Africa. The third column presents the growth (or lack thereof) in the O&D market for London between 2003 and 2011. The fourth column represents our best estimates for the market size today, while the fifth column represents market O&D demand estimates after the market is stimulated by the addition of nonstop service.

Based on the data in the first and fourth columns alone, there is no doubt that these markets cannot support nonstop service from London without onward connections. Even if American/British Airways captured 100% of the O&D market, they wouldn’t be able to fill half of a 737-800, let alone a 757-200 or 787-8. From a connectivity perspective, London Heathrow is extremely advantageous as a connection point for Eastern and Western Europe, the Middle East, and parts of North Africa, and well-timed flights would allow British Airways to capture a large share of the market. Onward connections to Asia (outside of perhaps India and Pakistan) would be longer than flying via an American hub, so those market sizes have not been considered for the sake of this analysis.

Historically, markets of this size have struggled to support long haul international service, however the superior economics of the 787, the British Airways-American joint venture, and economic recovery in both the United States and United Kingdom provide a rationale for optimism in these cities. While little hard data has emerged on the Austin service given how recently it was launched, early indicators from our sources at the airport and the airline both indicate that the route is performing better than the expectations that British Airways entered with.

With that being said, there is certainly market potential in each of the five markets. St. Louis, Nashville, and Cleveland have all supported nonstop service to London in the past (the former two on a 767 no less), though those services relied heavily on connections from the TWA, American and Continental hubs respectively. In 2003, both Cleveland and St. Louis had nonstop service to London, and the commensurate collapse in PDEW demand between 2003-2011 is due to the elimination of those nonstop flights. Nashville lost its service in the mid-1990s. The 2003-2011 data is a bit misleading given that 2011 was near the beginning of the recovery from the late 2000s recession, when trans-Atlantic demand collapsed from most US cities. Present day O&D demand is substantially higher, but the relative size of the decline in O&D demand (where Columbus and Indianapolis fare best) is still a useful piece of information.

Cleveland, Columbus, and Indianapolis can all be served using American Airlines Boeing 757-200s, while Nashville and St. Louis require the Boeing 767-300ER or the Boeing 787-8. Accordingly, the potential for Nashville and St. Louis should be considered separately from that of the other three cities.

St. Louis and Nashville both are similarly sized markets, and while St. Louis is a larger market (and a much larger local economy), demographics and underlying economic fundamentals favor Nashville.  According to IHS Global Insight, Nashville was the third fastest growing metro area in the US in 2013 trailing only Austin and San Jose. St. Louis’ economy was 47.7% larger as measured by Gross Metropolitan Product (GMP), but Nashville’s economy is projected to grow 37.5% faster between 2014 and 2020, meaning that by 2020, St. Louis’ economy will be just 28.5% larger than Nashville’s. Moreover, Nashville is a growing, if still nascent, tourist destination, and like Austin, its thriving music scene could attract international visitors. St. Louis has no comparable draw (unless you count Branson, which pales in comparison and requires a four hour drive away from St. Louis. Both Nashville and St. Louis are former American hubs, and have strong oneworld loyalty bases, which should help drive traffic onto nonstop flights. This effect is a wash between the two cities, so the advantage lies with Nashville in gaining nonstop service.

Turning to the Midwestern cities, Indianapolis is the largest market. However, Indianapolis is a Delta Air Lines stronghold, dating back to Northwest Airlines’ heartland strategy. While the once burgeoning Northwest focus city in Indianapolis has been largely dismantled, Delta does do some point to point flying out of Indianapolis which helps preserve loyalty. The threat of competitive entry from Delta could give American and British Airways pause. Between Cleveland and Columbus, demographic and economic fundamentals, as well as lack of alignment (many Cleveland business travelers are still United frequent flyers, while Columbus is a stronger oneworld city) favor Columbus. Thus in terms of priority, you are likely to see service to Columbus first. Between Cleveland and Indianapolis, market characteristics favor the latter, and the Delta stronghold is not as deep-seated as that of United in Cleveland. All of these services are likely, at least initially, to be offered on American 757s.

The one caveat to this analysis is that incentives, whether from an airport, or from local businesses could change the preferential order of these cities. Proctor and Gamble is a significant factor in keeping Cincinnati’s nonstop service to Paris despite Delta’s drawdown, and the Research Triangle companies have famously helped Raleigh Durham maintain nonstop service to London Heathrow long after American dismantled its hub there. In the long run, these five cities will most likely receive long haul service, especially if they pony up incentive money to offset initial losses. Whether that would be a smart investment is entirely another matter.