Nobody Is Losing American Airlines. Charlotte Might Lose the Deal.

Raleigh wants to change who runs CLT. The real question is who's best at negotiating with the airport's one tenant.

Nobody is losing American Airlines. Let's get that out of the way. American runs 670 flights a day out of Charlotte, employs more than 16,000 people here, and has put $3 billion behind the runways and concourses over the last decade. This airport works better for American than any hub in its system. It isn't going anywhere.

What Charlotte can lose is the deal.

My last issue on the airport landed like a fire alarm. Within hours of hitting send I heard from executives at American, members of City Council, and business and legislative leaders across the state. Almost all of them wanted to argue about who should run Charlotte Douglas. That's the wrong argument. The right one is who's best at negotiating with a tenant that is 90% of the business.

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The tenant that pays for everything

American is 90% of the traffic at CLT. Of its 42 million customers last year, 77% were connecting. They land, walk to another gate, and leave without ever seeing Charlotte.

Now look at American as a tenant. Fifteen properties on airport land. 1.3 million square feet. More than $120 million a year in rates and charges. Twenty-seven million dollars of capital since 2016 into buildings it doesn't own and never will.

Here's the part most Charlotteans don't know. American isn't just the biggest tenant. It's the one paying for the building. CLT is an enterprise fund. No local tax dollars go into it. Capital comes from passenger charges, federal grants, and the rates and charges the airlines pay, and when one airline is 90% of the traffic, that airline is writing most of the check.

Concourse A is the clearest example. Much of that concourse was paid for out of American's operating volume. The gates were built for American's competitors. When those gates sit empty, American is subsidizing capacity it can't use, and the airport is carrying gates nobody pays rent on. We all lose.

So no, you don't have to worry about losing American. Too much momentum, too much investment, too many employees. What you should worry about is leaving money, gates, and flights on the table because the two sides never got around to negotiating like partners.

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I've sat across the table from this landlord

I told you last time about the four land swaps we did with CLT in the 1990s, all of them through Jerry Orr and his rule that matching appraisals turn a political decision into a business one. What I didn't say is what that rule cost him. Airport money isn't tax money, but CLT is a city department, so every capital decision needed the council's blessing. Orr spent 24 years asking permission to spend his own tenant's rent.

He did it anyway, and under him CLT became the most cost-efficient of the nation's 25 largest airports. He built the hub American now can't live without.

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What nobody is negotiating, yet.

Whoever ends up holding the lease, here is what's sitting on the table that neither side has picked up.

A 20-year term. American wants it. The City has never put a price on it. What would Charlotte take in exchange? A commitment on Concourse A gate utilization, a local hiring floor, a share of the international growth? Nobody has asked.

Empty gates. Concourse A gates that American paid for and can't use are a cost to American and dead space to the airport. That's a problem two partners solve in an afternoon and two adversaries argue about for a decade.

Raleigh's checkbook. RDU got $4.5 million for two European flights. CLT, with eight transatlantic routes and the lowest cost per passenger in America, has never made the ask. An authority would. A city department hasn't.

The land. The airport controls roughly 6,000 acres. Some of it is the most valuable industrial ground in the Carolinas. I've done four deals on the edges of it. There's a lot more where those came from, and none of it moves while the two sides are circling each other.

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Now is the time for big and bold

American has a vision for this airport, and it's exciting. A 40,000 square foot Admirals Club. A full-service Flagship lounge. New baggage claim equipment. A Concourse C expansion. A new lounge near Gate A1. A fourth parallel runway in 2027. We should be trying to get all of it, as fast as possible.

And then we should ask why the plan isn't bigger.

Look at the airports that define how the world sees their cities. Singapore built a rainforest and a 130-foot indoor waterfall inside Changi, and people fly there to see the airport. Munich put a working brewery and a beer garden between the terminals. Doha built Hamad to announce that a country of three million intended to be a global crossroads, and it worked. Amsterdam stopped calling Schiphol an airport thirty years ago and started calling it a city, with offices, hotels, and logistics wrapped around the runways. Every one of those was a bet that the airport is the front door, and the front door tells you what kind of house you're walking into.

Charlotte's front door is a very efficient bus station. That's not an insult; efficiency is why the hub is here. But 42 million people a year walk through it, three quarters of them on the way somewhere else, and almost none of them leave with a reason to come back. The most-used building in the Carolinas says nothing about the Carolinas.

That's the opportunity. A tenant this committed, at an airport this efficient, at a moment when the State is deciding who's in charge: that's the setup for something Charlotte gets excited about, not more of the same. Where's the big, risky thinking that got us here? Orr didn't build the most cost-efficient large airport in the country by processing requests. He rolled up his sleeves, figured out what the airline needed, and invented the structure that delivered it. Land swaps, matching appraisals, gates built ahead of demand. Bold ideas, executed boringly.

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The takeaway

Charlotte isn't at risk of losing its airline. It's at risk of settling for more of the same when the tenant is ready to build something bigger, and showing up to that negotiation unprepared.

I've done four deals with this landlord and watched one governance war up close. The version of CLT that treated the airport like a business kept the tenant, built the hub, and posted the lowest costs in the country. Whatever structure comes out of Raleigh, that's the lesson worth keeping.

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Facing a negotiation where one party holds most of the cards?

The Negotiation Worksheet™ is the tool we use to prepare for every complex deal, and the one I wish had existed during the 2013 airport fight. It forces you to write down what the other side actually needs, what their walk-away option is, and where you can trade something cheap to you for something valuable to them.

Give us a call or shoot us an email and we'll walk you through it.

Cardinal Real Estate Partners | 704-900-0900 | www.Cardinal-Partners.com

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