Continental Airlines' CLE Hub: Part 1
In earlier articles (https://www.aviationcle.com/post/the-not-so-friendly-skies-united-airlines-and-cle-part-1-the-early-years and https://www.aviationcle.com/post/the-not-so-friendly-skies-united-airlines-and-cle-part-2-the-1970s-1980s), we have seen that United Airlines (UA) had a decades-long history as the largest air carrier at Cleveland Hopkins International Airport (CLE). United officially declared CLE a connecting hub in 1976, built it to its peak in 1978-79, began its drawdown by 1980, and finally changed its focus to a new hub at Washington-Dulles International Airport (IAD).
By the end of 1986, United had relinquished its number one spot at CLE to USAir, which built up a small connecting hub at CLE (see article here: https://www.aviationcle.com/post/usair-s-cleveland-mini-hub-1987-92).
But in 1987, Continental Airlines announced plans to begin developing CLE as its fifth regional hub, along with Denver (DEN), Houston (IAH), Newark (EWR) and Washington-Dulles (IAD). Among the factors that attracted both Continental and USAir to Cleveland in the wake of UA’s withdrawal were the airport’s good geographic location, strong under-served local market, good facilities, and lack of congestion and delays. Let’s first take a look back at the rather complex history of Continental along with its predecessor airlines at Cleveland, New York Air, Texas International, and People Express (and sister corporation, Eastern!).
The Complicated “Arrival” of Continental Airlines in CLE
Low-cost New York Air (NY), part of the Texas Air Corporation holding company created by Frank Lorenzo in December 1980, brought fierce competition to United on the lucrative CLE-New York-LaGuardia (LGA) route starting on April 12, 1981, with four daily DC-9 flights. NY offered fares of $79 on weekdays (versus UA’s $135 fare) and only $59 on weekends, sharply undercutting United (and American and TWA) on the busy route-611,000 passengers flew between the two markets in 1980. The airline bitingly criticized United in ads touting the new cheaper service and offered a free bottle of Korbel Californian sparkling wine (“champagne”) for each flight flown through April 30, 1981!
Of course, United matched the fares and increased flight frequencies to squelch this competition and retain market share. As a result of this stiff low-fare competition, American bowed out of the CLE-NYC market as soon as June 10, 1981 (beginning three new daily flights to Chicago-ORD the next day instead).
New York Air soldiered on and soon changed its service model to try to cater more to the business traveler, with perks like roomier seats, bagels and cream cheese, and a wine of the month, but also increased its prices accordingly, often matching UA’s fares. It thus lost its main competitive advantage, and business flyers returned to the major carrier. New York Air ended service to Cleveland on February 29, 1984, unable to compete with United and its large, entrenched base of flyers in CLE and more frequent service, not to mention its powerful Apollo computerized reservation system, used by most travel agents in Cleveland at the time, which gave preference to United over New York Air.
Another low-cost airline, Texas International Airlines (TI), also part of the Texas Air Corporation, began service to Cleveland on July 15, 1981, serving New Orleans (MSY) once daily and Houston-Intercontinental (IAH) two times daily from CLE.
The airline grew out of Trans Texas Airways (TTA), a local service carrier that began service within Texas and Arkansas in October 1947. It quickly grew and became known as Texas International in April 1969. It was eventually bought by the infamous Frank Lorenzo in August 1972, who began the process of turning the financially troubled airline around with a focus on hubs at Dallas (DFW) and Houston Intercontinental (IAH). Texas International had a very sharp looking red, white and blue livery, with a large Texas lone star on the tail of its DC-9 jets and Convair 600 turboprops. After the deregulation of the airline industry in October 1978, TI thrived.
The airline offered its deeply discounted “Peanuts Fares” on the routes from Cleveland, with a 50% discount off normal coach fares ($108 to IAH and $97 to MSY). Peanuts Fares were introduced by TI in 1977, to enable it to compete more effectively with Southwest Airlines in Texas.
On TI’s first day of operation at CLE, the airline offered 50 pairs of roundtrip tickets to anywhere it flew to passengers who brought any one of 50 specific items to the airport starting at 5:30 a.m. Passengers were urged to bring things such as 50 peanuts, 50 tacos, a 50-foot paper clip chain, 50 “Cleveland Plums” (Who is old enough to get this reference?), and a 50-inch cowboy hat, among many others.
Of course, chaos ensued the early morning of the inaugural flight as over 400 people overwhelmed airport security and Gate 49 on Concourse C, with people breaking into lines and “causing a ruckus.” In order to ease the tensions in the crowd, TI ended up giving free tickets to everyone that participated, about 600 in total. This promotion followed earlier ones sponsored by Midway Airlines (at BKL) and New York Air. The commotion caused disruption to airport operations leading airport officials to consider banning future free ticket giveaways at CLE.
On June 1, 1982, Texas Air Corporation acquired 51% of Continental Airlines and merged the two carriers under the Continental name, a much older, established brand with wider national recognition and a better reputation for service quality. At that time, the airline operated three to five daily flights from Cleveland to Houston, its largest hub. All operations were brough under the CO banner and the merger was completed on October 31, 1982.
Continental had not fared so well in the newly deregulated airline environment. It began to lose money ($60 million in 1981) due to its highly paid, tenured staff and some risky expansion of its route network in 1981, making the airline vulnerable to a merger.
Despite Texas Air Corporation’s early successes, it declared Chapter 11 bankruptcy on September 24, 1983, with operations resuming three days later, a shadow of its former self. Cities served declined from 78 to only 25 (Cleveland to Houston service was retained), medium-range routes were slashed, and 8,000 of 12,000 employees were cut. While Lorenzo was accused of union busting, the airline posted a $20 million loss in fall 1983, while it had a $27 million profit by the second quarter of 1984!
The final low-fare competitor, People Express, entered the Cleveland to New York market with flights to Newark (originally planned for June 1981, but delayed due to the air traffic controllers strike and the competition from New York Air) starting no-frills service on October 18, 1984, with five daily 737 flights at fares as low as $45 one-way.
People Express was founded in Houston in April 1980, by former Texas Air Corp. executives. However, operations were based in the old North Terminal at Newark International Airport (EWR), with service starting on April 30, 1981, with very low fares, advertised as “cheaper than driving.” The airline quickly grew and even spread its wings internationally with a flight from Neward to London-Gatwick International Airport (LGW) on a Boeing 747 for $149 one-way, starting on May 26, 1983.
It eventually acquired Denver-based Frontier Airlines (the original local service carrier, not related to today’s low-cost airline of the same name) in November 1985, after it outbid Texas Air Corp’s Continental Airlines. People Express’ buying spree continued with the purchase of two smaller commuter carriers, PBA for its local Florida network in January 1986, as well as Britt Airways for its Midwestern routes out of Chicago and St. Louis in February 1986. In August 1986, Frontier ceased operations and declared bankruptcy.
A few weeks later, on September 15, 1986, Continental announced a $297 million acquisition of People Express and Frontier, which was quickly approved on October 14, 1986, with the last PE flight on January 31, 1987. On October 1, 1986, venerable Eastern Air Lines was sold to Texas Air Corp., after a period of severe financial crises, but no complete merger ever took place. Eastern would fly its last flight on January 18, 1991, shortly after the reviled Frank Lorenzo resigned from Texas Air Corp. and left the airline business for good.
Continental Wants to Grow in CLE
After all this tumultuous business of mergers and acquisitions in the wake of the deregulation of the airline industry in the United States, Continental Airlines remained the major air carrier of the Texas Air Corp. in Cleveland (along with Eastern until 1991). It and other airlines needed space to grow their flight operations. However, incumbent airline, United Airlines, still controlled many more facilities than it needed for its reduced service at CLE.
Considering its flight reductions, the City of Cleveland asked United Airlines to relinquish control of nine of its thirteen gates to allow for other airlines to increase service. United stated that six of its gates were surplus and entered into sublease negotiations with other carriers, including Continental, New York Air (which re-entered the CLE market in January 1986 to Washington-(IAD), Midway and People Express, none of which signed the master lease for facilities prior to deregulation.
After much consternation and pressure from the city and business leaders, United finally agreed to sublease seven gates on the C Concourse to Continental in May 1987, and to consider additional subleases for some of its remaining six gates.
While Continental was already preparing to launch its fifth regional hub at CLE, airport officials were reportedly also wooing Trans World Airlines (TWA) to start a hub in Cleveland. According to an article in the Cleveland Plain Dealer (May 30, 1987), TWA solicited information from seven US cities it was considering for hub locations. Such a new operation at CLE would have required construction of new gate areas off of either the B or C Concourses. Other possible cities under discussion were New Orleans, Columbus, and Philadelphia. I had never heard of this expansion, especially in light of TWA’s massive domestic hub at St. Louis (STL) with over 300 jet flights and almost 300 commuter flights at the time, not to mention its sizeable international hub at New York (JFK).
The Hub Begins & Grows
Continental Airlines officially inaugurated its CLE hub on July 1, 1987, with the addition of nine jet flights, including two to Los Angeles (LAX), four to Washington (DCA), and one each to San Francisco (SFO), Tampa (TPA), and Orlando (MCO). These flights were in addition to existing service to Denver (DEN), Houston (IAH), Washington (IAD), Newark (EWR), and Detroit (DTW), bringing the total to 25 daily flights. This was the start of an initial $14 million investment at CLE. It more than doubled its employees to 100, took over ticket counter and baggage space from United, and moved from two gates at the end of Concourse A (7 & 7A) to seven gates at the end of Concourse C (50-56), including six on the “banjo” it had pried loose from United’s grip.
CO began a gradual buildup of flights in a second phase of expansion, adding New York-LaGuardia (LGA), Boston (BOS), and New Orleans (MSY) in September 1987, overtaking United as the number two carrier at CLE, and promising more service soon.
The airline announced a big buildup of flights effective December 15, 1987, in the third expansion phase, adding 13 jet flights and 25 commuter flights to its schedule, thus creating more of a true Midwest connecting hub. Flights were added to Chicago (ORD), Detroit (DTW), Phoenix (PHX), Sarasota (SRQ), Buffalo (BUF), and Boston (BOS), while Washington-Dulles (IAD) was cut. The first Continental Express flights were also added at this time with flights to Columbus (CMH), Detroit (DTW), Erie (ERI), Toledo (TOL), and London, Ontario, Canada (YXU). Continental’s first international jet flight from CLE was added December 19, 1987, with a weekly nonstop flight to Cancun (CUN), a route still flown by United today!
Below is another Continental brochure advertising new flights at its CLE hub in December 1987. (departedflights.com)
By June of 1988, Continental was offering 53 jet flights and 19 commuter flights, thus overtaking USAir as the largest carrier at Hopkins (although US continued to put up a good fight at CLE, peaking at 84 daily flights in mid-1990). If offered 66 flights to 23 cities by September 1988, including new service to Lansing (LAN), Flint (FNT), and Saginaw (MBS), Michigan, Baltimore (BWI), Hartford (BDL), and Las Vegas (LAS).
By the end of 1988, CO fielded about 94 daily flights. It was already feeling the gate squeeze and expressed a desire to add three additional gates, possibly from its sister company, Eastern, which operated from three gates on Concourse B. Eventually, the airline did acquire three additional gates sub-leased from United.
In order to cope with this growth, by the end of January 1989, Continental and the city of Cleveland agreed on financing for an estimated $30 million expansion of the hub allowing the airline to increase its facilities and number of daily flights from 72 to 175. The city was to issue tax-exempt industrial revenue bonds to finance new construction. No firm plans had been drawn up at this point, and the expansion was expected to take 14 months to complete after plans were approved by the city council.
By the time the plans for this Phase 1 of CO’s expansion were completed, the special facilities bond issue, which sold out in January 1990, had increased to $76.3 million. This phase was to include 40,000 square feet of new airport space, a new 40,000-square-foot flight kitchen for Continental’s Chelsea Catering division, a total of ten additional gates bringing its total to 19, either new or renovated, and the purchase and renovation of a hangar and maintenance support building from United Airlines.
The work at the terminal would ultimately consist of a two-story addition to the south end (rotunda or "banjo") of the C Concourse, construction of ground control tower on the fourth level of the rotunda, new operations area in the banjo for CO, renovation of mechanical systems and interior finishes of the existing C Concourse, remodeling of the airline's ticket counters, and construction of a baggage claim area at the south end of existing terminal building (carousels 10 and 11).
By May of 1989, Continental and its Express partner fielded approximately 100 daily flights, and by May 1990, it had about 150 departures per day from its Cleveland hub. The airline also opened a second city ticket office in Rocky River, Ohio, in addition to its original office at 1006 Euclid Avenue in downtown Cleveland.
In March 1990, CO announced yet another expansion of the Cleveland hub, this time with the addition of up to 130 new staff, including pilots and flight attendants, as well as 26 new flights and a reduction of 6 flights, mostly seasonal decreases in frequencies to destinations in Florida. Most of the new flights would be in place by March 1991, according to the airline. Some of this slow rollout was due to the rehabilitation of Hopkins’ main runway, which began April 1, 1990. CO wanted to minimize any potential inconvenience to passengers that delays caused by runway construction might lead to.
New destinations included Louisville (SDF), Norfolk (ORF), Providence (PVD), Dallas (DFW), and Seattle (STL). This would bring total departures to 152 daily, including 60 on Continental Express turboprops, a number which remained fairly steady until mid-1994. The airline also would supplement COEX flight with jets on select flights to Buffalo (BUF), Rochester (ROC), and Columbus (CMH).
A $53 million Phase 2 expansion plan was also proposed in mid-1990 shortly after construction of the first phase began. This project would have added four additional gates, bringing the total for the airline to 23, along with a 30% increase in passenger waiting space on the C Concourse. It would also be used for an expanded maintenance hangar, expanded baggage claim area (or building with a connector), moving walkways in Concourse C, an airline club, a new meeting room, and a concession area. However, the proposed construction bonds for this expansion failed to sell in October 1990. High fuel prices (due to the first Gulf War) and generally poor economic conditions held up the sale of the bonds.
Continental’s precarious financial position during this period led the company to declare Chapter 11 bankruptcy on December 3, 1990, while continuing operations. This caused it to cancel the second phase of the expansion. The airline assured worried city and airport officials that the project already underway would move forward. Perhaps this is why the expanded “banjo” is not completely circular, and several of its original gates from 1969, remain in use today (C16/C17/C18).
Despite the airline’s financial challenges, its chairman, president and CEO at the time, Hollis L. Harris told Cleveland officials in April 1991, that the airline might offer nonstop service to Frankfurt or Berlin by 1994, and a one-stop direct flight to London as early as 1992. This would be contingent on the airline’s emergence out of bankruptcy as well as the growth of service at CLE to 250 flights a day to support international flights.
Why Germany and not London? A survey of international passengers conducted the previous summer indicated Frankfurt as the most popular destination with 121 travelers per day in peak season; London ranked second with 112 daily passengers. Also, at that time the United States and Germany had an “open skies” agreement while the US and UK still had a bilateral treaty limiting entry into the market and requiring more costly negotiations which Continental wanted to avoid. Airport officials were confident that the city could easily support a nonstop flight to Europe three days per week already.
Throughout its bankruptcy, Continental reiterated its support for its Cleveland hub, reassuring anxious airport officials, especially considering reported merger talks. In fact, its new CEO, Robert R. Ferguson, III, stated on September 27. 1991, that the airline had no intention of closing or selling its hub here. In fact, CO claimed that from a profit and loss standpoint, CLE was the most successful of the airline’s four hubs (CLE, DEN, IAH, and EWR). In terms of Cleveland, the airline planned to continue service as it had and expand if industry and traffic dictate.
An Expanded Home for CO on Concourse C
Continental finally completed its major $60 million dollar expansion and renovation of Concourse C on June 16, 1992. The expansion project added about 96,000 square feet to the concourse and greatly improved its look with skylights and a new interior. Continental increased its capacity to handle 250 departures daily. Architecture and engineering services were provided by Robert P. Madison International Inc. of Cleveland.
Cleveland Plain Dealer architecture critic, Steven Litt, called the newly renovated and expanded concourse, “a cordial and polite greeting.” His review from July 26, 1992, is presented here:
Most airports make little more than a subconscious impact on travelers. But in the short time it takes to walk a concourse or hail a cab, an airport can say a lot about a city. Airports are gateways, like the great railway stations of the 19th century. Good or bad, the urban impression starts at the point of arrival.
At Cleveland Hopkins International Airport, the impression is so-so. The main parking deck is inconveniently far from the terminal, the moving walkways rarely work and the RTA station is a dank pit of grime better fit for livestock than humans. (RTA is planning improvements, fortunately).
The main ticket lobbies and shopping areas, expanded and renovated in the 1970s, are nothing special. They make no distinctive statement as does Eero Saarinen's TWA Terminal at John F. Kennedy Airport in New York, or Helmut Jahn's United Airlines Terminal at O'Hare in Chicago.
It comes as a pleasant surprise, then, to see the improvements that were finished last month on Continental Airlines' Concourse C. The $65-million makeover, designed by Robert P. Madison International, of Cleveland, isn't spectacular. It's not the kind of architecture that shouts and calls attention to itself. But in a quiet way, it has freshened the airport and thus bettered the impression that thousands of travelers will have of Cleveland.
It will also help renovate impressions of Continental, which is struggling to extricate itself from bankruptcy.
Madison, with architect Khai Lim in charge of the project, gutted Continental's quarter-mile concourse. They raised the low, 8-foot, 6-inch ceiling nearly a foot, and carved skylights that rise even higher in a space that formerly had been little more than a long, oppressively grim tunnel. Now, as you walk down the concourse, you move through pools of light and shadow that give the brief journey a variety and rhythm.
The experience is nothing out of the ordinary. Many airports have skylighted concourses. So do most suburban shopping malls. What Madison has done is to bring Hopkins closer to an acceptable contemporary standard. That means a lot at an airport that has lagged behind that standard.
Like the skylights, most of the changes on the Continental concourse probably will make no more than a subconscious impression. But such impressions can make all the difference between a pleasant journey and an ordeal.
With the exception of four out of 21 gates, Madison's team stripped away the ghastly peanut-brittle concrete wall panels and replaced them with drywall and a pale gray vinyl wall covering. (The four unrenovated gates belong to Northwest Airlines).
The old red and brownish-orange carpets have been replaced by pale, blue-gray carpeting that matches Continental's new corporate colors [unveiled in February 1991]. The columns supporting the roof, which had been hard, mean-looking shafts of concrete, have been wrapped with squarish bases and capitals that give them a vaguely classical look.
The concrete bases also serve a functional purpose: They prevent people from dragging suitcases or steering carts into them and leaving scars and scrapes.
The blue leather seats on the concourse, by furniture designer Rodney Kinsman, have sturdy, silvery steel frames that bear a resemblance to the trusses on bridges over the Cuyahoga River. Intentional or not, the seats give a dash of Cleveland flavor to the airport. They are also firm and comfortable. Madison chose them well.
The best parts of the concourse come at the end. Instead of being squared off, the concourse spins in a circle, half wide, half narrow. The start of the circle is marked by walls of glass block that undulate with piano curves.
Further on, the skylights, curving walls and sweeping windows give the concourse an airy, expansive feel.
Some visitors might argue that the color scheme is too pale, too gray, too blasé. But there is a virtue in being low-key.
For many people, air travel is stressful enough. If an airport can't aim for exaltation, the least it can do is to extend a cordial and polite greeting. That's what Continental's new concourse does.
Plain Dealer travel editor, David Molyneaux noted that “Continental Airlines, the city's most frequent flier, has done a fine job in the refurbishing of Concourse C. The concourse has a clean and airy look, with skylights and new carpeting throughout. Continental's new President's Club lounge, however, is disappointing. It's plain and unexciting [this apparently was referring to the temporary club near gate C25, not the club in the current location which did not open until 1998]. But the airline made a good move in renumbering the gates on Concourse C. Somehow that walk to the end to Gate 20 or 22 just doesn't seem as daunting as the old trek to Gate 50.” (August 16, 1992)
The expansion was financed by tax-exempt revenue bonds issued by the city. as noted above, Continental had planned a second phase with a new baggage area, but that project was put on hold in 1990 after market conditions forced the postponement of a $53 million bond offering. At the opening, Continental spokesman David Messing said there's still interest in Phase 2, but "economic conditions have to be right."
Post-Bankruptcy: The Continental Lite (Failed) Experiment & International Aspirations
After emerging from bankruptcy protection in April 1993, Continental also dipped its toe into the “airline within an airline” realm with the operation of Continental Lite from 1993 to 1995. This was an all economy, no-frills, low fare subsidiary with services mainly between leisure destinations focused on the IAH and CLE hubs, along with a new hub at Greensboro, North Carolina (GSO).
This experiment was ultimately unsuccessful (as were similar ones like US Airways’ MetroJet, Shuttle by United and Ted, and Song by Delta) and cost the parent company $140 million! Continental’s legendary new CEO, Gordon M. Bethune, pulled the plug on CO Lite, which was started by his predecessor, Robert Ferguson, and also stopped serving peanuts on board, underscoring that it had dropped its “Peanuts Fares” promotion. It removed the “Lite” logo from aircraft and reinstalled first class seats in the fleet.
Non-stop service to Europe had been a longtime goal of local business and civic leaders, who saw it as critical to the economic development of the city. As a result, Continental sought route authority to serve London-Gatwick (LGW) from Cleveland, but the city of Cleveland rejected an offer by the airline in July 1993, to provide this service in exchange for $5.9 million in subsidies to cover the carrier's potential operating losses. "We sought the city's support to make certain we would at least break even," said Ned Walker, a Continental spokesman.
Demand on the route had declined to between 80-90 travelers per day, not enough to cover the operating costs of a flight. The city did not want to set a bad precedent, although this type of route subsidy is very commonplace and is essentially how so-called “second-tier” cities, like PIT (BA to London), IND (DL to Paris-suspended due to the pandemic), and STL (LH to Frankfurt) have attracted and retained transatlantic air service today. Additional feed from "spoke" cities was needed to make such a route profitable on its own.
But Continental’s steady growth of the CLE hub continued. By mid-1995, the carrier offered 174 flights, and by summer 1996 it operated up to 239 daily departures to 61 destinations from Cleveland. In 1997, the airline had about 256 flights per day and carried over 7 million of the 12.1 million passengers served at Hopkins.
In the second part of this article, we will examine Continentals growing commitment to its Cleveland hub, including adding a brand-new concourse at the airport, and offering Cleveland its first ever regularly scheduled nonstop transatlantic flights. We will also examine the impact of the September 11, 2001, terrorist attacks and the Great Recession of 2007-2009 on the airline industry in general and Continental and Cleveland, specifically, including Continental’s ultimate merger with United Airlines in 2010. Stay tuned.