Smaller Air Hubs Hit Hard By Consolidation

MEMPHIS, Tenn. (The Atlanta Journal-Constitution/MCT) —

This riverfront city once boasted an airline hub to rival Atlanta’s, providing an international sheen and a source of civic pride.

It’s a familiar sentiment for Atlantans. But lately, the storyline in Memphis and other smaller cities has been much different.

The rise of Atlanta’s airport into the world’s largest hub – followed by the march of airline mergers and capacity cutbacks – eventually left Memphis behind.

Today, some concourse stretches at the Memphis airport that once teemed with activity are virtually deserted for portions of the day. After losing a prized route to Amsterdam and others, Memphis International now has just one international passenger flight: a weekly seasonal run to Cancun.

“We had great pride in our airport,” said Memphis-Shelby County Airport Authority Chairman Jack Sammons. “It’s done more than wound our ego as a community to lose more than 40 percent of our service.”

Memphis’s decline as a passenger hub reflects the tectonic shifts in the airline industry during the past few years, which have seen eight major players condensed to four. That has led to significant flight cuts at several secondary hubs as the acquiring carrier stitched together route systems.

The 2008 merger between Delta Air Lines, with its hometown hub in Atlanta, and Northwest, with its Memphis hub, was supposed to be “about addition, not subtraction,” Delta said at the time.

Yet Delta has cut its daily departures in Memphis from about 236 in 2009 to about 94 this year. While that’s still more than some cities of Memphis’s size have, it means getting around the country can require connecting in Atlanta. Salting those wounds, Memphis is also losing its downtown headquarters of Delta Connection carrier Pinnacle Airlines, which is moving to the Minneapolis area.

Sammons said Memphians are nostalgic for the days when they had their choice of flights from small towns to big cities. “But that day is gone now.”

Delta has also drastically downsized its Cincinnati hub, and other carriers have cut back in cities such as Nashville, Tenn.; Raleigh, N.C.; St. Louis and Pittsburgh.

In fact, cutbacks have hit even the bigger hubs that have survived mergers – including Atlanta, which lost some of its international routes after the merger.

Southwest, which bought AirTran Airways, is also restructuring AirTran’s Atlanta hub and has cut flights.

Despite such fine-tuning, the airlines emerging from the latest consolidation phase are concentrating investments in their largest operations.

In Delta’s case, that means continuing to build its route system around longtime connecting hubs Atlanta and Salt Lake City, along with former Northwest hubs Minneapolis and Detroit, as well as heavy-traffic markets such as New York.

It means that – even after cuts of recent years – metro Atlantans can choose from nearly 1,000 daily departures on Delta and its partners, including dozens of international flights. Southwest, AirTran and other carriers offer hundreds of other flights.

The global connectivity of Atlanta’s Hartsfield-Jackson drives economic growth. Atlanta’s large local population and global business community in turn drive travel demand. Memphis, by contrast, has few Fortune 500 firms and a smaller population combined with a high poverty rate, amounting to a smaller market for air travel.

When seven or eight large airlines staked out territory around the country in the 1980s and ’90s, there was a place for hubs large and small.

“Memphis was a must-have strategic asset for Northwest to be able to serve the Deep South,” Memphis International Airport chief Larry Cox said. The city’s aviation profile also was boosted by hometown shipping giant FedEx’s enormous air cargo hub at Memphis International, which remains a massive, mostly nighttime operation.

Even after Delta acquired Northwest in 2008, Memphis maintained an outsized prominence in the national airline system. During new lease negotiations with the Atlanta airport in 2009, Delta even threatened that it could move connecting flights to Memphis.

But some experts never thought the smaller hub would survive post-merger, with Memphis and Atlanta less than 400 miles apart. In 2011, Delta announced it was cutting 25 percent of its Memphis flights.

In addition to geography, a realignment of airline fleets played into the cutback. Small regional jets that airlines depended on to serve small cities are no longer fuel-efficient enough for carriers to make a profit. Delta said it costs an average of 46 percent more per  seat to fly a 50-seat regional jet than a 149-seat MD-88, and it has retired hundreds of the smaller models.

Memphis and Cincinnati had the highest percentage of 50-seat regional jet flights among Delta hubs.

Some believe Delta has broken promises it made to get the Northwest merger approved.

Delta Chief Executive Richard Anderson told a congressional panel in 2008 that the Memphis-Amsterdam flight would remain. It did for four years, but Delta last fall said it was axing the flight. U.S. Rep. Steve Cohen, D-Tenn., who had questioned Anderson at the hearing, expressed “disappointment and frustration with Delta’s growing string of broken promises.”

Greater Memphis Chamber president John Moore is more philosophical “It’s hard to ask anybody to say, ‘Promise you’ll never change,’ ” he says.




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