Smaller air hubs hit hard by consolidation

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 over 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 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, Raleigh, 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 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.

Even after cuts of recent years, it means 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 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.

A ‘MUST-HAVE ASSET’

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 giant 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.

Delta still calls Memphis a hub, but it is now less than half the size it was and is the smallest hub in Delta’s network.

Local residents, businesses and airport restaurants and shops have felt the effects. Memphis airline passenger counts declined from about 10.2 million in 2009 to about 6.8 million in 2012.

To be a small city with a large airline hub for so many years was “sort of like a drunkard that’s been on a long-time bender,” Cox said. “When you’re used to drinking a gallon of whiskey a day and you don’t have that anymore, it’s a hard transition.”

PROMISES BROKEN?

Vocal Memphians have taken to social media to voice their anger at high Delta fares on top of the flight cuts, posting comments on a Facebook page called “Delta Does Memphis” that has more than 5,000 members.

“It was just sheer frustration that we were paying a premium as compared to the cities nearest to us,” said Tom Jones, a consultant and blogger who started the Facebook page. “It’s sort of a surcharge” on doing business in Memphis when it requires travel.

Memphis had the sixth-highest average domestic air fare in the nation in the last quarter of 2012, at $480, according to the most recent federal air fare report.

“It affects everyone,” said traveler Jimpsie Ayres, who said she has seen some fares triple.

Travelers are driving to other airports for lower fares, dotting the Little Rock airport parking lot with Tennessee license plates, Sammons said. Even Delta’s weekly fare sale e-mail sent to customers in Memphis lists fares out of Little Rock, — an electronic insult to locals, according to Sammons.

Some feel 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, saying “it’s hard to ask anybody to say, ‘Promise you’ll never change.’”

He and other boosters are focusing on finding other air service. The Memphis airport last year authorized up to $1 million in incentives to attract new nonstop flights, and civic leaders formed an air service task force. Southwest will be coming to Memphis via its AirTran buyout, and a start-up carrier plans flights there.

“We’re not just throwing up our hands and saying, ‘Woe is us,’” Cox said. “You just have to go forward.”