Most of us in the business remember the pleas being made by airlines to airports over the past five years to help them through their trying financial times. For the most part, airports did what they could to help airlines. Now, Delta Air Lines is big and tough and not returning any favors.
Congressional testimony assured Senators and Representatives that there was no thought of eliminating any hubs should the merger of Northwest with Delta be approved. Well, the deal is done and now comes hub reality.
The hubs in question are: Atlanta, Minneapolis, JFK, Detroit, Cincinnati, Memphis and Salt Lake City. My prediction is that Delta will settle on four hubs and three of these airport will fall to mini-hub status just keep the political and bondholder covenants in tact.
Minneapolis, which had lathered Northwest with sweetheart deals and tax breaks, is perhaps the hub with the most direct city and state investments in the new joint airline. If anyone has been to the Minneapolis airport, it really is (was) Northwest Airlines city. Delta drove a hard bargain, but kept their northern headquarters in Minneapolis and guaranteed something like 10,000 regional jobs.
Atlanta has been the home of Delta for years. One would expect this city and its airport would be treated more kindly by the new behemoth. Not so. Delta is making noises about shifting flights to Memphis from Atlanta if the Georgia airport doesn’t play ball according to Delta’s rules and raises fees.
Memphis, a once-mighty Northwest hub with flights to Amsterdam, was given up for dead during the merger discussions. However, the airport has made a big push to have some of the Atlanta traffic shifted to their runways and terminals. With Atlanta’s pending fee increases, Memphis has become a valuable bargaining chip in Delta’s hub stack.
JFK, the main transatlantic Delta hub will probably continue with its normal operations and Delta with its new focus on international flights will grow there. European countries are especially interested in maintaining the JFK connections.
Cincinnati Airport is suffering. Delta has slashed their flights scheduled from this Ohio/Kentucky airport. After years of having residents forced to pay dramatically higher airfares because Delta controlled the market, the region is now suffering as Delta pulls out — or at least sharply curtails their operations. Losing the hub status might hurt the airport economy, and eliminate non-stop flights. But it certainly will mean lower prices for passengers.
Detroit airport is suffering from a natural drop in demand rather than a loss of demand caused by service being eliminated. The motor industry woes have impacted business travel in and out ot this airport and the layoffs have hurt leisure travel. Detroit, watch out. Get ready to be abandoned by Delta. This airport was always playing second fiddle to Minneapolis. The new economic realities will eventually condemn them as a hub.
Salt Lake City out in Utah should hold its own. Air traffic is down 12 percent, but that is just about the national average. SLC is the only hub in the West and doesn’t face the same hub competition that Cincinnati and Detroit or Atlanta and Memphis are seeing.