Delta’s Cincinnati hub takes another hit, Memphis International well positioned for future growth
Memphis Business Journal - by Jane A. Donahoe
Cincinnati’s loss could be Memphis’ gain. As Delta Air Lines Inc. continues to bleed jobs and flights at Cincinnati/Northern Kentucky International Airport, its future in Memphis seems well in tact. Delta is eliminating 840 jobs when it phases out operations in Concourse A at the Cincinnati/Northern Kentucky International Airport. The changes are to take place by May 1, when Atlanta-based Delta (NYSE: DAL) had previously announced a reduction in daily flights from 180 to between 160 and 170. The airline currently operates about 220 daily flights at Memphis International Airport. Delta currently operates out of 50 airport gates in Cincinnati, including 22 in Concourse A. After the consolidation, it will operate out of 28 gates, all in Concourse B, and will employ 2,200 Delta workers and 1,800 workers at its Comair unit, an airline spokesman said.
While he doesn’t “wish any harm to Cincinnati,” Memphis-Shelby County Airport Authority president and CEO Larry Cox admitted that Cincinnati’s loss is probably good for Memphis’ future as a Delta hub. Delta has been steadily cutting service at the Cincinnati airport in recent years. In late 2009, Delta said it would reduce daily flights from 215 to 180-190. Delta had more than 600 daily departures as recently as 2005 and Cincinnati was considered to be the second-largest hub in Delta's system. “Cincinnati has taken a huge cut, and essentially their hub is almost gone. It’s hanging on by a thread,” Cox said.
When Delta acquired Eagan, Minn.-based Northwest Airlines Corp. in October 2008, it took over Northwest’s three U.S. hubs in Memphis, Minneapolis/St. Paul and Detroit. Delta already had U.S. hubs in Atlanta, Cincinnati, New York’s John F. Kennedy International Airport and Salt Lake City. Part of Cincinnati’s woes can be attributed to its proximity to Detroit and Minneapolis and the number of surrounding airports nearby, according to Cox. Delta performed well in Cincinnati before the Northwest merger because it was competing with Northwest in Detroit and Minneapolis. “Now Detroit and Minneapolis are complementary hubs. Memphis and Atlanta are complementary hubs,” Cox said. “It sort of leaves Cincinnati all out in the pasture by themselves.”
Cox said Delta officials have assured him they are committed to Memphis as a complementary hub for Atlanta. Good weather and a low cost structure are two of the reasons Delta has been able to perform well locally, he said. “(Delta is) absolutely committed to Memphis for the long haul as a complementary hub for Atlanta,” Cox said. “We’re confident that with growth in the economy, Memphis is going to grow and get more service.” Memphis’ cost per enplaned passenger is the lowest in Delta’s system, Cox said, mainly due to the fact that Memphis does not charge a passenger facility fee, typically $4.50 per passenger. “If Delta wasn’t making money in Memphis, I assure you they wouldn’t be here,” Cox said, “The Memphis hub is performing as well as any of the hubs they have.” Delta officials said as much in a Feb. 22 announcement that the airline was adding direct service from Memphis to Amarillo, Texas, and Evansville, Ind., as well as restoring twice-daily direct service to Toronto. “Operationally our Memphis hub has been one of our highest performing hubs and with the overwhelming community support it is perfectly positioned for this additional service,” Glen Hauenstein, Delta’s executive vice president of network planning and revenue management, said in the Feb. 22 statement. There are several projects under way at Memphis International that are improving its function and allure, and prepping it to be ready for an economic turnaround in the airline industry.
Meanwhile, the airline is working to restore profitability at the Cincinnati hub, Gil West, senior vice president of airport customer service, said in a memo to Delta’s Cincinnati employees. “Delta continues to partner with the Cincinnati community to take steps to return the hub to profitability by focusing service on markets with the highest level of local demand and by implementing necessary cost-saving initiatives that make doing business in Cincinnati more efficient,” West said in the memo.