Passengers face closed concourses, more connecting flights, higher fares
Courtesy of Denver International Airport While some airports have lost hub status in the past decade due to airline mergers, Denver International Airport is the fastest-growing market for Southwest Airlines.
By Harriet Baskas
In the newest round of airline mergers, some airports will lose a significant chunk of scheduled service and, in some cases, their regional hub status.
For travelers in cities such as Cleveland and Memphis, Tenn., that means getting from here to there may soon be more costly and more complicated.
“Business travelers bear the brunt of the impact from hub downsizing,” said Kevin Mitchell of the Business Travel Coalition. “They travel to call on customers, prospective customers and governments in smaller cities. Fewer frequencies to these cities will result in higher prices, less productive travel and fewer options when there are air travel disruptions.”
In March, Delta Air Lines — which completed a merger with Northwest in 2008 — announced plans to cut about 25 percent of its current service at Memphis International Airport, which had been one of Northwest Airlines’ three major hubs. Airline officials described the move as a necessary cost-cutting measure.
The cuts, to be completed by the end of the year, mean that many business and leisure passengers who enjoyed nonstop flights to and from Memphis will now likely be making a connecting stop at Delta’s major hub in Atlanta, about 300 miles away. “Fares for passengers who previously just transited in Memphis won’t change that much,” said Tom Reich of aviation consulting firm Air Service Partners. “But those customers from the smaller regional markets will be hurt.”
Memphis currently serves about 9.5 million passengers a year, said Larry Cox, president and CEO of the Memphis-Shelby County Airport Authority. He expects an 8 percent to 10 percent drop in passengers as a result of Delta’s cuts.
“Delta did what it had to do — eliminate unprofitable flying from Memphis,” said Cox. “We don’t want to lose that service, but it’s understandable in the economy.”
Reich predicts Southwest Airlines, which recently acquired AirTran, will add a few new flights in Memphis, but he believes Delta will continue cutting capacity in Memphis. “It will be a continual unwinding of the hub, maybe over four or five years. That’s a typical strategy. It took US Airways that long in Pittsburgh from the first announcement of cuts until the hub was gone.”
US Airways pulled its hub out of Pittsburgh International Airport in 2004. Following the airline’s move, passenger traffic dipped from a 1997 peak of more than 20.7 million passengers to about 13.3 million in 2004 and, by 2009, to just over 8 million. The airport closed its commuter terminal and put up walls at the ends of the A and B concourses so areas of the terminal didn’t look abandoned.
US Airways is still the No. 1 carrier at Pittsburgh, but the airport has spent the last few years diversifying both its mix of carriers and its sources of income. Pittsburgh has attracted new carriers such as Southwest and JetBlue and successfully transformed itself from a transfer hub to a bustling origination and destination airport. More travelers from western Pennsylvania, northern West Virginia and eastern Ohio now use the airport, and in 2010, passenger traffic inched up to about 8.2 million.
The airport’s commuter terminal is now being used as an overflow security checkpoint for the main terminal. “And when business improves,” said airport spokesperson JoAnn Jenny, “we can just take down the walls at the ends of the concourses, flip a switch to turn the electricity on and be up and running there.”
Pittsburgh would still like to have a hub, Reich said. “But with airlines shrinking and consolidating, they’ve made the best out of a bad situation. You can’t expect any airport to do it better than Pittsburgh has.”
Like Pittsburgh, airports in St. Louis and Cincinnati have also lost their hub status. After American Airlines bought TWA in 2001, it began downsizing its service at Lambert-St. Louis International Airport until the hub was eliminated entirely in 2010. Cincinnati/Northern Kentucky Airport was Delta Air Line’s second-largest hub until 2005. Since then, there’s been a steady stream of downsizing, prompting the airport to close an entire terminal and some concourses.
Like Memphis, Reich also suspects that Cleveland Hopkins International Airport may lose its regional hub status as a result of last year’s $3 billion merger of United Airlines and Continental Airlines.
It’s a road the airport has been down before: Cleveland once served as a hub for both American and United, but now only Continental remains. “Continental is now Cleveland’s third and longest-standing hub,” said airport director Ricky Smith. “So there’s some level of insecurity about the United-Continental merger opening the door for the hub to be scaled back altogether.”
New business for some airports
Where there are losers, of course, there are also winners.
Howard Mann, vice-president of InterVISTAS, a travel and transportation consulting firm, counts airports in Denver, Fort Lauderdale, Fla., and Baltimore among the winners.
Southwest Airlines began service to Denver International Airport in 2006 with 15 daily flights to three destinations. Although Southwest does not use the traditional hub model, preferring a point to point system, the airline has since expanded to 139 daily flights through Denver as of May 2011. Denver is now the fifth largest station for Southwest and has been the fastest growing market in the carrier’s history.
“At Denver International Airport, Terminal 3 now serves Southwest Airlines flights and it is busier than ever with passengers making connections,” said Mann. “In Fort Lauderdale, Spirit Airlines brought more connections to Terminal 4 and totally changed the dynamic there.”
Now that the merger of Southwest and AirTran is official, Mann predicts plenty of new service and nonstop flight offerings at both Denver and Baltimore-Washington International Airport.
“The entire country is facing reduced domestic capacity,” said Mann. “Every airport is working toward getting frequency of flight back. Some just have to work harder than others.”
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