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Delta’s latest cuts inch Memphis closer in size to downgraded Cincinnati hub

10th July, 2012

A continued pare-down by Delta Air Lines of its Memphis hub that includes the elimination of approximately 56 weekly frequencies and three route cuts beginning in Aug-2012 will result in Memphis having a similar size in Delta’s network as the carrier’s Cincinnati hub, which has become increasingly marginalised since the 2008 merger of Delta and Northwest Airlines.

The latest pruning in Memphis by Delta should result in a decrease to approximately 125 daily departures by the carrier from the airport, down from a peak of approximately 300 in 2000, or a reduction of nearly 42%. As of Jul-2012 Delta estimated it offered 147 peak day departures from its Memphis hub.

Delta is eliminating flights to Fort Smith, Arkansas in Sep-2012 after cutting flights to Pensacola, Florida and Seattle, Washington in in Aug-2012. The carrier is the only airline offering direct flights in all three markets. The elimination of Seattle is a particular blow from Memphis, as Delta serves the city from every other US domestic hub and its international hubs in Paris and Amsterdam. Delta currently offers a single daily flights from Memphis to Seattle with an Airbus A320 narrowbody jet. Seattle is one of Delta’s most important non-hub markets as reflected by its status as the second largest carrier at the airport in terms of seat capacity behind dominant airline Alaska Airlines.

Seattle/Tacoma International Airport capacity by carrier (% of seats): 09-Jul-2012 to 15-Jul-2012

Both Pensacola and Fort Smith are small markets Delta serves with 50-seat regional jets. Current schedules show Delta offers one daily flight each weekday to Pensacola with alternating flights on Saturdays and Sundays. The airline’s service to Fort Smith entails two daily flights on weekdays with alternating service on the weekends.

Other frequency reductions planned by Delta at its Memphis hub later this year include cutting flights to Denver, Colorado; Des Moines, Iowa; and Tampa, Florida from 14 weekly roundtrips in each market to seven.

Additionally, Delta is cutting flights to Little Rock, Arkansas; Oklahoma City and Tulsa, Oklahoma; Shreveport, Louisiana; and Pittsburgh, Pennsylvania from 21 weekly services in each market to 14.

Delta operates 50-seat regional jets in most of those markets. The carrier operates larger two-class CRJ900s on flights to Denver, and also operates larger CRJs on some frequencies from Des Moines, Oklahoma City and Pittsburgh. On flights to Tampa Delta operates a mix of narrowbody and CRJ700/900 aircraft.

Those reductions follow changes Delta has previously loaded into GDS systems that show frequency cuts in six other markets from Memphis: Cleveland, Ohio; Columbia, Missouri; Springfield, Illinois: Milwaukee, Wisconsin; Omaha, Nebraska; and
Philadelphia, Pennsylvania.

See related article: Delta continues to perform surgery at its Memphis hub

Roles of Memphis and Cincinnati continue to shrink

Delta’s trimming down at Memphis results in the hub inching closer to the size of Cincinnati, which is Delta’s smallest hub as measured by approximate one-way seats on offer each week. According to data from Delta, Cincinnati’s 125 peak day departures are the smallest offering from the carrier’s six US domestic hubs. Once the cuts in Memphis take affect, the airport’s peak day departures will be close to those on offer from Cincinnati, which demonstrates the decreasing relevance of those two hubs in Delta’s network compared with other geographically desirable hubs including Atlanta, New York, Detroit, Minneapolis and Salt Lake City.

Delta capacity deployed from its US hubs (seats per week, one way): 09-Jul-2012 to 15-Jul-2012 and peak day departures

Hub Seats per week Peak day departures
Atlanta 1,779,217 1033
Cincinnati 125,654 125
Detroit 645,443 550
Minneapolis 597, 184 473
Memphis 152,194 147
Salt Lake City 341,604 275
New York LaGuardia 193,905 268
New York JFK 330,285 181

CAPA data show that from 2009 to 2011 Cincinnati recorded a sharp decline in passenger numbers from 10.6 million annually to 7 million, a 34% decrease. Annual passenger statistics in Memphis remained relatively steady at approximately 10 million for 2009 and 2010 before dropping to 8.7 million in 2011.

Cincinnati/Northern Kentucky Airport annual passenger numbers: 2009 to 2011

Memphis International Airport annual passenger numbers: 2009 to 2011

Delta’s pull-down in Cincinnati began prior to its merger with Northwest, but intensified after the tie-up due to Delta’s much larger hub in Detroit being located only 423km from Cincinnati. Based on current seats per week on offer and peak daily departures, Detroit is Delta’s second largest hub behind Atlanta. The same logic applies to the 617km distance between Atlanta and Memphis, which renders Memphis into a marginal role in Delta’s hub structure.

That followed a similar pattern of the merged America West-US Airways pairing down America West's Columbus hub and the merged American Airlines-TWA pairing down TWA's St Louis hub, all in favour of stronger hubs relatively nearby.

Even as Cincinnati is still classified as a hub airport its only long-haul passenger flights are to Paris. Both Delta and Frontier offer transborder flights to Cancun, and Frontier offers a once-weekly flight to Punta Cana in the Dominican Republic. Both Air Canada and Delta operate service from Cincinnati to Toronto.

Delta is scaling back the only long-haul service, from Memphis to Amsterdam, to a seasonal flight in 2013 from year-round service. Schedules in Innovata show other international service from Memphis includes a single weekly flight operated by Delta to Cancun and flights offered by Air Canada to Toronto.

More long-haul destinations are on offer by Delta from its non-hub market Seattle than Cincinnati and Memphis. Delta operates flights from Seattle to Osaka,Tokyo Narita, Beijing, Paris, and Amsterdam from Seattle, where it is buoyed by an extensive partnership with Alaska Airlines that contributes connecting traffic to Delta’s long-haul service from the city, which is the only large hub airport located in the US pacific northwest.

Cincinnati appears to have accepted its role as a de facto secondary hub for Delta. The city’s local newspaper The Cincinnati Enquirer is reporting that long-term master plans through 2035 for the airport show airport officials are evaluating consolidating all flights at the airport into concourse A. Currently Delta’s operations are centred in concourse B. Memphis also is attempting to understand its long-term role in Delta’s network as the city’s mayor reportedly recently travelled to Delta’s Atlanta headquarters to discuss the carrier’s plans for the airport.

Fares in Cincinnati and Memphis among the highest in the US

Delta’s pull-down in both Cincinnati and Memphis coupled with no carrier stepping up in a significant way to fill the voids created by the substantial cuts in those markets has resulted in both airports featuring some of the highest average fares in the US.

Data from the US Department of Transportation (DoT) show in 4Q2012 that Cincinnati’s average USD502 fare was the highest recorded in the US domestic market place. Memphis was third with a UDS484 average fare. The average US domestic fare during that time was USD386, approximately USD116 lower than Cincinnati’s fares and USD98 lower than average flight fares from Memphis.

US airports with the highest domestic fares: 4Q2011

The top five markets with the highest fares during that time period were either a hub for United or Delta – both the product of major US consolidation during the last four years – that have little penetration from low cost carriers.

Despite assurances by carriers of their plans to preserve hubs as consolidation ensues, the result is mergers create inevitable network redundancies that make certain hubs less viable. While United and Continental in 2010 pledged to keep 90% of its pre-merger flight levels from Continental’s Cleveland hub for a period of two years, the airport’s approximate 165,828 one-way seating capacity is just 13,634 more than Memphis, putting Cleveland in a similar marginal position in the combined network of United and Continental.

As for Cincinnati and Memphis, the steady cuts made in those cities during the last few years render those markets as hubs in name only while those communities must now strategise on how to remain relevant in Delta’s network going forward.

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