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US airport hubs: Memphis Airport

1-Apr-2010

For roughly the past month we have been looking at the US hub system, primarily at those cities that have loved and lost and how the airports and their communities have adjusted to their new reality. Some have done better than others and most, but not all, have ended up with facilities that are far larger than was once warranted.

The chart displays those cities that currently are claimed as hubs or focus cities by their carriers. The starred points are marginal, and in the case of CLE and CVG are claimed as hubs but much reduced from their heyday. As we saw, this is especially true of CVG.

US Airways claims BOS, LGA and DCA primarily because of the shuttles and a very long history at those airports, dating back to when the antecedent airlines that became USAir had strong ties to those locations. Even Phoenix has weakened for US in the face of Southwest’s presence and growth at that airport.

US Legacy Hubs

AA

CO

DL

UA

US

ORD

EWR

JFK

IAD

CLT

DFW

HOU

ATL

ORD

PHL

JFK

CLE*

DTT

DEN

PHX

MIA

 

MSP

SFO

BOS*

   

SLC

LAX

LGA*

   

MEM

 

DCA*

   

CVG*

   
   

LGA*

   

United claims LAX as a hub but, again, that city has seen a considerable reduction in UA service. An earlier examination of LAX and its traffic mix confirmed that the airport really has no truly dominant carrier.

As this series winds down, we will take one last look at the status and shape of all these operations through the new prism of alliances.

Which airport hubs are at risk?

But before that, the question needs to be asked if any of the remaining hubs are at risk for the kind of dramatic downsizing that occurred at CVG, PIT and STL. The answer is perhaps, based on many commonalities with those three — and it is Memphis.

MEM to

1980

1990

2000

2010

MEM to

1980

1990

2000

2010

Alexandria

 

NW*

NW*

DL*

Lexington

     

DL*

Amsterdam

   

KL

DL

Little Rock

DL/FL

NW/DL/UA

NW/DL

DL

Atlanta

DL/RC

DL/NW

DL/NW

DL/FL

Los Angeles

AA/UA

NW

NW

DL

Austin

   

NW

DL*

Louisville

AA/DL

NW

NW

DL*

Baltimore

     

DL*

Lubbock

     

DL*

Baton Rouge

RC

NW

NW

DL*

McAllen

     

DL*

Birmingham

RC

NW

NW

DL*

Madison

     

DL*

Boston

 

NW

NW

DL*

Meridian

RC

NW*

NW*

 

Cancun

     

DL

Miami

DL/RC

NW

NW

DL

Charleston SC

     

DL*

Milwaukee

RC

NW

NW

DL*

Charlotte

UA

US

US

US*/DL*

Minneapolis

RC

NW

NW

DL

Chattanooga

RC

NW

NW*

DL*

Mobile

RC

 

NW*

DL*

Chicago

RC/DL

NW/UA/ML

AA/DL/NW

UA*/AA*/DL

Moline

     

DL*

Cincinnati

 

DL

DL/NW*

DL*

Munroe

RC

NW*

NW*

DL*

Cleveland

   

CO*/NW

DL*

Montego Bay

     

DL

Columbia

     

DL*

Montgomery

RC

NW*

NW*

DL*

Columbus OH

     

DL*

Nashville

PI/AA/AL

NW/US/AA

NW

DL*

Columbus GA

 

NW*

NW*

DL*

New Orleans

DL/RC

NW

NW

DL

Columbus MS

RC

NW*

NW*

DL*

New York

AA

NW

NW/CO*

CO*/DL

Dallas

AA/BN

DL/AA/NW

AA/DL/NW

AA*/DL*

Norfolk

UA

     

Denver

UA

NW

UA*/NW

UA*/DL*

Okalahoma City

 

NW

NW

DL*

Des Moines

     

DL*

Omaha

 

NW

NW

DL*

Detroit

RC/DL

NW

NW

DL

Orlando

RC

NW

NW

DL

Evansville

DL

NW*

NW*

 

Paducah

 

NW*

NW*

DL*

Fayetville

 

NW*

NW*

DL*

Panama City

   

NW*

DL*

Ft. Lauderdale

 

NW

 

DL

Pensacola

 

NW*

NW*

DL*

Ft. Myers

 

NW

NW

DL

Philadelphia

 

NW

NW

DL*

Ft. Smith

FL

NW*

NW*

DL*

Phoenix

 

NW

NW

DL/US*

Ft. Walton Beach

 

NW

NW

DL*

Pittsburgh

 

US

 

DL*

Grand Rapids

   

NW*

DL*

Raleigh

UA

 

JI/NW*

DL*

Greensboro

UA

   

DL*

Richmond

UA

     

Greenville MS

RC

NW*

NW*

DL*

St. Louis

 

NW/TW*

NW/TW*

DL*

Greenville SC

 

NW

NW*

 

Salt Lake

   

NW

DL

Gulfport

 

NW

NW

DL*

San Antonio

 

NW

   

Houston

DL/AA

NW/UA/ML

CO*/NW

CO*/DL

San Diego

UA

NW

   

Huntsville

RC

NW

NW*

DL*

San Francisco

AA/UA

NW

NW

DL

Indianapolis

DL

NW

NW

DL*

Seattle

UA

NW

NW

DL

Jackson MS

DL/RC

NW

NW

DL*

Shreveport

DL

NW

NW*

DL*

Jackson TN

RC

NW*

NW*

 

Springfield

 

NW*

NW*

DL*

Jacksonville

   

NW

DL*

Tallahasse

     

DL*

Joplin

 

NW*

NW*

 

Tampa

DL

NW

NW

DL

Kansas City

DL

NW

NW

DL

Tulsa

 

NW

NW*

DL*

Knoxville

UA/AA

NW

NW

DL*

Tupelo

RC

NW*

NW*

DL*

Lafayette

   

NW*

DL*

Washington

BN/AA

NW

NW

DL

Las Vegas

UA

NW

NW

DL

West Palm

 

NW

 

DL

Laurel

 

NW*

 

DL*

Wichita

RC

NW

NW*

DL*

Memphis' chequered history as a hub

Another really big chart traces the last 30 years of nonstop service from Memphis. Following deregulation, a former second tier airline, Republic, made Memphis one of its hub cities.

The carrier, formed in 1979 just after deregulation, was created by a combination of North Central, Southern and Hughes AirWest. The new airline, like one of its predecessors, North Central, was headquartered in Minneapolis (another hub) and RC also made Detroit a hub. Milwaukee was seen as a focus city.

As we saw in St Louis, the Twin Cities’ dominant legacy carrier, this time Northwest, found its smaller rival’s ambitions to be detrimental to its own interest and purchased Republic, merging its operations with Northwest’s and, voila, Memphis became a cog in a much larger wheel.

How many hubs do we need? Memphis distances to neighboring cities

MEM

AIR MILES

STL

245

ATL

330

CVG

414

DFW

421

ORD

486

CLT

510

Within a very short time, the Southeastern US was awash in hubs and carriers trying to garner the largest slice of the online-connection pie. No less than six other hubs, all within roughly 500 miles, were vying for many of the same passengers. We know it did not end well with two of those cities; finding their fortunes radically altered.

By 1990, the position of Northwest had become unassailable, and in the mid 90s, NW was able to attract an Amsterdam service by its partner, KLM. Memphis was on the map. During the next decade and into the 21st century little changed, keeping Memphis’ position status quo.

Then along came Delta. The network that radiates from MEM in 2010 looks very similar to that of 2000 in terms of points served, but a closer look reveals some notable differences:

Domestic airline capacity share at Memphis

Airline

Capacity share

Delta Air Lines

84.8%

American Airlines

5.0%

US Airways

3.0%

AirTran Airways

2.5%

United Airlines

2.1%

Continental Airlines

2.0%

  • Atlanta, only 330 miles away, is no longer a competitor’s stronghold requiring a counter-offer, but rather Memphis is now overshadowed by Atlanta’s nearby predominance;
  • Services operated with RJs are starred, and it is immediately evident that the overwhelming majority of flights has been downsized. This is an understandable response by Delta’s competitors who only wish to feed their hubs, but under Delta’s care and feeding, the downsizing of its own equipment has been breathtaking;
  • There is virtually no competition with, as seen in the chart, Delta operating nearly 85% of the capacity—essentially a monopoly position;
  • With the exception of a few flights to Atlanta with AirTran, there is no new generation carrier presence at all;
  • Over half of “Delta’s” service is offered on contracted services provided by Delta Connection partners, meaning that the “real” Delta is less invested than seems at first glance.

Top 10 domestic destinations from Memphis International Airport

Rank

City

1

Atlanta

2

Dallas/Fort Worth

3

Chicago

4

New York

5

Charlotte

6

Minneapolis/St Paul

7

Detroit

8

Los Angeles

9

Phoenix

10

Houston

  • Finally, four of the top 10 destinations from the city are to other Delta hubs, with most of the others operating to someone else’s hub.

A steady, solid but not spectacular future?

The good news is that the airport is bulletproof against any effects of future consolidation as it is now within the embrace of an already completed merger. It is unlikely that today’s Delta will merge yet again, thus making the hub more redundant.

Furthermore, Delta has made no statement regarding any changes at the airport and has, with the exception of downsizing aircraft, done little to the existing network operated there.

Nonetheless, the industry continues to exist in a period fraught with threats to the traditional legacy carrier’s operations. As was the case in PIT, CVG and STL, the pleas of the local community counted for relatively little once the airline decided to draw down a hub and all of those cities have stabilized at traffic levels consistent with O & D demands. Similarly Memphis, as the nation’s 19th largest city, probably does not have the O & D traffic to support the current 4 nonstops a day to Salt Lake. Should a drawdown come, there is a lot of redundant service that could be eliminated.

And, unlike St Louis with its decades-long Southwest presence, Memphis has no alternatives immediately at hand. For better or worse, the city is almost totally dependent on Delta for its access to the world and that carrier’s main focus is ATL; but 300 miles distant. Gives one pause for thought.

However strong Delta is or becomes, Memphis retains FedEx as its trump card. In January 2010, passenger operations (3,062) were only a quarter of the total movements, being only a third of cargo operations (9,540).

So whatever happens at Memphis in the years to come as far as airline service is concerned, stepping into a FedEx box will continue to get you virtually anywhere. Given the current dismal service reputation of most US carriers, it might even prove to be a service upgrade.


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