Chicago Midway Airport

Delta finally dehubs Memphis after years of pruning unprofitable flights

After years of scaling back its Memphis hub, Delta Air Lines has officially declared Memphis is losing that status in late 2013. The airport’s fate has been sealed as Delta has been steadily cutting service from Memphis – from a peak of 300 daily departures during 2000 to roughly 93 daily flights. Once the de-hubbing its complete Delta’s departures from Memphis will decrease a further 35% to 60 daily departures.

Delta’s reasoning in closing Memphis rests on the significant reduction in 50-seat jets it is undertaking to reduce its small jet fleet to roughly 125 shells from a peak of more than 500 five years ago. The carrier determined it is unprofitable to operate those aircraft in Memphis where the amount of local originating traffic is somewhat sparse.

Even though the official de-hubbing of Memphis comes as no shock to the airport, which has been courting other airlines, political backlash has ensued against Delta. Tennessee politicians are accusing the carrier of making false promises when it merged with Northwest in 2008 when the company assured service from Memphis would not diminish. As American and US Airways work through the requisite approval processes for their merger, the decision by Delta to de-hub Memphis will only create additional pressure on those carriers to pledge no hubs within their respective combined networks will lose their respective status.

Hainan Airlines' first 787s go to Chicago, Seattle & Toronto but Air China gets Beijing's key routes

Originally due to arrive in China in time for the country's 2008 Beijing Olympics, the 787 even missed the 2012 London Olympics. Once the aircraft were finally ready in 2012, Chinese certification lagged and then the 787's battery-induced grounding put a further hold on delivery. But now in sight is an end to the saga and start of commercial service of the 787 in China.

Three operators hold 35 orders: China Southern for 10 787-8s, Hainan Airlines for 10 787-8s as well and Air China for 15 787-9s. Xiamen Airlines has a pending order for six 787-8s. China Southern is due to be the first carrier to take delivery and Hainan the second, but Hainan was first to announce deployment plans, which include domestic services and long-haul flights to Chicago, Seattle and Toronto.

But, as a less privileged, private airline, Hainan Airlines could be constrained by its own government on which routes it can use the full 787 fleet, as the airline faces route restrictions out of Beijing, its main long-haul base – as China Southern painfully experienced when it sought to fly from the capital with its A380.

Southwest Airlines presses to improve its fortunes in Atlanta by officially de-hubbing in Nov-2013

Southwest Airlines aims to realise its goal of dismantling AirTran’s hub in Atlanta in Nov-2013 as a means to bolster local passengers at the airport in the hopes of improving Atlanta’s performance. The declaration that Atlanta will officially become a point-to-point operation completes efforts by Southwest to eliminate unprofitable flow-through routes and concentrate on areas where it, along with AirTran, has relative strength.

After completing its acquisition of AirTran in May-2011, Southwest set its sights on network optimisation between the two carriers. The exercise essentially resulted in many small markets being eliminated from AirTran’s network and Southwest’s determination that Atlanta would perform more effectively in the combined network through the adoption of Southwest’s point-to-point route management strategy.

South Korea's Asiana targets growth in 2013 within Asia, in advance of big long-haul growth in 2014

One of the highest growth rates in North Asia in 2013 will be from South Korea's Asiana, which is projecting a 9% increase in RPKs. This compares to 4% RPK growth at Korean Air and modest growth from All Nippon Airways and Japan Airlines. Many Chinese carriers will have similar or higher growth, but notably Air China will be lower as it runs out of slots.

The focus in 2013 for Asiana, globally the 54th largest airline based on capacity and sixth largest for intra-Asia international capacity, is regional flights, increasing capacity to cities including Chongqing and Yangon and launching new services to Denpasar and Jakarta. This traffic will help feed its long-haul network, due to commence notable expansion beginning in 2014 as A380s replace 777-200ERs, facilitating their re-deployment to new routes.

Porter attempts to determine its place in Canadian aviation as rivals move into new endeavours

Porter Airlines seems to be instituting a slight strategy shift as its main rivals Air Canada and WestJet turn their attention to the respective launches of their new subsidiaries. While Porter appears largely protected from direct competitive threats from either enterprise, the carrier has recorded dwindling load factors, perhaps an effort to trade loads for yields.

The shift follows increasing competitive pressure in some of Porter’s busier business markets in Canada’s eastern triangle (Toronto-Montreal-Ottawa) after WestJet during 2012 bolstered its frequencies on those routes along with introducing new transborder service from Toronto to New York LaGuardia. Air Canada has repeatedly stated its unit revenues have come under pressure in those markets as competitors increased capacity in those regions.

From its base at Toronto City Centre Porter serves the busy US northeastern transborder markets of Boston, New York (Newark) and Washington (Dulles). The carrier also operates its 70-seat Q400 turboprops to Chicago Midway.

Chicago Midway Airport Privatisation: Anatomy of a US airport lease

Just as with a bus, you wait 17 years for an airport privatisation to come along, one breaks down then you find two come at once.

That encapsulates the story of the US’ 1996 pilot Airport Privatization Program, which, after five years in the doldrums, suddenly sprang back to life in late Feb-2013 with the conclusion of the lease transaction on Puerto Rico’s San Juan Luis Munoz Marin Airport and with the completion of the RfQ (Request for Quotations) procedure on the second attempt to privatise Chicago Midway Airport.

Both of these events imply that life is returning to the US’ Airport Privatization Program, not surprisingly in light of the sequestration that is currently taking place, and due to the struggle between the Obama (Democrat) administration and the Republican majority in Congress to reach a political consensus on deficit reduction. Meanwhile, Airports Council International estimates the US airport system needs investments of USD14.3 billion annually until 2017.