Memphis International 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.

Southwest continues de-hubbing Atlanta as ROIC targets start to look murky

Southwest Airlines continues to refine the combined operations it has with AirTran in Atlanta as part of its overall strategy to put less emphasis on Atlanta as a connection point and more focus on creating a rolling schedule in the market that is more reflective of its other top focus cities.

All of the efforts that are designed to reach fruition in Nov-2013 are being undertaken to improve the overall performance of Atlanta in the combined AirTran-Southwest network as the integration of the two carriers continues.

But in the short-term Southwest is battling some revenue weakness as unit revenues during 1Q2013 increased just roughly 2% and fell 4% to 5% during Apr-2013. Some of the weakness in Apr-2013 resulted from the timing of the Easter holiday and system slowdowns triggered by budget cuts in the US. Moving forward, Southwest believes it should post unit revenue improvements during the last two months of 2Q2013, with the momentum continuing throughout the rest of the year.

Delta leverages its strength in Seattle and Alaska Airlines partnership to bolster service to Asia

Delta Air Lines aims to leverage its strong position in Seattle and the long-standing relationship the carrier has built with Alaska Airlines to expand its offerings to Asia. Through the expansion, Delta could intensify competition from the US west coast to Asia with United, which has recorded some sluggishness in its Asian performance during the last year. If Delta succeeds in launching proposed new services to Shanghai and Tokyo’s Haneda airport, Seattle will join the airline’s Detroit hub in becoming a major Asian gateway for the carrier.

If the requisite regulatory approvals for seven weekly frequencies are awarded, Delta intends to launch new service between Seattle and Shanghai in Jun-2013. The carrier is also seeking approval to launch flights between Seattle and Tokyo Haneda. Delta already serves Seattle from Tokyo Narita. Delta is seeking approvals to transfer to the Seattle-Haneda route the traffic rights and Haneda slot it had used for its Detroit-Haneda service, which it axed on 30-Sep-2012 after declaring that the route was underperforming. But American, Hawaiian and United have also all applied to use the Haneda slot originally awarded to Delta for Detroit-Haneda service.

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

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 continues to perform surgery on its Memphis hub

Delta Air Lines is continuing to slowly pare down its hub in Memphis, Tennessee as recent schedule changes show the carrier is cutting about 49 daily flights beginning Sep-2012 in markets largely operated with 50-seat regional jets. Delta has found a four-bank schedule at Memphis provided too much capacity, and is trimming it down to three banks.

Once the changes that are scheduled to start at the beginning of Sept-2012 are complete, Delta will serve four destinations from Memphis with just seven weekly flights: Cleveland, Ohio; Columbia and Springfield, Missouri; and Fort Smith, Arkansas. The cuts will also affect Milwaukee, Wisconsin; Omaha, Nebraska; and Philadelphia, Pennsylvania, which will have just 14 weekly flights each from Memphis. Delta deploys 50-seat jets in all those markets except Philadelphia, where the carrier operates 76-seat regional jets.

US Airways solidifies hub strategy with new Washington National flights

US Airways has embarked on the last phase of a strategy to ensure the majority of its flights are operated in profitable markets and 99% of flights touch the carrier’s hubs or its eastern shuttle routes. The first roll-out of service to 22 new markets from Washington National Airport culminates a two-year effort by Delta Air Lines and US Airways to engineer a slot swap that resulted in US Airways gaining 42 slot pairs at National and Delta gaining 132 pairs at New York LaGuardia from US Airways. Once all the phases of new flights from National are complete, US Airways is banking on an annual USD75 million contribution to its revenue as it further cements its position as the leading carrier at the airport closest to the US capital.