US airport hubs: Memphis Airport

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*

Source: OAG

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

Source: OAG

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%

Source: Centre for Asia Pacific Aviation & OAG

• 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

Source: Centre for Asia Pacific Aviation & OAG

• 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.