Delta: 25% cut in flights will make Memphis a better hub

By Ben Mutzabaugh
March 23, 2011

Delta will eliminate about 25% of its daily departures at its Memphis hub.

Speaking to analysts earlier today in New York, Delta President Ed Bastian says the changes help make Memphis more of a "complementary flow" hub to Delta's biggest hub in Atlanta, according to The Associated Press.

Still, the move seems certain to stoke speculation about Memphis International's long-term hub prospects for Delta, which -- along with its regional affiliates -- accounts for more than 80% of the passenger traffic there.

The Commercial Appeal of Memphis writes "the cuts are expected to primarily affect smaller destinations, such as Montgomery, Ala., and Greenville, Miss., with smaller aircraft, primarily flown by Comair, Delta's regional airline partner, (that are) being retired from service, said Airport Authority President Larry Cox."

Overall, Delta's daily departures will drop from about 210 to between 170 and 150, Cox tells the Commercial Appeal. The overall number of seats will drop less dramatically, falling 8%-10%, according to Cox.

So, what does all of that mean for Memphis' hub prospects?

AP calls the cuts "a blow to an airport that has already wondered how long the airline would keep it as a hub."

But while the news isn't good for Memphis, the Commercial Appeal adds it's also not "the devastating blow predicted by naysayers when Delta announced plans three years ago to gobble up what was then the city's hub operator, Northwest Airlines."

Following that merger, Delta pledged that it would keep all of its hubs along with those that it acquired from Northwest. That included Memphis, which some worried might be too close to Delta's giant Atlanta base to continue to offer value as a connecting hub.

But, all along, Delta has said it hoped to utilize Memphis to relieve some connecting traffic away from Atlanta, where congestion and capacity have been nagging concerns for more than a decade.

Shifting some connecting passengers from Atlanta to Memphis also allows Delta to hold more Atlanta seats open for lucrative point-to-point business routes or pricey international flights.

For example, if Delta could connect a Raleigh/Durham-Los Angeles passenger via Memphis instead of Atlanta, that would in theory keep that passenger and also open seats from Atlanta that Delta could sell for higher fares -- either on the nonstop L.A.-Atlanta route or to a Raleigh passenger connecting via Atlanta to an expensive overseas destination such as London or Shanghai.

Memphis' hub fears have been heightened over the past 18 months as Delta has all but "dehubbed" its once busy Cincinnati base, leading some to wonder if Memphis would be next.

Like Memphis, Cincinnati is close to another hub: Detroit -- which Delta acquired in the Northwest merger. But, the difference with the Detroit-Cincinnati overlap is that Detroit has little problem with capacity or congestion, meaning Delta has less of a need to shift connecting traffic away from that hub to maximize its revenue there.

As for Delta's spin, Bob Cortelyou, Delta's senior vice president of network planning, tells the Memphis Business Journal:

"Our changes at Memphis are designed to improve the performance of the hub by trimming unprofitable flying on smaller, regional routes with little local demand and focusing our service on flights to the top destinations that matter most to Memphis customers."

He adds that service to major cities such as Boston, Chicago, Los Angeles, New York and Washington, D.C., will remain on the schedule -- as will all off Delta's current mainline service from Memphis.

The Atlanta Journal-Constitution says "Delta is also considering consolidating from three concourses to one in Memphis next year."

"A successful hub is a financially viable hub," Cortelyou says to the Business Journal. "Memphis has a long track record for efficient and cost-effective operations, which has helped preserve the hub for many years."

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Delta: 25% cut in flights will make Memphis a better hub

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