Northwest-Delta airline merger hurt hubs, including in Cincinnati

Fallout from the 2008 merger between Delta and Northwest airlines has led in part to a loss of flights, passengers and jobs at the Northern Kentucky-Cincinnati International Airport, Cincinnati officials say.

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Clik here to view.Associated Press fileDelta jet taxis past a terminal at the Cincinnati/Northern Kentucky International Airport, in Hebron, Ky.

With Tom Feran, Plain Dealer Reporter

CLEVELAND, Ohio -- Cleveland officials are looking anxiously to the south, where Cincinnati's diminished and struggling airport serves as a cautionary tale from the nation's last big airline merger.

Fallout from the late-2008 union between Delta and Northwest airlines has contributed to a loss of flights, passengers and jobs at the Northern Kentucky-Cincinnati International Airport, Cincinnati officials say.

The airport no longer has direct flights to London, Amsterdam, Frankfurt and Rome, and next month it is shutting down an entire concourse, causing a loss of 840 jobs.

The merger, along with the recession and other factors, has not been kind to the airport, which is in Kentucky's Kenton County, 20 minutes south of Cincinnati.

"It cast a pall on the community," said Steve Stevens, head of the Northern Kentucky Chamber of Commerce. "It's like when you're in a small town with a big factory that closes and people lose jobs. It really affects the attitude of the whole community."

Several small firms with European headquarters have left the city, and the region has lost hundreds of millions of dollars annually, officials said.

"We've lost some companies and we lost an important tool to keep and attract companies," said Doug Moorman, vice president for economic development at Cincinnati USA Regional Chamber.

The sliding fortunes of Cincinnati's airport is something Cleveland officials want to avoid, if a United-Continental union happens. As a Continental hub, Cleveland Hopkins International Airport has a $1 billion-plus impact yearly on the Northeast Ohio economy, officials said.

Hopkins must not become "a casualty of airline consolidation, as currently happening in Cincinnati-Northern Kentucky Airport," Cleveland Mayor Frank Jackson said in a letter last week, enlisting the help of U.S. Rep. Dennis Kucinich.

Delta's merger with Northwest, which closed in October 2008, created the world's largest airline.

That partnership appears to have been less severe for hubs in Minneapolis, Detroit and Memphis.

"In general, things have fared fairly well," said Scott Brockman, chief operating officer for the authority that runs the Memphis International Airport. "A lot of what used to go through Cincinnati now goes through Detroit, Minneapolis, Atlanta and Memphis."

Cleveland officials are right to be concerned about a merger fallout, said John LaCosta, an airline-industry consultant.

Cleveland's airport, which offers "excellent service" as a midsize hub, would have to compete with larger United hubs in Chicago and Houston for flights, LaCosta said.

On the plus side, Continental has an extremely loyal base in Northeast Ohio, he said.

"The strategic realignment [that follows a merger] is hard to predict but the fear is always there," LaCosta said. "Obviously, the larger, more dominant cities and hubs have survived the best."

Merger, recession reshaping Cincinnati airport

But not Cincinnati.

At one time, the Delta hub had 673 daily flight departures. Around the time of the merger, it was handling 323 flights a day at more than 100 gates. By next month, that daily number of departures will drop to 200, an airport official said.

Delta's 2005 bankruptcy, high air fares and volatile fuel costs are factors in the startling slide, industry experts say.

But more recent cuts, including the upcoming closing of the concourse, are due mainly to the merger and recession, Cincinnati officials believe.

"It's a combination of the two forces that are helping to shape the future of our airport," said Daniel Tobergte, head of an economic development group in Northern Kentucky.

A Delta spokesman said cuts since 2005 are largely an effort to "right size" the airport to customer demand and return it to profitability.

"We made the decision that the number of flights in the market were much greater than the local market could support," said Kent Landers, spokesman for Atlanta-based Delta.

Cincinnati airport has plenty of competition

Still, the merger has meant cutting back on some overlapping flights, to the detriment of Cincinnati airport, airport officials and industry experts said.

"With Detroit serving as a hub only 200 miles to the north and Memphis about 400 miles to the south and west, Cincinnati's formerly strategic position was less critical," according to a recent study of the airport by the Center for Asia Pacific Aviation, which analyzes the global airline market.

Cincinnati's airport already faced growing competition nearby, including airports in Dayton, Louisville, Columbus and Indianapolis, officials said.

Some passengers were heading to those airports, rather than paying some of the highest fares in the country to support Delta's hub services at the Cincinnati airport.

Cincinnati business leaders are frustrated, to say the least, although they emphasize the airport still has 60 nonstop flights daily, hitting the country's top business destinations. And it still has direct flights to Paris.

Heeding the pleas of local business leaders, Delta cut its airfares last year. That led to the highest increases in local passenger traffic in the country, during last year's third quarter, officials said.

Moorman, of the Cincinnati chamber of commerce, said the community understood Delta's stance five years ago that the airport, which expanded in the 1980s and 1990s, was just too large for a market that had dwindled.

"Delta says the airport is being 'right sized,' " Moorman said. "We're saying, 'We think you've right-sized enough.' "

Detroit, Minneapolis, Memphis airports fare better after merger

Detroit and Minneapolis landed in the winner's circle by keeping their status as hubs, but winning is relative. Neither city, so far, has come out ahead of where it was.

"Our numbers are down, but that's consistent with most airports across the country," said Patrick Hogan, public-affairs and marketing director of Minneapolis-St. Paul International Airport. "If you look at Delta hubs, we've had less reduction."

Minneapolis-St. Paul had a net loss of more than 4,000 flights by Delta-Northwest and its affiliates from 2008 to 2009, Hogan said.

"In terms of lost air service, I'm not sure we can attribute much if any of it to the merger," he said. "The numbers have been declining since 2004 overall at Minneapolis-St. Paul. That certainly accelerated with Northwest's bankruptcy filing, and after they emerged from bankruptcy there was the recession."

In number of jobs, the merged carrier has about 700 fewer employees than the 13,657 workers that Northwest Airlines had at the end of 2007.

Overall, Detroit airport sees no negative impact of merger

In Detroit, the workforce was reduced 15 percent last year, according to Michael Conway, public-affairs director of Detroit Metropolitan Wayne County Airport.

But he said the cuts reflected an attempt to control costs in a struggling economy, not corporate direction.

"It's hard to separate the impact of the recession," he said. "We feel that the merger has not had a negative impact on Detroit."

In fact, Detroit's importance continues to grow. The airport became Delta's second-biggest hub, behind Atlanta, when the company merged with Northwest, and it took on special status as the airline's primary connector for flights to Asia. Only San Francisco had more seats to Asia aboard U.S. air carriers last year.

Detroit was able to capitalize because its six jet runways give it "a lot more pavement than a lot of other airports," Conway said.

Two almost-new terminals increased its capacity to move and screen passengers efficiently.

FedEx fees help Memphis airport stay competitive after merger

At the Memphis airport, anxiety was high before the merger. But it has had relatively little impact, said Brockman, the airport authority's chief operating officer.

The number of flights and passenger traffic is down across all airlines, reflecting a national reality, Brockman said.

"That's more related to demand than the merger," he said.

The airport also has one of the lowest per-passenger costs in the country, thanks to the benefit of hosting FedEx's worldwide headquarters. Revenue from FedEx's landing fees and leases keeps costs low for passenger airlines.

"A lot of people were saying Memphis was too close to Atlanta and too small," John Moore, chief executive of the Greater Memphis Chamber of Commerce, said of anxiety before the merger. "But I knew early on the merger would be good for us. This airport is complementary to Atlanta."