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VOL. 126 | NO. 245 | Friday, December 16, 2011

Perl Addresses Local Airfare Concerns

By Bill Dries

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Memphis has more passenger air service per capita than its population, said Arnold Perl, the chairman of the Memphis-Shelby County Airport Authority board.

And most of the passengers going through Memphis International Airport – 70 percent – are not coming to or leaving Memphis as a destination. They are making connections to go somewhere else.

Since last August, those catching regional flights to destinations closer to Memphis have seen fewer flights as Delta Air Lines Inc. cut its capacity at Memphis International Airport, where it has one of its seven U.S. hubs.

Perl pointed out the airport retained its service to major markets but acknowledges prices have gone up for air travelers into and out of Memphis International. It is part of a cycle that began with a spike in airline fuel prices that has caused permanent changes in the way all of the major carriers do business.

Delta executives have been more outspoken than leaders of other major airlines in saying the cuts they have made in capacity won’t be coming back even if fuel prices go down.

“With the spike in fuel costs there aren’t enough seats on the 50-seaters to cover the added expense,” Perl said. “Our cuts were greater by virtue of being a DC-9 location as well as having a significant number of 50-seaters.”

Perl talked about the challenges facing Memphis International Airport the same week that average fare figures by the U.S. Bureau of Transportation Statistics for the quarter ended June 30 showed Memphis had the highest airfares in the country at an average of $476.22.

“We’ve seen, when you cut capacity, (there is) a bump in fares,” Perl said of airfares across the country. “So we have less service being offered at higher fares across the board.”

For the higher fares, Perl counters Memphis passengers get a higher level of service and fewer delays than at other airports and those efficiencies also apply to the airlines as well.

Memphis International, he said, has weathered the rethinking of aviation business plans better than most because of its cargo airport side of the business ledger as the World Hub for FedEx Corp. The cargo needs of FedEx have helped keep the costs down for Delta and other airlines coming into and out of Memphis.

Some critics argue the airport’s position as a Delta “fortress” hub means less competition when it comes to fares and inflates the fares passengers pay.

“In some communities they provide that level of service without a hub,” Perl said. “We would foresee in the next several years, additional service here in Memphis over and above what we see today.”

The additional service Perl is quizzed about most frequently is by Southwest Airlines, which in the last year bought AirTran, a carrier that already has a presence at Memphis International.

“We are one of the largest communities in the United States not served by Southwest Airlines,” Perl said. “They’re mindful of it. We’re mindful of it.”

Southwest executives were cautious after the AirTran merger was announced about even speculating about which markets it might expand into in the near term.

“Southwest in the past has been influenced by two factors – does the community have high fares and is it underserved with air service,” Perl said in echoing comments from Southwest leaders earlier this year. “Well, in Memphis we’ve been over served. As air service from the hub comes down somewhat, that equation necessarily changes.”

Perl was just re-elected by the airport authority board to a new five-year term as chairman that begins with the new year.

Perl, who said the authority has built the airport’s reputation on consistency, is the third chairman of the board since the authority was created in 1969.

“We’re keenly aware of the dramatic changes taking place among the airlines,” he said. “We are working to ensure that we will be protected short term and many years out.”

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