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VOL. 127 | NO. 43 | Friday, March 2, 2012

Seasonal Focus at Root of Flight Reduction

By Bill Dries

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Delta Air Lines Inc. executives quoted discount airline pioneer Freddie Laker last April when they talked about the market that was causing them the most problems as fuel prices soared.

A jumbotron welcomes visitors to Memphis International Airport, where international presence is shrinking and regular service to Amsterdam is ending. 

(Photo: Lance Murphey)

Glen Hauenstein, Delta executive vice president of network planning and revenue management, reminded those on an earnings call that Laker once said anyone can make money with transatlantic flights during the summer season.

The trick is making those flights work during the slow time of the year – winter.

“The game is not to give back the profits you make in the summer during the winter, Hauenstein said. “We didn’t do a good job of that.”

Delta president Ed Bastian said the transatlantic region was “largely driven by over capacity.”

And Delta’s mantra for the last year has been to root out over capacity permanently even if fuel prices drop. The mantra has meant significant domestic service cuts since last August at Memphis International Airport.

Almost a year later, Delta executives have solved the transatlantic problem at Memphis International Airport by announcing an end to regular Amsterdam-Memphis service out of the airport starting in September.

Delta had already cut back the flights out of Memphis to four a week.

And further cuts were in the wind for Memphis when KLM, Delta’s partner on the non-stop service, announced a summer season schedule last week to start March 25 with 14 flights a day at four airports – none of them Memphis.

The non-stop service between Memphis and Amsterdam began with a civic flourish in 1995 with a Northwest Airlines-KLM partnership.

More than the previously inaugurated flights to Cancun, Mexico, the Amsterdam service was touted by airport officials as a truer international connection because of Amsterdam’s status as the gateway to Europe for airline passengers traveling for business as well as tourism.

The customs gates at Memphis International were the setting for not only the inauguration of service but a new set of shops that catered to the tourist market with an emphasis on Memphis brands and the iconography of Memphis music.

The Amsterdam-Memphis service will continue through the coming summer season but with fewer flights than the summer season service out of Atlanta, Detroit, Minneapolis and New York City’s John F. Kennedy International Airport.

The Atlanta service, four flights a day compared to four a week in Memphis, will begin in June when the international terminal at Delta’s flagship hub opens to the public.

Meanwhile, in other airlines news, Pinnacle Airlines executives announced this week they are delaying the company’s annual shareholders meeting in mid-May as the company restructures and renegotiates key agreements with global air carriers and unions representing employees.

No new date has been set of the meeting. Earlier, Pinnacle executives had delayed indefinitely a Feb. 16 earnings report for the last quarter of 2011, its end of the calendar year statement and its report on the first half of the fiscal year.

The next critical date on the Memphis-based regional air carrier’s calendar is April 2. That’s when its interim financing agreements with United Air Lines Inc. and Export Development Canada run out.

The interim agreements involving Pinnacle’s financing and terms of use of Q400 aircraft are linked. The agreements could be extended. Pinnacle is seeking to make the modifications to its agreement to provide regional connecting service for United a permanent agreement.

Pinnacle CEO Sean Menke said last week a permanent agreement with United and a permanent pact cutting the wages of pilots represented by the Air Line Pilots Association are essential to the airline’s future.

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