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VOL. 128 | NO. 92 | Friday, May 10, 2013

Memphis Not Alone in Losing Flights

By Jennifer Johnson Backer

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Memphis residents won’t be surprised by the findings of a new study that shows a drastic reduction in air service at small and medium-sized U.S. airports in the last six years.

But the study, by the Massachusetts Institute of Technology, shows that Memphis is far from alone in being targeted for flight route cuts.

While the nation’s largest airports lost 8.8 percent of their domestic flights between 2007 and 2012, medium-sized airports like Memphis lost 26.2 percent of their scheduled flights, the study shows. Overall, U.S. airlines cut the number of scheduled domestic flights by 14 percent.

In Memphis, departures fell 40.6 percent to 58,263 in 2012, compared with 98,097 departures in 2007, the study by MIT researchers Bill Swelbar and Michael Wittman shows. The number of seats offered fell slightly more – by 41.7 percent to 4.3 million seats in 2012, from 7.4 million seats in 2007. This summer, the airport will be down to 91 total daily passenger flights.

Even the nation’s busiest airports have lost 9 percent of their domestic flights, as airlines hard hit by the difficult global economic climate, rising and volatile fuel prices and nearly a decade of losses and bankruptcies cut unprofitable routes. Network airlines like Delta Air Lines, US Airways, American Airlines and United Airlines have made the switch from smaller regional jets – which are less fuel efficient – to larger planes that fly in and out of bigger hubs.

From 2007 to 2012 domestic flight departures dropped by 40.6 percent at Memphis International Airport, 64.4 percent at Cincinnati/Northern Kentucky International Airport and 49 percent at Ontario (Calif.,) International Airport.

As airlines retire regional jets, the switch to larger planes has hurt airports like Memphis International that have traditionally relied on regional planes. Network airlines have shifted from a strategy focused on operating as many flights as possible in an attempt to gain market share, to filling airplane seats and building more efficient networks. That shift has reversed low profit margins and losses, at the expense of service options and routes at most U.S. airports.

The Memphis-Shelby County Airport Authority board is well aware of the hurdles. For months, the board has tried to figure out how to attract discount carriers like Dallas-based Southwest Airlines Co. amid public criticism over high airfares and fewer flights.

Jack Sammons, the board’s chairman, outlined the industry challenges for members of the Memphis World Trade Club in late April.

“It’s harder to justify flying these smaller airplanes,” Sammons explained. “The CRJs (smaller regional jets) that made these hubs profitable are now dinosaurs.”

From the 1990s into the early part of the 2000s, the number of regional jets serving smaller and medium-sized airports quickly increased fueled by consumer preferences and attractive economic conditions. But that trend reversed beginning in 2007, when fuel prices soared.

While not alone, Memphis International is among the hardest hit of the 35 midsize airports included in the study. From 2007 to 2012, only Cincinnati/Northern Kentucky International Airport – like Memphis, a Delta hub – and Ontario (Calif.,) International Airport lost more departures than Memphis, with a 64.4 percent reduction and 49 percent reduction respectively.

Pittsburgh International’s 39.7 departure drop and T.F Green Airport in Rhode Island’s 37.6 departure decline also rivaled Memphis. Some very small airports, like St. Augustine, Fla., have lost all commercial air services.

While some airports have offered free advertising, revenue guarantees and waived landing fees in an effort to entice carriers, the study warned conducting too many of these deals “runs the risk of drawing the ire of incumbent airlines that may threaten to exit if they do not receive the same preferential treatment as a new entrant.”

To be sure, there are opportunities for airports like Memphis International to attract discount carriers like Southwest. The airline said Tuesday, May 7, it will enter the Memphis market Nov. 3 with daily nonstop service to five cities: Houston, Baltimore, Chicago, and Tampa and Orlando, Fla.

Southwest is adding two new daily flights from Memphis to Houston and Tampa. The two new flights are in addition to previously announced flights from Southwest’s AirTran subsidiary to Baltimore, Chicago and Orlando that begin Aug. 11. Those flights also will operate under the Southwest brand beginning Nov. 3.

But even the enthusiasm about Southwest’s entry into the market is tempered. As operating costs at the nation’s largest low-cost carrier have risen, the airline has begun to adopt many of the strategies practiced by larger carriers, the MIT study says. Southwest cut about 10 percent of its domestic departures from 2007 to 2012 even as rivals JetBlue Airways, Frontier Airlines, and Allegiant Air and Spirit Airlines increased service. But those carriers tend to offer travelers fewer connecting opportunities.

Even the Airport Authority’s Sammons sounded a note of caution upon Southwest’s announcement.

“While we celebrate the arrival of this premier aviation brand name to Memphis,” he said, “we must all also remember that the long-term commitment to Memphis is dependent upon how well these initial flights perform.”

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