- Jan 10, 2008
- 333
- 142
D E L T A : de-hubbing MEM
- Thread starter Airlinelifer
- Start date
Memphis finally gets STL'd. Or PIT'ed. Or BNA'd. Here's the memo to employees:
http://ftpcontent4.w...v/DeltaMemo.pdf
http://ftpcontent4.w...v/DeltaMemo.pdf
robbedagain
Veteran
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,721
The local market for PIT, BNA, and CVG is larger than it is in MEM.
MEM existed as a hub for NW in order to provide a southern presence to a heavily northern-tier airline.
MEM wouldn't have been chosen as a hub for an airline that had choices as to where to place a southern hub.
Increased fuel prices and decreased demand as a result of higher fares have resulted in the loss of a lot of smaller hubs - and there are still some more whose future is not certain.
It should also not be forgotten that DL's historic roots are deeply connected to MEM and the south. DL has had to reduce MEM service to match the realities of the marketplace more than once.
Nonetheless, even with real economic reasons for this action, real people's lives are being impacted and my desire is that each of them land well on their feet.
MEM existed as a hub for NW in order to provide a southern presence to a heavily northern-tier airline.
MEM wouldn't have been chosen as a hub for an airline that had choices as to where to place a southern hub.
Increased fuel prices and decreased demand as a result of higher fares have resulted in the loss of a lot of smaller hubs - and there are still some more whose future is not certain.
It should also not be forgotten that DL's historic roots are deeply connected to MEM and the south. DL has had to reduce MEM service to match the realities of the marketplace more than once.
Nonetheless, even with real economic reasons for this action, real people's lives are being impacted and my desire is that each of them land well on their feet.
One semi-positive note is at least MEM is still a hub for Fedex. Unlike an airport such as PIT, who was very reliant on US, the MEM hub had at least two big players (before this announcement that is).
MEM seemed to hang on for a long time. Sorry for those affected by this. Now let's see if Frontier will return and add lots of flights.
I wonder if MEM ever made money for Northwest airlines.
Does anyone know which cities will be kept or which will be going? Is DEN, LIT, DCA, ORD, CLT going away?
I wonder if MEM ever made money for Northwest airlines.
Does anyone know which cities will be kept or which will be going? Is DEN, LIT, DCA, ORD, CLT going away?
Kev3188
Veteran
We all knew it was coming, no matter how many times DL leadership said otherwise.
Interesting that the drop to 60 flights/day really isn't that far. The article notes ~90 daily, but if you factor in the Sat. schedule, they're really only averaging ~77.5 a day as it is. This is just the 1000th cut... Sure a different world from when I worked there...
As for the insourcing piece, it's long overdue; they've messed around with parts of the DCI operation here and there for awhile, instead of just making a wholesale move.
If F9 does anything, it'll be a nominal increase.
As for what stays?
The hubs are all safe bets. After that? Who knows? The article does mention retaining 16 of the top 20 O&D markets, so I guess that's as good of jumping off point as any...
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,721
Kev,
You are absolutely right regarding the scope of what is happening in MEM. The real issue is not that DL is reducing a huge number of flights but that they are intentionally making the decision to no longer attempt to connect passengers over MEM and flight schedules will likely be released in the next few weeks – if not days –to show that.
The impact on staffing for DL at MEM will be obvious. If DL is no longer trying to connect passengers, they will optimize the schedule for connections at other hubs as well as optimally schedule for the efficiency of the rest of the network as well as staffing of the MEM operation.
DL’s announcement regarding MEM sounds very similar to what WN recently announced in ATL; hubs are expensive to maintain if they are not working efficiently. As with all hubs, when you start taking away flights from the hub, it doesn’t take long before what is left no longer works well and the whole hub no longer works.
MEM survived as long as it did because it did serve some connecting markets in the DL network more efficiently than DL can serve them over ATL including service to the west from a number of cities in the south that are several hundred miles west of Atlanta. DL faced the same problem w/ DFW and maintained DFW as long as it did for the same reason but in both cases DFW and MEM were closed as hubs because the relatively small gain to the DL network cannot offset the higher costs. DFW and IAH and to a lesser extent DEN are far better positioned and have larger local markets that help support the long, thin flights from the deep south and south central US to the west. DFW will undoubtedly continue to add flights from some of these cities to the west via LAX, SLC, and even MSP but DL has a strategic weakness in the southeast compared to AA and UA and there is no easy fix other than point to point flying in markets that support it.
It is true that the drawdown of MEM took a lot of time and conventional wisdom says that it is better to deliver bad news quickly while dragging good news out over a period of time. Nonetheless, you have to give DL credit for trying to make MEM work, even if most expected it couldn’t, esp. since it had such a high percentage of 50 seat RJs. It is also likely that the drawdown of MEM was specifically tied to the plans to reduce the 50 seat RJ fleet; the 717s will start arriving and the withdrawal of the 50 seaters will increase about the time MEM is closed.
The economics of the 50 seaters are not changing other than for those 50 seaters that are new enough that heavy maintenance will not be an issue for several years. Fuel is still expensive and pilot costs will rise as new FAA regulations make it harder for regional carriers to use pilots the way they have in the past; add in the coming shortage of pilots because pay and career advancement doesn’t justify the cost of private training and the military is providing fewer and fewer pilots to the private sector the economics of regional carrier flying will continue to deteriorate. DL just happens to be ahead of its peers in addressing the issue which should not only help DL’s profitability but also help them gain market share by offering mainline jet service in markets where other carriers can only offer RJs.
Remember that the price of jet fuel has increased even since the DL-NW merger was announced and it has only been in the last two years or so that it has become apparent that the price of jet fuel would remain about $3/gal on a permanent basis. No one, including DL mgmt. knew that years ago and that reality does shape the reality airlines have to face... there are affects of that on the TATL network as much as there is on the domestic market.
It is very possible that the decision to close MEM as a hub is tied to the ability to renegotiate ground service contracts; if DL had closed down MEM earlier, it might have had to displace more of its own workers from MEM. By taking over ground handling of all flights, DL improves the economics of the whole operation while reducing the number of employees that have to be displaced.
Airline Employee,
As noted, the most likely cities that will be chopped are the short-haul markets in the south, Midwest, and south-central parts of the US and those without much local traffic. The top markets on the coasts, DL hubs, a few large Midwest markets, and possibly some Florida markets will likely retain service.
F9 or other airlines might add new service from MEM but remember that CVG and other former hubs that have larger local markets have been in the same position. WN knows full well the size of the MEM market and is not likely to add more service than the city can support while F9 still has major long-term strategic issues to resolve in order to secure its future; they could add some service in the short-term but they can’t be counted on as a long-term player.
Further, DL has maintained its share of the CVG local market very well despite cutting out a lot of capacity; they have reduced the CVG hub in such a way so as to retain the local traffic while cutting the connecting passengers. It would be a surprise if DL hasn’t figured out how to do the same thing which means that the ability of other carriers to pick up traffic in MEM is limited.
You are absolutely right regarding the scope of what is happening in MEM. The real issue is not that DL is reducing a huge number of flights but that they are intentionally making the decision to no longer attempt to connect passengers over MEM and flight schedules will likely be released in the next few weeks – if not days –to show that.
The impact on staffing for DL at MEM will be obvious. If DL is no longer trying to connect passengers, they will optimize the schedule for connections at other hubs as well as optimally schedule for the efficiency of the rest of the network as well as staffing of the MEM operation.
DL’s announcement regarding MEM sounds very similar to what WN recently announced in ATL; hubs are expensive to maintain if they are not working efficiently. As with all hubs, when you start taking away flights from the hub, it doesn’t take long before what is left no longer works well and the whole hub no longer works.
MEM survived as long as it did because it did serve some connecting markets in the DL network more efficiently than DL can serve them over ATL including service to the west from a number of cities in the south that are several hundred miles west of Atlanta. DL faced the same problem w/ DFW and maintained DFW as long as it did for the same reason but in both cases DFW and MEM were closed as hubs because the relatively small gain to the DL network cannot offset the higher costs. DFW and IAH and to a lesser extent DEN are far better positioned and have larger local markets that help support the long, thin flights from the deep south and south central US to the west. DFW will undoubtedly continue to add flights from some of these cities to the west via LAX, SLC, and even MSP but DL has a strategic weakness in the southeast compared to AA and UA and there is no easy fix other than point to point flying in markets that support it.
It is true that the drawdown of MEM took a lot of time and conventional wisdom says that it is better to deliver bad news quickly while dragging good news out over a period of time. Nonetheless, you have to give DL credit for trying to make MEM work, even if most expected it couldn’t, esp. since it had such a high percentage of 50 seat RJs. It is also likely that the drawdown of MEM was specifically tied to the plans to reduce the 50 seat RJ fleet; the 717s will start arriving and the withdrawal of the 50 seaters will increase about the time MEM is closed.
The economics of the 50 seaters are not changing other than for those 50 seaters that are new enough that heavy maintenance will not be an issue for several years. Fuel is still expensive and pilot costs will rise as new FAA regulations make it harder for regional carriers to use pilots the way they have in the past; add in the coming shortage of pilots because pay and career advancement doesn’t justify the cost of private training and the military is providing fewer and fewer pilots to the private sector the economics of regional carrier flying will continue to deteriorate. DL just happens to be ahead of its peers in addressing the issue which should not only help DL’s profitability but also help them gain market share by offering mainline jet service in markets where other carriers can only offer RJs.
Remember that the price of jet fuel has increased even since the DL-NW merger was announced and it has only been in the last two years or so that it has become apparent that the price of jet fuel would remain about $3/gal on a permanent basis. No one, including DL mgmt. knew that years ago and that reality does shape the reality airlines have to face... there are affects of that on the TATL network as much as there is on the domestic market.
It is very possible that the decision to close MEM as a hub is tied to the ability to renegotiate ground service contracts; if DL had closed down MEM earlier, it might have had to displace more of its own workers from MEM. By taking over ground handling of all flights, DL improves the economics of the whole operation while reducing the number of employees that have to be displaced.
Airline Employee,
As noted, the most likely cities that will be chopped are the short-haul markets in the south, Midwest, and south-central parts of the US and those without much local traffic. The top markets on the coasts, DL hubs, a few large Midwest markets, and possibly some Florida markets will likely retain service.
F9 or other airlines might add new service from MEM but remember that CVG and other former hubs that have larger local markets have been in the same position. WN knows full well the size of the MEM market and is not likely to add more service than the city can support while F9 still has major long-term strategic issues to resolve in order to secure its future; they could add some service in the short-term but they can’t be counted on as a long-term player.
Further, DL has maintained its share of the CVG local market very well despite cutting out a lot of capacity; they have reduced the CVG hub in such a way so as to retain the local traffic while cutting the connecting passengers. It would be a surprise if DL hasn’t figured out how to do the same thing which means that the ability of other carriers to pick up traffic in MEM is limited.
All the best to those who will be impacted.
Rep Steve Cohen must be mad as hell now:
http://youtu.be/CVGxDFeoyBY
http://youtu.be/uSCf1pCKerc
Josh
Rep Steve Cohen must be mad as hell now:
http://youtu.be/CVGxDFeoyBY
http://youtu.be/uSCf1pCKerc
Josh
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,721
and yet we have seen the same thing multiple times by other legislators regarding other issues.....
The airline industry was deregulated and some continue to want airlines to provide services that cannot be economically justified or serve as collectors for even more government spending.
ALPA got it right here. This is labor leadership in the marketplace of ideas and government policy.
http://finance.yahoo.com/news/alpa-misguided-u-policy-unlevel-152300596.html
The airline industry was deregulated and some continue to want airlines to provide services that cannot be economically justified or serve as collectors for even more government spending.
ALPA got it right here. This is labor leadership in the marketplace of ideas and government policy.
http://finance.yahoo.com/news/alpa-misguided-u-policy-unlevel-152300596.html
The guy doesn't understand the fundamentals of the airline industry let alone any other business. An airline hub is only as healthy as the community it serves. MEM faceshigh crime, high unemployment and has been harder hit in the downturn than other DL hubs and a much smaller corporate base.
Josh
Josh
If it were not for states/NW cities in places like ND/SD/MT,....MSP numbers would be shrinking next.
DL cares a whole lot more about SLC than MSP, And, if they could have gotten away with it, they would have taken NRT/DTW and AMS ONLY from NW.
As the great NW employees KNOW, the 'Big D' ain't foolin' nobody !
F-Delta !
DL cares a whole lot more about SLC than MSP, And, if they could have gotten away with it, they would have taken NRT/DTW and AMS ONLY from NW.
As the great NW employees KNOW, the 'Big D' ain't foolin' nobody !
F-Delta !
WorldTraveler
Corn Field
- Dec 5, 2003
- 21,709
- 10,721
F*(% DL because they won’t operate a money-losing hub? Obviously the folks down in ATL have figured out they aren’t a charitable organization. I’m sorry MEM isn’t working based on industry economics but there is no airline in the US that can sustain money-losing operations on a long-term basis if they intend to continue to exist. DL isn’t the only airline that has figured out that key principle of business.
Since you are close to the seat of power in the USA, you might want to let our elected leaders in Washington know that the US airline industry could sustain a whole lot more flights and thus jobs if domestic tickets were not taxed at a rate of 15-25% or more as they are now, higher than nearly every other industry. Because airlines are businesses, they have to adjust their capacity to the demand based on price levels. Since airlines and consumers have no choice regarding paying taxes, the result based on the high tax levels we have is fewer flights and fewer jobs.
Your comment about MSP is childish and devoid of understanding. DL closed NW’s HDQ but still operates a viable and profitable hub where DL’s capacity changes very closely correlate to the overall capacity changes in the industry over the past five years, largely driven by the abovementioned taxes and increased in fuel prices. DL remains one of the largest private employers in MN. SLC and MSP are not duplicate hubs and work together with DTW to provide DL with great network strength along the northern tier of the US. Unless you missed it, UA pulled CO’s headquarters out of Houston and there is no threat of that hub closing, despite UA’s temper tantrums about doing so if the City allowed WN to start int’l flights from HOU. And then we have other airlines that not only have removed the headquarters of the airlines they acquired from the city where it previously existed but also closed the hub.
Since you are close to the seat of power in the USA, you might want to let our elected leaders in Washington know that the US airline industry could sustain a whole lot more flights and thus jobs if domestic tickets were not taxed at a rate of 15-25% or more as they are now, higher than nearly every other industry. Because airlines are businesses, they have to adjust their capacity to the demand based on price levels. Since airlines and consumers have no choice regarding paying taxes, the result based on the high tax levels we have is fewer flights and fewer jobs.
Your comment about MSP is childish and devoid of understanding. DL closed NW’s HDQ but still operates a viable and profitable hub where DL’s capacity changes very closely correlate to the overall capacity changes in the industry over the past five years, largely driven by the abovementioned taxes and increased in fuel prices. DL remains one of the largest private employers in MN. SLC and MSP are not duplicate hubs and work together with DTW to provide DL with great network strength along the northern tier of the US. Unless you missed it, UA pulled CO’s headquarters out of Houston and there is no threat of that hub closing, despite UA’s temper tantrums about doing so if the City allowed WN to start int’l flights from HOU. And then we have other airlines that not only have removed the headquarters of the airlines they acquired from the city where it previously existed but also closed the hub.
yoyodyne
Veteran
The UA cutbacks in IAH were largely seasonal adjustments that are done every year without fanfare.
UA still has a decent corporate presence in the Houston area and that won't be changing from what I have heard. They are spending a good amount on new UAX facilities in Terminal B.
Josh
UA still has a decent corporate presence in the Houston area and that won't be changing from what I have heard. They are spending a good amount on new UAX facilities in Terminal B.
Josh
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