January 2, 2009, 12:28 pm
How Deep Will Delta Cut at its Cincinnati Hub?
Posted by Matt Phillips
Plenty of pixels have been spilled over what Delta will do with service in Cincinnati following the official close of the Delta/Northwest merger deal. (If you’re interested in background, see this previous post.)
Recently, credit rating company Fitch weighed in on Delta’s plans for the Midwest hub, as part of a note in which it downgraded its ratings of the airport’s debt. There are plenty of tasty tidbits in the note — for starters, Delta reductions already announced through 2009 represent a nearly 30% cut in capacity at the airport, already the nation’s most expensive. Also, according to Fitch, Delta’s operation at Cincinnati is its second-largest domestic hub and the Atlanta-based carrier accounted for roughly 92% of total passenger volume in 2007.
Speaking of traffic, historically, Delta Airlines’ connecting traffic accounts for more than 70% of CVG’s total passengers. Besides downgrading the airport authority’s debt rating, Fitch analysts also said its outlook for future ratings adjustments on CVG debt was negative. Here’s why:
The Negative Rating Outlook reflects the ongoing uncertainty of future traffic as the airport’s largest carrier, Delta Airlines (Delta), begins to execute its merger with Northwest Airlines. As the two airlines harmonize their fleets and strategically deploy assets across their networks, the ability to maintain operations at four large connecting hubs within close proximity (Minneapolis, Detroit, Memphis, and Cincinnati) at current levels will be difficult. Further reductions in enplanements will increase financial pressure and likely result in the cost per enplaned passenger (CPE) having to rise to levels that make the airport less competitive …
Despite the airline’s public commitment to the airport through 2015 and the limited elimination of markets served, the airport has already experienced significant re-alignment and retrenchment by Delta as part of its reorganization from bankruptcy and the overall retrenchment in domestic capacity. The airport expects that enplanements in 2008 will be 6.7 million, down approximately 15% from 2007, with an additional 18% reduction in 2009 that would drop the total to 5.5 million, a level not seen since 1992.
Fliers who call CVG their home airport have a complicated relationship with Delta. The carrier’s overwhelming dominance at the airport is largely responsible for Cincinnati consistently grappling with some of the highest fares in the country. On the other hand, fewer Delta flights there will likely only push prices higher. Unless, of course, another carrier manages to somehow find a gap in Delta’s fortress hub and gain a toehold there.
http://blogs.wsj.com/middleseat/2009/01/02...b/?mod=yahoo_hs
So as long as Delta management keeps calling it "right" sizing, people will buy into their lies!
I just feel bad for the Delta employees in CVG, time to move or find a new career folks! Who knows, maybe WN will move in and you can truly experience "premier" treatment as an employee and as a professional.
How Deep Will Delta Cut at its Cincinnati Hub?
Posted by Matt Phillips
Plenty of pixels have been spilled over what Delta will do with service in Cincinnati following the official close of the Delta/Northwest merger deal. (If you’re interested in background, see this previous post.)
Recently, credit rating company Fitch weighed in on Delta’s plans for the Midwest hub, as part of a note in which it downgraded its ratings of the airport’s debt. There are plenty of tasty tidbits in the note — for starters, Delta reductions already announced through 2009 represent a nearly 30% cut in capacity at the airport, already the nation’s most expensive. Also, according to Fitch, Delta’s operation at Cincinnati is its second-largest domestic hub and the Atlanta-based carrier accounted for roughly 92% of total passenger volume in 2007.
Speaking of traffic, historically, Delta Airlines’ connecting traffic accounts for more than 70% of CVG’s total passengers. Besides downgrading the airport authority’s debt rating, Fitch analysts also said its outlook for future ratings adjustments on CVG debt was negative. Here’s why:
The Negative Rating Outlook reflects the ongoing uncertainty of future traffic as the airport’s largest carrier, Delta Airlines (Delta), begins to execute its merger with Northwest Airlines. As the two airlines harmonize their fleets and strategically deploy assets across their networks, the ability to maintain operations at four large connecting hubs within close proximity (Minneapolis, Detroit, Memphis, and Cincinnati) at current levels will be difficult. Further reductions in enplanements will increase financial pressure and likely result in the cost per enplaned passenger (CPE) having to rise to levels that make the airport less competitive …
Despite the airline’s public commitment to the airport through 2015 and the limited elimination of markets served, the airport has already experienced significant re-alignment and retrenchment by Delta as part of its reorganization from bankruptcy and the overall retrenchment in domestic capacity. The airport expects that enplanements in 2008 will be 6.7 million, down approximately 15% from 2007, with an additional 18% reduction in 2009 that would drop the total to 5.5 million, a level not seen since 1992.
Fliers who call CVG their home airport have a complicated relationship with Delta. The carrier’s overwhelming dominance at the airport is largely responsible for Cincinnati consistently grappling with some of the highest fares in the country. On the other hand, fewer Delta flights there will likely only push prices higher. Unless, of course, another carrier manages to somehow find a gap in Delta’s fortress hub and gain a toehold there.
http://blogs.wsj.com/middleseat/2009/01/02...b/?mod=yahoo_hs
So as long as Delta management keeps calling it "right" sizing, people will buy into their lies!
I just feel bad for the Delta employees in CVG, time to move or find a new career folks! Who knows, maybe WN will move in and you can truly experience "premier" treatment as an employee and as a professional.