**direct cut and paste from gomemphis.com**
Northwest Airlines announced Wednesday that it is cutting 18 percent of its flights in Memphis, a move that will cost the Memphis-Shelby Airport Authority $1.6 million a year.
On Jan. 6, Northwest will cut its Memphis flights from 242 to 198, essentially streamlining its four arrival and departure periods into three segments suited to business travelers and freeing up eight gates to its competitors.
"We are in a continual process of refining the proper amount of supply in this economic environment," said Tim Griffin, NWA vice president of marketing and distribution. "Conditions ebb and flow, and supply does as well."
About 55 Northwest employees - ticket workers, ramp employees and mechanics - will lose their jobs. Northwest has 1,866 employees based in Memphis.
Pinnacle Airlines, which does business as Northwest Airlink, will announce staff cuts today, said president Phil Trenary.
"We will be laying off more than 55," said Trenary. "They will be a mix of full- and part-time workers."
While most of the cuts will include regional jets and turboprops, they will affect five mainline jets.
The change, which reduces the airline's capacity here by 16 percent, should not be read as a sign that Northwest is phasing out Memphis, its smallest hub, Griffin said.
"This is the right thing at the right time," he said. "I wouldn't read anything into it than what it is."
The new flight schedule will start later in the day and end earlier. With a few exceptions, flights now out by 9 a.m. will start leaving then - northbound first - followed by southbound at 9:30 a.m.
Other northbound flights will begin departing at 2:30 p.m. and 6:30 p.m. The remaining southbound flights will start departing at 2 p.m. and 7 p.m.
The job losses are serious to Memphis, said John Gnuschke, director of the Bureau of Business and Economic Research at the University of Memphis.
"Clearly, Northwest Airlines and the airport are among the community's biggest assets," he said. "The quality and quantity of air service is a major positive factor when we try to recruit industry into this area."
Service to 44 of the 78 cities Northwest serves from here will be affected, including Denver, scheduled for one flight, down from two.
Cities going from four to three flights a day include Alexandria, La.; Columbus, Ohio; Gulfport, Miss.; Fort Walton Beach, Fla.; St. Louis and Louisville, Ky.
"We did not simply reduce one bank of flights," Northwest spokesman Kurt Ebenhoch said. "We tried to move flights around to meet the needs of business travelers."
For example, he said, the current 5 p.m. departures are too early for many business travelers, and the 9 p.m. too late.
"We're betting we can draw from both and make everyone happy," Ebenhoch said.
"But obviously, with less flying, we'll run the operation at a lower total cost and retain revenue," Griffin said.
The airline does not anticipate it will lose passengers because of the reduction.
But Larry Cox, president and CEO of the airport authority, expects an 18 percent reduction in flights will similarly decrease passenger counts, cutting into airport concession sales.
"We're not real sure of the effect this will have on our budget," Cox said. "A 16 percent change in capacity does not mean a 16 percent reduction of expenses or revenue."
While the reductions will affect the number of connect ing passengers, revenue from such profit centers as parking and car rental will not be, he said.
In June, the airport authority approved a $111.2 million budget for fiscal year 2004, based on estimates Northwest and other airlines submitted.
The authority purposefully used conservative figures because Northwest's numbers seemed high, Cox said.
Airport projects on tap to start this year, including the estimated $18 million redesign of the concession area, are so far unaffected.
The change essentially puts Memphis on par with Northwest's hubs in Minneapolis and Detroit where flights dropped after 9/11 have not been restored.
Northwest pulled its late-evening bank of flights in Memphis, but restored them in June 2002. "We are bigger in Memphis now than we were after 9/11," Griffin said. "We may have overshot the market a little."
Based on population, Memphis is the smallest hub in the United States, making it difficult for Northwest to significantly increase traffic either originating or destined for here.
Most passengers - between 60-70 percent - are connecting in Memphis from other flights.
"You need a good mix of originating and destination traffic and transferring traffic to grow," Cox said.
That vulnerability makes Memphis an easy target, said Ray Neidl, analyst with Blaylock and Partners in New York. "The big carriers are still trimming capacity," he said. "But they are not doing it in their major hubs."
Neidl believes Memphis will become increasingly less important to Northwest as the airline cements its alliance relationships with Delta, based in Atlanta, and Continental, based in Houston.