Action urged to save NWA hub
'Share gap' in Memphis worries airport authority chief
By Jane Roberts - Memphis Commercial Appeal
February 25, 2004
Thanks to Northwest Airlines, only Cincinnati and Anchorage top Memphis in departures per 1,000 people.
But NWA market share is off here, an ominous sign as airlines restructure and close hubs nationwide.
In remarks to the downtown Rotary Club Tuesday, Arnold Perl, chairman of the Memphis-Shelby County Airport Authority, said 60 percent of Memphis passengers choose Northwest - which provides 80 percent of the total airplane seats here - causing a "share gap" of about 20 percent.
"This presents a source of concern," Perl said. "We have a great relationship with Northwest, but relationships only go so far."
Northwest also has share gaps at its hubs in Minneapolis and Detroit, but spokesman Kurt Ebenhoch said they are "significantly lower.
"Every airline has some sort of gap out of their hub because there are more seats out of that market," he said.
Although Southwest Airlines, the largest low-cost carrier, doesn't fly into Memphis, it's a factor nonetheless because Memphians drive to Little Rock or Nashville for cheaper flights, Perl said.
The gap persists in part because Memphis is the smallest hub city in the nation. Only 23 percent of the passengers at Memphis International Airport originate here.
"The figures range from 25 to 35 percent in every other airport in the U.S.," Perl said. "In an era of restructuring, some financial analyst is going to question, 'What about Memphis.'
"We've got to come up with countermeasures to make sure we keep the hub," he said. "The time to do something is now."
Since 9/11, American Airlines has reduced its hub in St. Louis by more than 50 percent. Others, including USAir and Delta Air Lines, have scaled back 25 percent at hubs in Pittsburgh, Dallas/Ft. Worth and Salt Lake City.
Northwest spokesman John Moore says Memphians can help by planning ahead.
"We're asking you to help us," he told the Rotarians.
"Look at the airline schedule before you plan your meeting. The 77 percent of traffic originating in other cities are getting your low-cost seats."
Northwest has repeatedly said Memphis is central to its domestic hub strategy, but analysts have questioned that, particularly as mainline carriers continue to cut seats.
Ray Neidl, analyst with Blaylock and Partners in New York, expects Memphis will be increasingly vulnerable as Northwest's alliance with Delta and Continental gains ground.
In January, Northwest announced 15 new nonstop flights out of Memphis, including daily service to Toronto.
"We hope the increased number of nonstop destinations we serve out of Memphis is a further example of our commitment," Ebenhoch said.
I know, this topic ranks up there with the DC-9 replacement topic, but I just thought I would throw it out there for the masses.
Always a pallbearer, never a corpse.