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Latest Article On NWA At MEM In Memphis Paper

Thu Feb 26, 2004 10:23 am

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.

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RE: Latest Article On NWA At MEM In Memphis Paper

Thu Feb 26, 2004 10:27 am

Well as more and more code shares and alliances, the weaker hubs are going to be the victim of this trend. Also with airlines looking to cut costs and watch costs, again the weaker performing hubs will feel the effects first and deepest.....
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RE: Latest Article On NWA At MEM In Memphis Paper

Thu Feb 26, 2004 10:40 am

According to the Census Bureau's 2000 statistics, Memphis is the smallest metro area in the US with an airline hub. Just another stat to throw out there ...
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RE: Latest Article On NWA At MEM In Memphis Paper

Thu Feb 26, 2004 11:44 am

Another "well-duh" article

In all that "share gap" is pretty good. NW captures 60% of O&D, thats not too bad, and has 80% of the seats of of MEM. MEM is a hub, so it would only make sense for some sort of gap to exist.

Codeshares, however great they might seem are primarily for marketing. NW doesn't gain any revenue on flights operated by DL through ATL. If NW was revenue, then they gotta fly it.

Also, NW has a whole slew of CRJ's with about 40 some more to be delivered over the next year. If NW were to pull the plug on MEM, they've got an awful lot of aircraft, regional aircraft at that, somewhere else.

At least the airport admin. at MEM is trying to keep NW in town, as opposed to attempting to "lure more LCC's" He sure knows that LCC's would in the end mean less flight options for the people there.

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