SLC hub sure to survive, thrive

Unlike operating on their own, a combined Delta Air Lines and Northwest Airlines would have the size and muscle to open routes across the world.
    That would bode well for Delta's hub at Salt Lake City International Airport, which has had to be content with funneling passengers bound for foreign destinations to other Delta hubs.
    The airport's traditional role of providing flights to other domestic airports will begin to change in June, when Delta launches its first trans-Atlantic flight from Salt Lake City to Paris.
    But if the proposed merger of Delta and Northwest is accomplished, more routes might be forged by the new Delta (as it would be called) from Salt Lake to other reaches of the globe.
    "The principal reason for the merger, [and] the benefit to Delta, is the Northwest routes to Asia. I think there's a real possibility Salt Lake would be connected to those Pacific routes," said David Swierenga, a Texas-based airline consultant and former chief economist for the Air Transport Association, an industry trade group.
    The idea may not be far-fetched. Glen Hauenstein, Delta's executive vice president of network planning and revenue management, last week didn't brush off the possibility of flights from Salt Lake to Tokyo, where Northwest has coveted landing spots at Narita International Airport.
    Delta President and Chief Financial Officer Ed Bastian expanded on that Friday in Salt Lake City. "We have not run the numbers yet, but we will be working with the airport [and others] in terms of looking at future [international] opportunities. But we do think that this merger gives us greater strength to have a much more vibrant hub in Salt Lake City."
    In an interview with The Tribune, Bastian also raised the possibility of a flight to Northwest's hub in Amsterdam from SLC. "When we do run the numbers, we are going to see Salt Lake-to-Amsterdam also works." The route would be predicated on the success of the SLC-to-Paris route and what happens to fuel prices. Bookings on the Paris route, which launches June 2, are good, Bastian said.
    The proposed merger would create the world's largest airline, with headquarters in Atlanta, a fleet of about 1,000 aircraft and the potential for $35 billion in annual revenues. Delta CEO Richard Anderson would retain that title as head of the merged airline, Northwest CEO Douglas Steenland would take a seat on the new board of directors and Bastian would retain his titles.
    Although industry analysts are skeptical of pledges by all three executives that the new airline will continue to operate both airlines' existing hubs, the execs insist that they are sincere. Seven hubs are in the United States, including Delta's operations in Cincinnati and a Northwest's in Memphis. The latter two are close to bigger hubs in Atlanta, Detroit and Minneapolis and were thought to be vulnerable to consolidation.
    "Whether it's Memphis or Cincinnati or Salt Lake, I think all of those hubs are going to have a secure future in this merged identity going forward and are going to make a contribution to the profitability of the airline," Bastian told reporters last week.
    "So it's not a political decision [to curry favor with federal regulators and skeptical employees]. It's an economic decision based on the very good performance and the strong demand for the service that emanates from those communities."
    Some analysts noted there was little in what Bastian said that would rule out a change of heart, especially if record-breaking crude oil prices continue to climb, and the economy grows weaker.
    "The mantra of consolidation has been reduction in excess [flying] capacity, and in announcing this merger not one single hub has been identified as surplus capacity," said Scott Hamilton, a Seattle-based aviation consultant with the Leeham Co.
    "It makes no sense, more or less in a straight line, to have hubs in Detroit, Cincinnati, Memphis and Atlanta. Those are all much too close to each other."
    Mike Boyd, an airline consultant in Evergreen, Colo., who was a vocal critic of US Airways' failed bid for Delta last year, argues that Delta and Northwest executives would not have promised to retain the hubs if they weren't serious.
    "Anderson is a man of integrity. The man couldn't lie with a banana in his mouth," Boyd said.
    Analysts are in agreement that the Salt Lake hub should be secure if the merger survives a tough antitrust review over the next several months, and if skeptical Northwest unions come around.
    "There really isn't a competing hub anywhere in close proximity. Northwest certainly didn't have any presence in the West, and that's Delta's only true hub in the West. So if the new Delta is going to have a Western presence, Salt Lake remains the obvious choice," said Hamilton, who also thinks Utah's hub may get a Tokyo route.
   pbeebe@sltrib.com