Delta to close hub operations in Memphis
Minneapolis • Delta Air Lines said Tuesday that it will drop its money-losing hub in Memphis, Tenn., this fall, slashing flights there and eliminating 230 jobs.
The cuts begin Sept. 3, right after Labor Day weekend and the end of the busy summer travel season.
It's the outcome that was feared in small hubs like Memphis, Cincinnati, and Salt Lake City when the wave of airline mergers began five years ago with Delta's purchase of Northwest Airlines. Northwest had used Memphis as a hub, meaning it funneled passengers through there on their way to other destinations such as New York or Florida. For travelers, flying from a hub city means fewer layovers and a bigger choice of destinations.
Delta flew as many as 240 flights per day out of Memphis in June 2009, including a flight to Amsterdam. It has been ratcheting that number down ever since. It offers about 96 flights per day now, and will drop to 60 in the fall.
When it bought Northwest in 2008, Delta executives said repeatedly that no hubs would be closed because of the merger. The possibility of hub closures was a major topic of Congressional hearings into the deal.
At the time, Northwest executives said their Memphis flights made money. But Memphis was widely believed to be on borrowed time as a Delta hub. Atlanta sits just 370 miles to the east, and Atlanta-based Delta has turned that city's Hartsfield-Jackson International into the world's busiest airport, reducing its need for Memphis.
Demand has fallen and fuel prices are persistently high, making the Memphis hub unprofitable, Delta spokesman Anthony Black said on Tuesday. There's only enough demand for 50-seat regional jets on most routes, and Delta is phasing those planes out, he said.
Asked whether other Delta hubs are likely to be cut, Black said, "Delta continually reviews the viability of all markets and there are no other significant changes planned at this time."
Other airports have suffered after losing hub status over the past decade. St. Louis was once a base for Trans-World Airlines. When American bought TWA out of bankruptcy it had more than 500 daily flights there. By 2009 that was down to 36. Terminals at Pittsburgh International Airport were abandoned after US Airways began winding down its hub there in the mid-2000s.
The wave of airline mergers has raised questions about the future of Delta in Cincinnati as well as United Continental Holdings Inc.'s hub in Cleveland.
"The only thing we hear from Delta is that they think we're right-sized at this point," said Brian Gregg, a spokesman for Cincinnati-Northern Kentucky International Airport, another small Delta hub. In the 1990s it had 670 flights in and out; that's down to about 170 now.
Larry Cox, the president and CEO of the Memphis-Shelby County Airport Authority, said Delta's reductions give the airport a chance to recruit other airlines. He said that Southwest is expanding there in the fall. "We're looking on the bright side," he said.
Delta's Memphis job cuts are focused on customer service and cargo workers. They were laid out in a memo from Delta executives to workers on Tuesday. The memo said Delta would offer buyouts to some workers, and that there are other jobs available for those who remain.
U.S. Rep. Steve Cohen, a Tennessee Democrat, blasted Delta's decision. Cohen noted that Delta CEO Richard Anderson told Congress in 2008 that the merger of Delta and Northwest would not impact flights in and out of Memphis and had even hinted at the addition of a Paris flight. "He said that the merger was about addition, not subtraction," Cohen said.
Cohen said in a statement that he has reached out to the Justice Department "to discuss the growing evidence that Delta is violating the promises made to the Department when seeking antitrust immunity for their merger."
Shares of Atlanta-based Delta Air Lines Inc. rose 28 cents to close at $18.09.
Delta's operates its westernmost U.S. hub at Salt Lake City International Airport. The airline employs more than 3,000 people in the state, where about 600 of its pilots are based.