Where was Delta gonna put Mesa again???
February 12, 2009, 1:24 pm
Delta’s Fare Cuts at Cincinnati: Last Chance for the Hub?
Posted by Matt Phillips
Following our previous post about Delta’s plan to cut fares at Cincinnati – an airport that has long had some of the country’s highest ticket prices — we’ve heard from numerous passengers and airline industry observers wondering whether the cuts might foreshadow plans to cut service deeply at the airport.
“Makes perfect sense to lower fares,” wrote one commenter identifying himself as Shawn. “That way they can say they yields have tanked along with lower demand and there goes your CVG hub.”
Such sentiments might be somewhat cynical. But others in the industry we spoke with have voiced similar thoughts. Aviation consultant George Hamlin suggested that one could see the decision to cut fares at Cincinnati as a way of providing some cover for any eventual pullout from the hub. “This enables Delta to say, ‘Well, we tried. We put in low fares, and the economics weren’t there,’” Hamlin told the Terminal in brief interview.
Aviation consultant Michael Boyd emailed his thoughts on Delta’s move to cut fares at Cincinnati, writing that the “Bottom line is that Delta is making a good-faith effort to make the hub work better. They tried it a few years ago with their “Simplifares” experiment. Traffic spiked at CVG, but total revenues dropped. If that happens with this latest effort, there’s no blaming Delta for downsizing the operation.”
As we previously wrote about Cincinnati, Delta Airlines’ connecting traffic accounts for more than 70% of CVG’s total passengers. And the Atlanta-based carrier accounted for roughly 92% of total passenger volume in 2007. In a recent note from Fitch Ratings downgrading ratings on the Cincinnati airport authority’s debt, the ratings agency noted, “ongoing uncertainty of future traffic as the airport’s largest carrier, Delta Airlines (Delta), begins to execute its merger with Northwest Airlines. As the two airlines harmonize their fleets and strategically deploy assets across their networks, the ability to maintain operations at four large connecting hubs within close proximity (Minneapolis, Detroit, Memphis, and Cincinnati) at current levels will be difficult.”