Airline Mergers and the High Cost of Flying
TV coverage of the just-announced merger of Delta and Northwest gives the average viewer the impression that the sky is about to fall on travelers' pocketbooks.
NewsBusters' Jeff Poor had this review of how the Big Three networks' evening news programs covered the news:
All three network newscasts on April 14 reported the ... [deal] ... as if it were a conspiracy to bilk air travelers out of more money.
... ABC [World News Tonight] correspondent Lisa Stark said ... [that] "Delta operates 1,500 flights a day with hubs in Atlanta, Cincinnati, New York, and Salt Lake City. Northwest, some 1,200 flights a day with hubs in Detroit, Minneapolis, and Memphis. Put the two together, and passengers could take a hit."
... According to World News, two of the hub cities -- Memphis and Cincinnati -- could be de-hubbed after the merger.
... The other two networks were also critical of the merger deal. NBC Nightly News assumed the merger would cause fares to increase because of supply. CBS Evening News trotted out a Democratic pro-airline union congressman that opposed the merger.
Living in Greater Cincinnati, I suppose I should be worrying about the coming Armageddon caused by the loss of our precious Delta hub.
You must be kidding.
Here are some examples of what it has been like having an airport where one airline -- along with smaller, but Delta-beholden, Comair -- controls over 85% of the traffic.
I obtained the lowest quotes for trips from Greater Cincinnati (CVG) and nearby airports to a few common destinations. All flight quotes obtained assume departure on April 23 and return on April 25, and included all taxes and fees. Quotes were obtained on or before April 16, in time to take advantage of 7-day advance fares. All flights from Cincinnati were non-stops -- that's what hubs are for, right? Comparison quotes from other cities were non-stops unless otherwise noted, and I sought out non-Cincinnati non-stop alternatives on other airlines. Flights are on Delta unless otherwise noted. Non-locals should know that Dayton, Columbus, and Indianapolis are about 55, 110, and 110 miles, respectively, from Cincinnati.
Los Angeles (LAX):
- From Cincinnati -- $1,059
- From Dayton via Atlanta -- $360
- From Columbus via Atlanta -- $296.50
- From Indianapolis via Atlanta or Cincinnati(!) -- $352
- From Indianapolis via Chicago O'Hare, on United -- $301
- From Cincinnati -- $850
- From Dayton via Atlanta -- $776
- From Columbus via Atlanta -- $424
- From Indianapolis via Atlanta -- $424
- From Indianapolis, on American -- $382
Washington Reagan National (DCA):
- From Cincinnati -- $1,029
- From Dayton -- $576
- From Columbus -- $606
- From Indianapolis -- $310
- From Indianapolis, on US Airways -- $314
You can see why, for the past two decades, Greater Cincinnati travelers have been wearing out the roads to other towns, just to get tolerable air fares. All too often, as seen in the Indianapolis-to-Los Angeles example above, Delta trips originating in other cities go through Cincinnati for their connections!
I estimate that I have flown out of a city other than Cincinnati 80% of the time during the past ten years. I went through one two-and-a-half-year stretch involving about 25 trips without ever flying out of Cincinnati, either because my clients wouldn't put up with paying Cincinnati-level fares, or because I could not see sticking them with such fares.
Cincinnati turned into a "pass-through" airport once Delta became dominant. It became, and has remained, among the 25 or so busiest airports in the country only because so many travelers pass through it to make connecting flights. Meanwhile, we locals, unless we happen to work for one of the few large employers in the area that have special deals with Delta, begin our adventures in the sky elsewhere.
The hub setup has been great for airport employment, but I don't see how the rest of Greater Cincinnati is better off. In fact, I believe that some companies considering relocation or expansion here have thought better of doing so because of the impossible airfare structure. It has also hurt existing small- and medium-sized businesses struggling to compete against rivals in towns where air fares, thanks to multi-carrier competition, have been sane.
So you'll have to excuse me if I think that losing a Delta hub would not be the end of the world. In fact, as Dave at NixGuy noted on Tuesday:
The good news is that with an empty CVG, we could attract more discount flights or possibly even a discount hub. Less direct flights, but cheaper.
As usual, newscasts have focused on the short-term pains while ignoring the very real possibilities of long-term gains. After two decades experiencing the "benefits" of one dominant hub carrier, I'll take my chances on doing without one.
Tom Blumer owns a training and development company based in Mason, Ohio, outside of Cincinnati. He presents personal finance-related workshops and speeches at companies, and runs BizzyBlog.com.