=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2004/04/28/f= inancial0851EDT0034.DTL --------------------------------------------------------------------- Wednesday, April 28, 2004 (AP) How a city can win by losing its airport hub status MELANIE TROTTMAN, The Wall Street Journal (04-28) 05:51 PDT (AP) -- Maybe losing an airport hub isn't so bad after all. Compare Nashville and Cincinnati. The average one-way domestic fare to fly out of Nashville International Airport was $138, or about 16 cents per mile, in the second quarter of last year, according to the U.S. Department of Transportation. From Cincinnati, the average one-way fare was 71 percent higher at $236, or 30 cents per mile. The difference? Cincinnati is a hub, Nashville isn't. With the nation's biggest airlines still retooling and sputtering toward financial recovery, industry experts say it's likely some hubs will continue to shrink, or disappear, stoking fears at the potentially orphaned cities that they'll have more limited airline service. St. Louis was crushed when AMR Corp.'s American Airlines shrank what was left of TWA, which had a hub there. US Airways Group already has threatened to cut operations further at its hub in Pittsburgh, and faces a battle at its Philadelphia hub with Southwest Airlines. Northwest Airlines has been reducing service at its hub in Memphis, and Delta Air Lines has in recent months been "realigning" its hubs in Salt Lake City and Dallas/Fort Worth, cutting the number of departures by its mainline Delta carrier and increasing service by its small-jet regional affiliates. Residents of Charlotte, N.C. -- where average fares are among the highest in the country -- have worried that the US Airways hub there also might be vulnerable to cuts, especially with the airline back in survival mode nearly a year after emerging from Chapter 11 bankruptcy protection. In fact, just Tuesday, US Airways said it plans to become less dependent on hub operations in general. The loss of a hub means fewer flights at the local airport and the likely end of nonstop service to Europe, factors that in the past made cities less attractive to relocating corporations. But in the current airline economy, losing a hub can actually leave a ci= ty better off. As the dominant airline shrinks, others can more readily boost service and increase competition. The airport can also more easily lure new entrants, particularly fast-growing low-cost carriers that can push down prices overall. And many companies now look to locate near airports with lower fares or less congestion for their traveling employees. When American started phasing out its hub in Nashville 12 years ago, locals feared a dearth of service. But low-fare Southwest Airlines picked up much of the slack domestically, now accounting for 42 percent of scheduled service compared with American's 15 percent, according to airport statistics. What's more, since 1993, average fares at the airport have dropped 22 percent, and corporate relocations to the area have climbed in recent years as companies focus more on the bottom line, said the city's Chamber of Commerce. In February, low-fare Frontier Airlines signed on to fly to Nashville saying the airport was more appealing because it doesn't have a mammoth dominant carrier. Frontier also said Southwest paved the way in Nashville to drawing passengers who live farther away from the airport, from such cities as Chattanooga, Tenn., and Louisville, Ky. The story is different at Cincinnati/Northern Kentucky International Airport. Officials there say they've found it impossible to recruit low-cost carriers despite the airport's abundance of empty gates and counter space. "We talk to them all the time. We even go see them," said Ted Bushelman, an airport spokesman. Part of the problem is that it's a major hub for Delta. The airline accounts for about 93 percent of service at the airport, which makes low-cost carriers reluctant to enter unless they're carving out new routes. Head-to-head competition would be risky because Delta could match the lower fares to head off any incursions from low-cost carriers. Furthermore, Cincinnati is small, unlike such hub cities as Atlanta, Chicago or Philadelphia, where low-cost carriers such as AirTran thrive. That means low-cost carriers worry there's not enough local traffic in Cincinnati to support them and a big dominant carrier. And it's passengers in Cincinnati who are paying the price. Those who fl= ew out of the airport in last year's second quarter paid an average of 61 percent more than for comparable domestic routes, according to the DOT. Passengers flying out of Nashville experienced the opposite, with an average fare "discount" of 12 percent. The fares between both cities and the San Francisco area, nearly the same distance from each city, illustrate the difference. In last year's third quarter, the average one-way fare from Cincinnati to the San Francisco area was $312.94, 74 percent more than the average fare of $179.56 from Nashville, according to Mike Allen, chief operating officer of Back Aviation Solutions, a New Haven, Conn., aviation consulting firm. Nashville's mix of air service has enhanced its appeal to companies, squashing the notion that only hub cities can draw major corporations, says Janet Miller, senior vice president of economic development for the Nashville Area Chamber of Commerce. "Occasionally we will hear about a very big relocation project that says 'we will only look at hub cities.' But it's becoming less frequent that we hear that," she says. "Everybody is really trying to get the most mileage out of their dollars." Louisiana-Pacific Corp. chose Nashville last fall as its new corporate headquarters over Charlotte, N.C. and Richmond, Va., and "the air service factor did tie in," says Hugh Donnolly, a consultant who helped Louisiana-Pacific make the move from Portland, Ore. "We looked at daily departures, nonstop destinations and the list of airlines" in each city, says Mr. Donnolly, who noted Nashville's appealing mix of seven major carriers, including Southwest, topped the list. (Richmond has six major airlines, but no low-cost carriers.) Nevertheless, travelers in Nashville do miss out on some conveniences. Cincinnati provides nonstop service to about 130 cities; Nashville provides it to 51. Cincinnati provides nonstop service to Europe; Nashville's nonstop international service consists of Canada and Mexico. But Nashville airport officials, once crushed to be losing hub status, a= re now happy with their tradeoff. Airport spokeswoman Allison Lanquist, noting the current economic struggle in the airline industry, says life without a hub is just fine. "You're solely dependant on the travel demands of your city," she says, "and don't have to rely on the ups and downs of what is considered a very volatile industry." ---------------------------------------------------------------------- Copyright 2004 AP