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Flying Low

Loss of Delta hub clears the way for lower-cost carriers.

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They say things get worse before they get better, and it looks like Memphis International Airport may be on its way to rock bottom after Delta cut 29 more flights and took away the airport's hub status last week.

But that might not be a bad thing, according to Smart City Consulting's Tom Jones, who started the "Delta Does Memphis" Facebook page last summer in response to Delta's higher-than-average Memphis airfares.

"The cuts were expected, and many of us expect the flights to be reduced even more after the first of the year. At this point, it feels like the sooner, the better," Jones said. "Let's just get to what bottom is going to be, so we can start working on coming back to where we need to be."

Citing higher fuel costs, the inefficiency of Delta's 50-seat aircraft, and lower local market demand, Delta announced last week that it would cut 29 direct flights to 12 destinations, many of them within driving distance from Memphis.

"You have access to all the destinations that you had before, but now they've become a one-stop through our other hubs versus a direct flight," said Delta spokesperson Anthony Black.

Memphis is no longer a hub for Delta or any other carrier, and that means no one is catching a connecting flight out of the Memphis airport except in emergency rerouting situations. But low-cost carrier Southwest Airlines is set to launch in Memphis in November with six initial flights, and Jones believes Southwest service will be the beginning of something big here. But it won't happen overnight, he said.

"I think they'll see a windfall of opportunity here if Delta continues to cut flights," Jones said. "But they are tough, hard-nosed business folks who want to see that Memphians are willing to fly them instead of what few flights Delta has left."

Larry Cox, president of the Memphis Airport Authority, said Southwest will likely allow some time for Memphis travelers to use up their Delta frequent-flier miles before expanding their operations in a big way.

"Every frequent flier in Memphis probably has a Delta credit card or frequent-flier miles, and even though they know Delta will be a much smaller airline, they want to use their built-up miles. Southwest wants to be prudent and try to come in and win over passengers," Cox said.

Southwest will likely attempt to win over passengers with their famously lower-cost airfares, but Jones said Delta may also lower fares on their remaining flights to compete. Memphis has historically been anywhere from number one to number five on lists of the highest airfares in the country, but those are already going down as Delta cuts flights and anticipates the arrival of Southwest.

The average ticket price in the first quarter of 2013 was $478, down from $525 during the same time period a year ago. But it's still about $100 higher than the average national airfare for the first quarter.

"As we get into November, I expect new low-cost airlines in the Memphis market, and our airfares will continue to come down," Cox said.

There is a downside to Memphis losing its Delta hub, however. Without transfer flights coming into Memphis, there's less need for retail and restaurant businesses in the airport. The smoker-friendly Blue Note Café closed last week.

"This transition period, from when we hit bottom and start moving up, is going to be fatal for some businesses," Jones said. "And that's sad because there are some locally owned businesses at the airport."

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