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Up in the Air

Memphis International Airport is enhancing its infrastructure as the number of Delta flights declines. But Southwest/AirTran is circling for a landing.



AC Wharton and Kevin Kane do about as much traveling as anyone in Memphis.

Last week, the mayor and the head of the Convention & Visitors Bureau and two others made a quick trip to St. Louis to try to persuade members of the Church of God in Christ (COGIC) to return their annual convention from St. Louis to Memphis.

The meeting only lasted about 90 minutes, but the round trip, by car, took eight hours. They could have saved some time by flying, but their tickets would have cost $976 apiece. So they hit the road instead.

Such is the choice of the Memphis business traveler who does not have the luxury of booking plane tickets weeks in advance to get lower fares.

"Because of commitments that change hour to hour, it is hard for me to book a ticket a month in advance," Wharton said. "You never know when a deal is going to pop up, so you can't get the discounts."

That includes the "Southwest effect" touted by Southwest Airlines and its Memphis fans who drive to Little Rock to save big bucks on certain flights rather than fly Delta Airlines out of Memphis, Delta's hub stepchild to Atlanta.

But the "effect" may be a thing of the past in 12 to 24 months. The recent Southwest Airlines/AirTran merger is expected to be approved in early 2012, a move that offers hope for lower fares for Memphis travelers — as well other Southwest perks such as no first- and second-class baggage charges.

But for now, "the economy has forced travelers to look for the best deal, and clearly sometimes that is to fly out of Little Rock or Nashville," Kane said.

One of those travelers is Tom Jones, a consultant who writes the Smart City Memphis blog.

"I used to defend the Airport Authority and say it's worth a 15 percent levy for flying direct and having a hub, but those days are long gone," Jones said. "I make my living selling my time, and I'd rather go to another airport, sit for an hour and a half, and catch another flight if I can save some money."

Currently, the "best deals" may come with a lot of inconvenience. If Wharton and Kane had flown Southwest to St. Louis for the posted fare of $184 last week, they would have had to drive two hours to Little Rock, leave cars at the airport, catch a plane at 11 a.m., spend the night at a hotel in St. Louis, grab a return flight to Little Rock Saturday morning, get their cars, and drive back to Memphis — about a 30-hour trip if all went well.

Wharton now drives to appointments in Tennessee or Mississippi rather than pay for plane tickets that may include a transfer because of flight cutbacks and consolidation in the airline industry. When he does fly, he often goes through Atlanta, the busiest passenger airport in the world, where a transfer can involve an airport train and a fast walk on a moving sidewalk.

"The whole world is about competition, and we've got to find a way to be much more competitive," Wharton said. "I can't relocate my headquarters, but the business community can, as we are seeing. But to pay a high fare and to have to go through Atlanta, that is kicking a man when he's down. That violates the Eighth Amendment against cruel and unusual punishment."

For Memphians who fly, there is not much relief in sight for the immediate future. Delta is cutting Memphis departures 25 percent and, like other carriers, tacking on fees for premium seats and baggage, from which it earned $424 million in the first half of 2011. According to federal Bureau of Transportation statistics, Memphis has the seventh-highest average fares ($454) among the top 100 airport cities in the country. Memphis ranks 65th in originating domestic passengers.

"Delta has about 85 percent of the seats here," said Larry Cox, head of the Memphis and Shelby County Airport Authority. "They essentially control the pricing in the Memphis market. Through the soft economy and increase in fuel prices (up from $2.29 per gallon to $3.29 per gallon in a year) Delta and other carriers have learned that the only way to make a profit is to cut capacity so that they reduce supply and even reduce demand."

In its annual report, Delta says its long-range strategy is "consolidating facilities in Atlanta, Minneapolis, Cincinnati, and Memphis." Atlanta-based Delta acquired hubs in Detroit, Minneapolis, and Memphis when it bought Northwest Airlines. They were derisively known as "Motown, Snowtown, and Notown."

The Airport Authority consists of seven members appointed for seven-year terms. Wharton's wife, attorney Ruby Wharton, is one of the members. The Memphis mayor makes five of the seven appointments.

"We have more air service on a per-capita basis than any city in America, and there is a price for that," said Airport Authority member and former Memphis city councilman Jack Sammons. "The authority has been aggressive for a generation in chasing low-cost carriers. It brought in Frontier Airlines, but they didn't last because Northwest matched their fares. The potential game-changer is Southwest buying AirTran. That is going to change Memphis prices in 12 to 24 months."

Southwest and AirTran combined will serve more than 100 destinations, "expanding the well-known Southwest effect of reducing fares and stimulating passenger traffic wherever we fly," according to Southwest. The merger is expected to be finalized in the first quarter of 2012, but the airlines say it could take another year to integrate their operations. The federal law known as the Wright Amendment, which restricts airline service into Dallas and Fort Worth, will be loosened in 2014, allowing Southwest more flexibility there.

Meanwhile, regional jets like the ones flown by Memphis-based Pinnacle Airlines are losing money due to the increase in the price of fuel and the inefficiency of regional jets that carry 50 passengers. The airline moneymakers these days are full-size 180-passenger jets and 70- to 76-passenger regional jets. Pinnacle announced last week that it lost $3.5 million in the third quarter.

The net effect has been to make Memphis International Airport, marketed as "America's Aerotropolis" and "America's Hassle-free Connecting Hub" by the Airport Authority, a hot and cold place. It is a busy economic engine when FedEx cargo planes land and take off and when Delta packs its arrivals and departures into a few hours each day. The airport has a new $72 million control tower and is building a parking garage and passenger transfer facility. Unlike Nashville, it has direct service to Amsterdam. But the passenger terminal is often eerily quiet now that Delta has begun cutting daily flights from 210 to 150.

"We talk to the airlines all the time, but they are reluctant to add capacity," Cox said. "One problem is Memphis is a fairly small market. It's difficult for us to get an airline to go anywhere other than one of their hubs. About 30 percent of our passengers are originations and destinations and the other 70 percent are getting off a plane, getting on the concourse, and going to another plane."

Cox predicts that Pinnacle "will survive and thrive." He is "optimistic" that Southwest will come to Memphis. And he said Delta has not told the Airport Authority that they plan on ramping back up or that adjustments are merely seasonal.

"If fuel prices come down, they have facilities here and an opportunity to grow again," Cox said. "Whether they will do that I don't know."

At its quarterly conference call with analysts in October, Delta president Ed Bastian said, "Our strategy has been to reduce flying in those markets which cannot generate adequate returns in a high-fuel environment. We will not chase market share at the expense of earnings. And I am pleased to say that plan is working."

On a seasonal note, Cox's advice for Memphis passengers planning on flying over the holidays: "Make plans as far in advance as possible and go online and look at all alternatives."

Where the Deals Are (and Aren't) on Air Fares

It is difficult to make generalizations about the cost of air travel for Memphians. Fares vary widely depending on destination, travel dates, advance booking, and willingness to endure transfers or drive to alternative cities such as Nashville and Little Rock. Here is a sampling of fares we found on the Internet last week.

Memphis to Amsterdam: Just for fun, a business-class ticket, nonstop on KLM and Delta, is $12,044. (This is not a typo!) Economy class is $1,699. Multiple carriers offer one-stop flights starting at around $1,200 from Memphis or Nashville.

Memphis to Atlanta: The lowest advance fare we found was $148 on AirTran.

Memphis to Dallas: On Delta, an advance fare can be as low as $285, but with no advance it can be as high as $1,277. To go there and back on the same day on United costs $2,760. Driving to Little Rock and taking Southwest, the fare is $149.

Memphis to St. Louis: On Delta, $965 on short notice. Book two weeks in advance and stay overnight, the fare on Delta is $274.

Memphis to Kansas City: With advance booking, Delta's fare is $421 (nonstop), but from Little Rock it is as low as $156 (one stop). From Nashville, Southwest has a special nonstop fare of $138.

Memphis to Washington, D.C.: On multiple carriers, $408 to $891 with advance booking. On short notice, $610 to $948.

Memphis to Chicago: United and Delta have nonstops for $255 with advance booking.

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