Travel Forum / Travel Types / Air Travel / May 2008

Another sign of decay in the air transport system.

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Fuel's Rise Hurts Pittsburgh, Cincinnati as Airlines Cut Flying

By Mary Jane Credeur

May 28 (Bloomberg) -- As Delta Air Lines Inc. and US Airways Group Inc.
drop flights to trim record fuel bills, passengers in Pittsburgh and
Cincinnati are feeling the pain.

Pittsburgh, home to 12 Fortune 1000 companies, lost nonstop service to
London, Paris, Frankfurt and 19 U.S. cities when US Airways pared flights
this year at its former hub by a third. Delta's Comair cut back by 10
percent in Cincinnati, the headquarters of Procter & Gamble Co., the world's
largest consumer-products maker.

The result is a scramble by corporate fliers for connections once taken for
granted. Airports in Pittsburgh and Cincinnati are among 120 where airlines
reduced seating capacity at least 10 percent in the past year, with more
cuts likely to offset the 83 percent, 12-month surge in the cost of jet
fuel.

``It turns what used to be a one-day trip into at least a two-day trip,''
said Doug Moormann, a Cincinnati USA Regional Chamber vice president and
frequent flier to Washington. ``There are fewer flights. The times aren't as
good. The planes are smaller. There are fewer seats available.''

Regional business centers such as Oakland, California, Pittsburgh and
Cincinnati are being hit hardest as airlines abandon routes, shift to
smaller planes and fly less frequently. Calyon Securities analyst Ray Neidl
estimated last week that carriers need to chop U.S. seating capacity by 20
percent, the equivalent of the domestic flying done by US Airways,
Continental Airlines Inc. and Frontier Airlines Holdings Inc.

Even at Atlanta's Hartsfield, Chicago's O'Hare and Dallas- Fort Worth, the
three busiest U.S. airports, weekly seating declined at least 2 percent.

`Unprecedented'

``It's unprecedented. I've never seen the major carriers move with such
aggressive cuts in capacity other than after the 9/11 attacks,'' said John
Walsh, president of consulting firm Walsh Aviation in Annapolis, Maryland.
``This time, it's deeper and it's permanent. There's a sense of
desperation.''

Forty-nine cities are losing scheduled service entirely. This includes three
state capitals -- Trenton, New Jersey; Topeka, Kansas; and Santa Fe, New
Mexico -- as well as hamlets such as Chicken, Alaska, population 37,
according to U.S. Transportation Department data.

Those cities' reductions represent about 2.4 percent of the 550,000 weekly
seats cut at the U.S. airports that lost domestic flights.

Driving the search for savings are losses that JPMorgan Chase & Co. analyst
Jamie Baker estimates may reach $7.2 billion this year among the biggest
U.S. airlines.

Matching American

Rivals will have to match plans announced last week by AMR Corp.'s American
Airlines, the world's largest carrier, to reduce domestic seats by as much
as 12 percent, according to analysts including Michael Derchin of FTN
Midwest Research Securities in New York.

United, Delta, Continental and Northwest Airlines Corp., which round out the
top five U.S. carriers after American, have announced pullbacks so far
ranging from 5 percent to 10 percent.

Some officials say their airports' lost service is probably gone forever.
The Trenton airport now projects a $1 million deficit without revenue from
passenger fees, said Mercer County Executive Brian Hughes. Residents must
drive 45 minutes to the Philadelphia airport or about an hour to Newark --
and even that option becomes less attractive with the rising cost of
gasoline.

Losing Appeal

Pittsburgh and Cincinnati civic leaders say having fewer nonstop flights may
make it more difficult to appeal to businesses trying to relocate or grow.

In Pittsburgh, home to U.S. Steel Corp., the second-biggest U.S. steelmaker
by market value, US Airways's most-recent cuts extended a six-year airport
decline. Traffic has dropped by half over the period to 9 million
passengers.

``We could not make the economics work there'' in part because of
competition from discounters including Southwest Airlines Co., JetBlue
Airways Corp. and AirTran Holdings Inc., US Airways spokesman Phil Gee said.

Those competitors have helped boost so-called origination- and-destination
passengers by almost 50 percent in the past six years to 8.7 million,
business leaders said. The low-fare carriers also have curbed ticket prices
in the city of 335,000.

Still, Pittsburgh's fall from hub status sometimes means passengers start on
flights heading away from their destination. US Airways fliers going west to
San Diego, for example, may have to go to hubs in Philadelphia, 258 miles
(415 kilometers) to the east, or in Charlotte, North Carolina, 365 miles to
the south.

There's also a sting in having to connect in Philadelphia or New York for
flights to venues such as London, said Michael Langley, chief executive
officer of the Allegheny Conference on Community Development, a regional
business group.

``People want to be able to get on a plane in Pittsburgh and get to Europe
directly,'' Langley said. ``This is a very emotional thing. People really
love their airports and their air service.''

To contact the reporter on this story: Mary Jane Credeur in Atlanta at
mcredeur@bloomberg.net.