Pajamas Media

Airline Mergers and the High Cost of Flying

The media are trying to convince travelers that the Delta/NWA merger will hammer their pocketbooks. But flying out of single-carrier hubs like Cincinnati is already a ripoff.

April 17, 2008 - by Tom Blumer

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

Dallas (DFW):

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.

9 Comments

1. BizzyBlog » New Pajamas Media Column (’Airline Mergers and the High Cost of Flying’) Is Up:

[...] It’s here. It’s about the Delta-Northwest merger, why I’m not worried about the possibility of losing Delta’s Greater Cincinnati hub, and would in fact welcome it. [...]

Apr 17, 2008 - 4:39 am 2. Jon:

Amen. We have the same situation in MN with Northworst, which controls 85% of the gates. The politicians tell us we benefit from Northworst because we get lots of direct flights as a hub, but what is really going on is that Northworst has a lot of political clout here because its headquarters and most of its employees are here. Let Northworst or the combined airline pull its hub. Other carriers will jump at the empty gates.

Apr 17, 2008 - 8:14 am 3. Fat Man:

Tom: You do have some choice. Mason is Northeast of downtown Cincinnati. It is about 40 mi. from CVG, 60 mi. from DAY (Dayton Airport), and 90 mi. from CMH (Columbus). Columbus has a strong presence from Southwest and good fares. It is cheaper to fly to ATL from CMH connecting through CVG than CVG non-stop to ATL. I have often met folks from the Cincinnati area on flights to and from Columbus.

You are right about airline hubs. It is better to have a toothache than a hub.

Apr 17, 2008 - 9:15 am 4. Fat Man:

P.S. I should have read more carefully. My mileages are from Mason not downtown Cincinnati. Indy is 130 from Mason.

Apr 17, 2008 - 9:21 am 5. Tom Blumer:

Fat Man:

Thanks, I noted most of what you said in the article. I have flown out of DAY and CMH frequently, Indy and Louisville relatively occasionally.

Jon from MN, your situation is actually worse than mine, because I’m sure you have to drive a lot further to get to a reasonably major airport, if it’s even practical at all. My memory is that there’s really nothing that’s close at all. You’re literally stuck, and it’s a shame.

Apr 17, 2008 - 12:05 pm 6. ATLien:

I used to work for DL, and i can tell you it’s not the HUB that totally determines the price.

You have to ask yourself a question: “Who else flies from here?” If the answer in Southwest or AirTran (or other large discount airline), You fare will be much cheaper. If DL (or United, American, etc) does not have a competing Discounter on that route (or combinations), then they charge what they want. But toss AirTran into the mix, and your flight’s cost drops to what AirTran wants to price it at. The big 3 will even sometimes match rules, since discounters also offer flexibility on that, too.

Then you run into another problem, scarcity. When the big 3 drop their fares, they only do it for x number of seats. Once they’re gone, the next price bracket (and rules) come into play. The big 3 sell out the cheaper tix quicker because when one shops and the choice is between the “big” airline and the discount, the “big” airline is almost always chosen, thus reducing the number of cheaper seats.

Hope this helps

Apr 18, 2008 - 12:51 am 7. Chester White:

For a Cincinnatian, it might also be worth looking at fares from my former home town of Lexington, KY, about 70 miles down the road.

My relatives tell me that sometimes there are deals to be had, relative to Cincinnati.

Apr 18, 2008 - 3:06 pm 8. Tom Blumer:

Chester, I have looked at that from time to time. I think Lexington is actually the furthest from where I live in Mason vs. Columbus, Indy, and Dayton (but not Louisville).

Apr 19, 2008 - 6:12 am 9. BizzyBlog » As Delta and NWA Merge: What’s a Hub Got to Do With It?:

[...] This column was originally posted at Pajamas Media on Thursday under the title “Airline Mergers and the High Cost of [...]

Apr 19, 2008 - 6:18 am