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"Charlotte airport could lose hub, survive, officials say"


 
Friday, December 15, 2006

Charlotte airport could lose hub, survive, officials say
Some say hub is at risk in merger
By Steve Harrison
The Charlotte (NC) Observer


If Charlotte loses its prized US Airways hub as a result of a Delta-US
Airways merger, the city's airport would retrench -- mothballing some
concourses and clustering the remaining flights into the center of the
airport.

But Charlotte/Douglas International Airport wouldn't face a financial
disaster, mostly because it has a small staff and less debt than similar
airports.

The airport would have to increase the fees it charges airlines. But even if
Charlotte/Douglas lost all its hub traffic, its fees would still be below
the average for large hub airports nationwide, according to an Observer
analysis. Low-cost carriers such as Southwest often scrutinize those fees
when deciding where to add service.

Charlotte/Douglas aviation director Jerry Orr said that each year, he
envisions -- and plans for -- different scenarios for losing the hub, many
of which, in the past, involved US Airways' going out of business. But Orr
said he never considered US Airways would merge with Delta, creating a
super-carrier on the East Coast. Delta's biggest hub is in Atlanta, less
than 45 minutes' flight time from Charlotte -- US Airways' biggest hub and
home to nearly 5,000 employees.

Delta, which is in Chapter 11 bankruptcy protection, is fighting the
takeover, and 3,000 of its employees held a rally against the deal
Wednesday. If the merger happens, it would create the nation's biggest
airline, under the Delta name.

Despite the surprise of the hostile takeover attempt last month by US
Airways, Orr emphasized that the airport could still pay its bills without
drastically raising fees. Charlotte/Douglas, like most airports, balances
its budget with fees from airlines, cargo planes, rental car companies,
concessionaires and parking -- not from tax dollars.

Airports often worry about embarking on large construction projects, only to
see air service slashed. The airport, in turn, must raise fees, making it
more expensive for airlines, and less competitive when seeking new airlines.

"Let me say it this way: If the hub went away completely and we had only
local passengers, we could pay all of our debt service and maintenance and
operations," Orr said. "That's the basis of, 'Don't worry, be happy.' "

US Airways officials have said emphatically that if the Delta deal is
successful, they will keep Charlotte as a large hub. US Airways President
Scott Kirby has said that Charlotte's banks and other businesses make it a
lucrative city for the airline because a large number of business travelers
are willing to pay higher fares than budget-conscious leisure passengers.

The airline has said Charlotte would keep all its nonstop destinations --
including London; Frankfurt, Germany; and the Caribbean -- though it might
be served by smaller aircraft. It would lose some banks of flights -- the
coordinated sets or arrivals and departures that happen throughout the day
and allow passengers to change planes with short waits.

But airline analysts and many Charlotte residents are skeptical. They think
it would be more economical for the new airline to concentrate its firepower
in Atlanta, where there is a much larger pool of local traffic to fill
airplanes.

Stuart Klaskin of KKC Consulting and other experts say it is unlikely that
all of Charlotte's hub traffic would disappear in the event of a Delta
merger.

US Airways slashed destinations and flights from Pittsburgh two years ago
but still operates a small hub there. It also still flies nonstop from there
to non-hub cities such as Los Angeles, San Francisco, Dallas/Fort Worth, New
Orleans and Tampa.

Overall, Pittsburgh has 60 nonstop destinations, down from 118 at its peak
earlier this decade. Charlotte has 123 nonstop destinations.

"Even under a worst-case scenario, Charlotte is not going to be Des Moines,"
Klaskin said.

If US Airways eliminates the hub or scales it back, Orr said, he could
easily mothball some parts of the airport. Traffic could be concentrated in
the center of the airport, in concourses B and C. Concourse A could be
mothballed, as could D and E.

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