Memphis’ Airport Future Taking Flight

There’s nothing more fundamental for consumers than to express their opinions to a business from which we are buying a product.

But we’ve learned that airline and airport consultants are about as likely to encourage this when it comes to airlines as a physician is to encourage someone to file a malpractice lawsuit against a colleague.

While there was much that we found encouraging about the report a week ago by Memphis Mayor A C Wharton’s airlines consultant, his prepared comments admonishing us for complaining about the egregious airfares of Delta Airlines were tone deaf and condescending.

Here’s the thing: we’ve learned the consequences of sitting by and remaining mute as Delta Airlines, aided and abetted by the Memphis and Shelby County Airport Authority, made our airport a fortress hub, forcing us to drive two and three hours to Little Rock and Nashville to find affordable tickets.  To be quiet about the problem of high Delta Airlines ticket prices is the civic equivalent of Stockholm Syndrome.

Three-Pronged Approach

We are not lemmings willing to follow others off the cliff while Memphis International Airport was further decimated by Delta Airlines and instead we clearly recognized Delta as the problem and demanded that our leaders and our community join hands to do something about it. That’s why we created Delta Does Memphis, and it has succeeded beyond our wildest expectations.

It’s been called by the news media the most successful social media grassroots campaign in Memphis history and it’s been credited by a reporter with driving leaders into action to come to grips with the problem and address it.

Back at the creation of Delta Does Memphis, we envisioned three phases to the campaign: 1) it would give voice to our frustrations and complaints and bring us together to call for change; 2) it would put high airfares and airport reform at the top of our local agenda; and 3) it would inspire a movement that would bring the community together to pursue more airlines and lower ticket prices.

It seems that all of these have now been accomplished.  The discussion at Delta Does Memphis continues, our leaders are talking about what can be done, and now Come Fly Memphis provides a platform for all of us do something to sell the Memphis region and to tell other air carriers that there is a way for them and us to be successful and to invite them to talk with Mayor Wharton about what we can do to get them here.

Dysfunctional Relationships

The consultant leaned on by Mayor Wharton, Brian Campbell, suggested that there is no point in criticizing Delta because it is not conducive to the “relationship” that we need with the airlines.  Considering that the so-called relationship that we’ve had was tantamount to turning our airport over to the airline and it resulted in the elimination of more than half our flights and  the highest airfares in the country, we’re baffled as to what negative impact a little tension in our relationship can have.

To the contrary, we think that the image of our community coming together to say no to business as usual and yes to new approaches is all about creating the airline relationships that are most important: new ones.

There’s little doubt that the number of Delta Airlines flights in Memphis in the future are only going down, so suggesting that we should not keep our opinions to ourselves is simplistic at best and self-defeating at worst.  More than anything, we are sending the unmistakable message that we are a public that is passionate about our future and able to join together for a common purpose.

In other words, given the opportunity to support Frontier Airlines, Southwest Airlines, JetBlue, or any other new carrier, we can turn the frustration expressed about Delta Airlines into enthusiasm for its competitor.

Getting to the Business at Hand

In his presentation to the regional mayors prior to his unfortunate public comments, Mr. Campbell provided some provocative statistics about MEM and painted the picture of a region facing high hurdles and an era of some pain as we move from where we are today as a fortress hub to where we can be as an airport as multiple carriers.

Most of all, Mr. Graham echoed comments made on Delta Does Memphis that we need a clear business plan that evaluates where our citizens are flying and want to fly and a strategy for appealing to each new airline’s specific needs and concerns.  In addition, he commended the creation of Come Fly Memphis as an effective, complementary way to support the recruitment of new air carriers.

The founding supporters of the new Come Fly Memphis website were FedEx, Graceland, Commercial Advisors, Methodist Le Bonheur Healthcare, Monogram Foods, Launch Memphis, Memphis Convention & Visitors Bureau, Leadership Academy, Leadership Memphis, and Howell Marketing Strategies.  Since the launch of Come Fly Memphis, many other businesses and organizations, including the Greater Memphis Chamber of Commerce, have signed on and arguably the convergence of so many important local players behind this site is the most important message of all.

Close behind that is the willingness by Mayor Wharton to take up the baton and lead the campaign for more carriers.  It would have been easy for him to say it’s other people’s responsibility and that he’s leaving it to them, but instead, he took the lead in meeting with FedEx founder Fred Smith, in meeting with Delta Airlines CEO, and in asking for the help of his own independent consultant (recommended by Mr. Smith).

Just the Facts

It was one of the mayor’s finest moments, made even more so by the way that most elected officials were steering clear of such a volatile issue with no easy answers.   Some of the charts and graphs presented at the mayors’ luncheon detailed just how hard we’ll have to work as a community to make progress on this issue

* The number of inbound and outbound seats declined 40% since 2008.

* Only 4% of the seats here are on a low cost air carrier.

* The number of local passengers went down every year since 2007 while airfares climbed

* Memphis fares increased 18% since 2009.

* Memphis has the highest domestic fares among the top 75 U.S. airports (the fare premium over domestic average in Memphis is 29% – Nashville: 1%).

* Memphis has the third highest concentration of small regional aircraft among U.S. hubs (at a time when they are being eliminated).

* Memphis is #3 among the top U.S. cities for the lowest share of capacity from low-cost carriers.

* 58% of Delta departures in Memphis are commuter planes with 50 or fewer seats.

* In three years, Delta departures have declined by 41%.

* 71% of the 76 Delta routes from Memphis in November, 2010, have been exited or reduced in capacity

* Memphis hub flights have declined from almost 300 in 2000 to 123.

Dehubbing It

As a result, the seminal question is whether Memphis wants to be a hub again, according to Mr. Campbell.

The pros are that a hub has maximum number of nonstop flights, larger aircraft in key markets, greater airport revenues, and cost-sharing with FedEx.  The cons are that it creates numerous monopoly routes and high fares, it discourages the entry of other airlines, it involves some loss of control over airport policies in decisions like capital improvements and allocation of gates, and it’s vulnerable to abandonment and public perception of city/airport failure.

The game plan, in his opinion, is to work with Delta to maintain service near the November reduced level, identify markets where lower fares would be better for Delta, and to maintain international airport status.  Meanwhile, Memphis should pursue hub services with all legacy carriers, American, United, and U.S. Airways (MEM has unserved hubs by all three), and Memphis should pursue new services by low-cost carriers like Southwest, JetBlue, and Spirit Airlines.

The good news is that Memphis does have low-cost carrier opportunities, said Mr. Campbell, as a result of high Delta fares and service declines and both Southwest and JetBlue “need to be convinced that they can increase the size of the Memphis market – and at a profit, need to be shown a phased development plan with specific identified markets.

Dealing Serious

Southwest may be “hesitant to begin service due to the fact that fleet growth is flat and it is in the middle of integrating the AirTran operation and JetBlue would need to be convinced that Memphis fits in with its strategy,” he said, adding that Southwest already services 49 cities of similar or smaller size than Memphis and JetBlue serves 21 cities.

As part of its plan of action, he said Memphis should support new start-up carriers with a business plan that includes business community support (seat/revenue guarantees), financial support, and airport facilities and attractive operating costs.  It also should conduct economic studies and surveys like business and organization travel surveys to support the air service development mission, involve corporate leaders in marketing missions, show the economic benefits of FedEx superhub, and address factors important to airlines like local traffic and fares, connecting traffic, and integration with the airline network.

Memphis has a storied entrepreneurial history and we now need to tap into that spirit to deal with this serious challenge to our economic future.  It is the right step that Mayor Wharton, as the chief economic development official of our region, has stepped forward to lead the journey to a better future.  As we move ahead, there’s little reason to expect that consumers being pummeled by high airfares are suddenly going to quit driving to Little Rock or Nashville and instead offer up their money for higher priced tickets from Delta Airlines.

It seems obvious that the question about Memphis continuing to be a hub has already been answered.  We’re not a hub now and we’re not likely to be one again.  There is a life after death of a hub, but only if we are deadly honest about the challenge, realistic in our assessments, and ambitious in our plans.

It also means that we need to bring more intellectual capital and new thinking into the process.  After all, if the same people do the same things, we really can’t expect different results.  Some  Airport Authority officials say that they have worked on getting more airlines here for 20 years, and if that is the case, we think they will understand if most people would like them to give someone else a chance.