Many are surprised that it’s taken this long, but Delta has finally begun taking the first big steps in what will ultimately likely result in the dismantling of the Memphis hub. Flights will be slashed 25 percent after this summer. Big cuts like this only hurt the viability of the hub going forward. I thought it would be fun to look inside the Memphis hub to see how it works and why this change will be bad news for its future hub status.
The hub itself has settled in with three banks per day. Planes come into Memphis in the early morning and then go right back out. There’s also an early afternoon arrival that turns around. Lastly, there’s an evening operation. Nearly all of Delta’s operations in Memphis fit into those three banks.
I say “nearly” all, because Delta has more operations from Memphis to its other hubs. For example, there are 10 flights a day to Atlanta. Those flights, however, aren’t there to support the Memphis hub but rather to feed Memphis customers into the Atlanta hub. These operations aren’t impacted by the cuts so far, and they’re some of the few routes where you’ll see larger mainline airplanes in operation. Here are the destinations from Memphis to Delta hubs and focus cities.
The other area where you’ll see larger airplanes is to the sun markets. Florida, Phoenix, Vegas, etc. You know the deal there. Memphis, like other non-hub cities, can often support larger airplanes to these markets because there is enough traffic going back and forth. That’s why we see Delta mainline airplanes in Ft Lauderdale, Miami, Orlando, Tampa, and Vegas. There are a few cuts in these sun markets, but it’s really the smaller sun markets that are hurt most, like Panama City. For the most part, however, these aren’t seeing much of an impact.
Once you get beyond those two groupings, there are very few mainline airplanes at all. It’s mostly a regional jet operation to a mix of small and medium cities in the South and Midwest along with large cities around the country. The large cities are untouched in these cuts. These are generally other airline hubs that have enough traffic to warrant some flights to Memphis. I’m considering a city to be large if it’s in the top 25 Metropolitan Statistical Areas (MSA) in the US from the 2000 census.
Once we get below that level, the cuts start becoming more fierce. I’m considering a mid-size city to be one between 25 and 100 on the MSA list. As you can see, none of these cities are going away, but some are losing frequency.
Then when we get to the small cities (anything below 100 on the MSA list), it’s a bloodbath. Not only are we seeing a slew of cities losing service entirely (this doesn’t even include Montgomery and Monroe which were discontinued before the summer), but many of the rest are taking hits in frequency. The small cities are in trouble here.
So why does this matter? Well, it’s a shot at the heart of how hubs work. The idea of a hub is to bring in traffic from a variety of cities, aggregate it in one place, and then put people on planes to other cities. So you might only have 1 person from Lafayette, LA wanting to go to Chicago, but when you combine that with the little numbers from Montgomery, Baton Rouge, Lubbock, Austin, etc, you get enough to fill that airplane. When you start taking away these small cities, it will inevitably make the other flights at the hub perform worse as well.
If Lafayette is gone, that’s one less person that will fly on that flight to Chicago. Maybe that’s the tipping point for making that Chicago flight unprofitable. You could try a smaller airplane, but most of these are already on pretty small jets. In the end, when you start whacking away at a hub like this, it generally hurts the chances of that hub sticking around.
This doesn’t mean it’s the wrong move. Smaller hubs simply don’t perform as well because there’s not enough of the higher-yielding local traffic in the market to make it work well. Delta really should be cutting back in Memphis if it can’t make money there.
Does this mean Delta will walk away from Memphis? Nah. We’ll still see flights to the other Delta hubs and sun destinations. It’s possible some of the large cities will keep service as well, but the way this looks right now, I’d be amazed if Memphis made it as a true hub in the long run.