Delta to adjust service to smaller, underperforming markets

Delta Air Lines (Atlanta) today will notify the U.S. Department of Transportation (DOT) of its plans to adjust flying in 24 small markets. In concert with the retirement of Delta’s SAAB 340B fleet and to halt $14 million in annual losses, the changes will affect Essential Air Service (EAS) markets.

According to Delta, flights in these markets on average depart with 52 percent of the seats filled, with some locations as low as 12 percent. This compares to a domestic system load factor of 83 percent for 2010. Weak demand in some markets has led to flights occasionally operated with no passengers on board.

Delta has taken a number of steps to respond to added cost pressures. Delta previously announced its intention to reduce capacity this fall by 4 percent and retire 140 aircraft. Delta has reduced its facility costs at 170 airport locations and 10 cargo locations across the system, saving more than $80 million annually.

The notification provides the DOT the opportunity to select a new carrier to begin service in affected EAS communities within a 90-day period. Delta will continue to serve the affected communities through its Delta Connection partners until the DOT selects a replacement carrier and appropriate funding is available. In some cities, Delta is coordinating with other carriers to bid on the routes. In addition, Delta will continue service in some subsidized and non-subsidized markets, but the subsidy rate must be higher in order for Delta to fly larger regional jets on the routes in question. A complete list of affected communities is available at http://news.delta.com/index.php?s=18&item=156.

The EAS program was created to ensure small communities continue to have access to passenger air service. In some cases, airline service in EAS markets is subsidized by the government. The Airline Deregulation Act of 1978 provides that if a carrier is held in beyond the 90-day notice period, it is entitled to receive compensation “to pay for the fully allocated actual cost to the carrier of performing the …service … plus a reasonable return on investment that is at least 5 percent of operating costs; and to provide the carrier an additional return that recognizes the demonstrated additional lost profits from opportunities foregone [by continuing to be held in and providing service.”

Cities to be dropped:

Thief River Falls, MN TVF EAS subsidized 12.0% load factor
Greenville, MS GLH EAS subsidized 27.6% load factor
Devils Lake, ND DVL EAS subsidized 30.3% load factor
Watertown, SD ATY EAS subsidized 35.0% load factor
Muscle Shoals, MS MSL EAS subsidized 35.7% load factor
Fort Dodge, IA FOD EAS subsidized 39.1% load factor
Hibbing, MN HIB EAS subsidized 39.2% load factor
Alpena, MI APN EAS subsidized 39.5% load factor
Tupelo, MS TUP EAS subsidized 41.0% load factor
Jamestown, ND JMS EAS subsidized 42.1% load factor
Mason City, IA MCW EAS subsidized 45.9% load factor
Pierre, SD PIR Not EAS subsidized 47.4% load factor
Iron Mountain, MI IMT EAS Subsidized 48.7% load factor
Sioux City, IA SUX Not EAS subsidized 51.4% load factor
International Falls, MN INL EAS subsidized 52.5% load factor
Brainerd, MD BRD Not EAS subsidized 52.6% load factor
Hattiesburg, MS PIB EAS subsidized 53.7% load factor
Escanaba MI ESC EAS subsidized 55.2% load factor
Aberdeen, SD ABR Not EAS subsidized 55.6% load factor
Pellston MI PLN Not EAS subsidized 58.5% load factor
Bemidji, MN BJI Not EAS subsidized 59.3% load factor
Sault Ste Marie MI CIU EAS subsidized 60.0% load factor
Waterloo, IA ALO Not EAS subsidized 61.4% load factor
Butte, MT BTM Not EAS subsidized 65.3% load factor

Copyright Photo: Bruce Drum. Please click on the photo for the story of the SAAB 340B retirement.

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