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 As Nashville discovered, it can take years of adjustments to come
to terms with an airline's decision to pull back. Yet the Music City
showed it is possible to recover and prosper again.
Following its example, other former hubs are recruiting new
carriers, consolidating facilities and finding alternate uses for
their land to ensure their stability.
While credit ratings for Cincinnati, St. Louis and Pittsburgh
airports fell when they lost their hubs, since then all three
airports have cut costs and taken other steps to restore their
ratings, said Seth Lehman, senior director of Fitch Ratings.
"It took several years for the airports to improve the things that
they can control," Lehman said. "Even at their lower levels of
traffic, they were finally able to right-size their costs, and their
ability to be competitive seems stronger now than when they were
de-hubbed."
For cities, cuts in air service have made it more difficult to lure
conventions and leisure travelers, sent corporate headquarters
packing and hurt business in general.
And just as airports have found ways to survive, Nashville
demonstrated how a city itself can survive.
When American Airlines stopped routing connecting flights through
Nashville International Airport in 1996, passenger numbers plunged
to 7.1 million that year from a record 10.3 million four years
earlier. Airport revenue fell 1 percent in the first year, though
the impact on the economy - a center for music and healthcare - was
broader.
Among the flights American discontinued was a nonstop to London,
making European travel more difficult for the local business
community.
"The loss of the London flight was a big blow," said Tommy Lewis,
senior vice president of growth initiatives for Emdeon Inc, a
Nashville-based provider of healthcare payment management services
with 4,000 employees.
Despite the long odds, Nashville handled 10 million passengers last
year, a recovery fueled by an economic revival that has made the
city a prime destination for businesses and leisure travelers.
Still, it took almost 20 years and the persistent efforts of airport
officials, for Nashville International Airport to regain the lost
ground.
NOT TOP BANANA
As U.S. airlines merged in recent years, many found they didn't need
as many hubs, said William Swelbar, an air-travel researcher at the
Massachusetts Institute of Technology.
"It has been a major contributor to the financial turnaround of the
U.S. airline industry," he said of hub closures.
But for many U.S. cities, the industry's good fortune has come at a
cost. The United States had 63 large and medium-sized hub airports
in 2013, down from 68 in 2005, according to the Federal Aviation
Administration.
The loss of hub status can hurt an airport's ranking for passenger
traffic. Memphis International Airport, a hub shuttered by Delta Air
Lines last year, tumbled to 59th in passenger boardings in 2013 from
34th in 2005.
And for some cities, airport cutbacks have taken a wider toll.
In 2012, Chiquita Brands moved its headquarters to Charlotte, North
Carolina, a US Airways hub, after Delta cut flights at the fruit
company's former base in Cincinnati. Chiquita said the importance of
air connections contributed to its decision.
COURTING AIRLINES
Though airports in St. Louis and Cincinnati lost as many as half
their connecting travelers after being downsized, they have managed
to claw back some of the lost passenger traffic. That has led to
higher parking and rental car revenue.
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Lambert St. Louis International Airport officials studied passenger
travel patterns and worked with Boeing Co and other local employers
to identify cities that most needed connections after American
announced the closure of that hub in 2009. The effort paid off: In
2010, Alaska Airlines launched nonstop flights to Seattle after
Lambert officials showed 260 local people traveled to the Pacific
Northwest daily.
Similar initiatives helped secure more flights at Lambert, which is
now served by 11 airlines, up from seven when American was dominant.
Lambert also leased unused land for a compressed natural gas fueling
station, bringing in rent and pumping fees. Operating revenue rose 6
percent in 2013 and 5 percent in 2012.
"We’re not going to see these huge swings of 100 flights added in a
year, but I think we can continue to steadily grow as the economy
here is growing," said Lambert Airport Director Rhonda
Hamm-Niebruegge.
DESTINATION NASHVILLE
American's hub closure in Nashville pushed political, business and
tourism leaders into action.
"It hurt our ego," said Butch Spyridon, president of the Nashville
Convention and Visitors Bureau. "And it certainly didn't enhance our
sales ability" for conventions or tourism.
The airport lobbied airlines, and city leaders launched marketing
campaigns that played up Nashville as a desirable place to live and
operate a business since there is no state income tax, Spyridon
said.
Nashville's willingness to offer business incentives paid off,
attracting such corporations as Nissan Motor Co Ltd, which moved its
North American headquarters to the area from California in 2006.
New carriers came to the airport, with Frontier beginning flights in
2004.
As American scaled back, Southwest Airlines added flights and
lowered fares, making Nashville more attractive as a travel
destination, Spyridon said.
Though Southwest didn't initially provide flights to as many markets
as American had served, it expanded over time. Southwest is now the
largest carrier in Nashville with about 86 daily departures.
Today, Nashville's airport offers 380 flights, more than when it was
at its peak as a base for American in 1993. Expanding entertainment,
technology and healthcare industries have made the city a top U.S.
market for job growth.
Standard & Poor's and Moody's raised debt ratings on revenue bonds
issued by the airport this year, citing declining debt levels,
passenger and population growth.
"What we learned from American and we continue to learn from
Southwest is that if we can continue to create the demand, they will
come in and meet that," Spyridon said. "All the groundwork was laid
from adversity."
Nashville still doesn't have a nonstop to London, however, something
Emdeon's Lewis pines for.
"We would love to restore that service," he said.
(Reporting by Karen Jacobs in Atlanta; Editing by Alwyn Scott)
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