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From: http://www.bizjournals.com/atlanta/s...17/story4.html
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No. 2 hub braced for showdown
Atlanta Business Chronicle - April 14, 2006
by Lucy May

Special to Atlanta Business Chronicle
A strike by Delta pilots would be felt almost as hard in Cincinnati, Delta's second-largest hub, as it would be in its hometown of Atlanta.

Together with its subsidiary Comair, Delta operates more than 90 percent of the flights at Cincinnati/Northern Kentucky International Airport.

Delta CEO Gerald Grinstein has said even a brief strike would kill Delta. And a Delta shutdown would take Comair with it, wiping out Delta's stronghold on flights to CVG, the Cincinnati airport.

That would mean Cincinnatians would lose 122 direct flights a day to their airport.

"For Cincinnati, it would be like Dayton," said Michael Boyd, an aviation consultant based in Colorado. "Dayton was a hub at one time; it won't be a hub again."

Boyd doubts anyone would rush to replace the hub in Cincinnati, and he said it would hit the area's economy hard.

The Delta hub is a critical strength for the region, and businesses large and small count on the direct air service to get to clients and plants nationwide.

"There would be a ripple effect," said Darryl Laddin, chairman of the bankruptcy practice at law firm Arnall Golden Gregory LLP in Atlanta, where Delta operates its largest hub.

"That ripple effect is not only on the employees but also all those businesses who do business with the airlines and all the employees."

Such a large departure from a market creates other opportunities. Experts figure a region Cincinnati's size -- a metro area with about 2 million people -- should expect to have 41 direct flights daily without being an airline hub.

Airport insiders expect that the other airlines currently serving the airport would add flights from their hubs, although there would be fewer direct flights serving Cincinnati.

It's unclear, though, how interested other airlines would be in having as large a presence in Cincinnati as Delta.

"We carry a lot of Cincinnati passengers now from Dayton through our Atlanta, Baltimore-Washington and Orlando service," said AirTran Airways (NYSE: AAI) spokeswoman Judy Graham-Weaver. "We are certainly keeping an eye on the CVG market and while we do have interest in it, we do not have current plans to add the market to our route map."

Southwest Airlines has hinted that it, too, is interested in Cincinnati but isn't ready to start service.

And observers don't necessarily think Delta's absence, if the airline shuts down, would make the market any more appealing.

"Cincinnati could attract some of the low-cost guys," said Richard Gritta, a business professor and aviation expert at the University of Portland. "But if Cincinnati were that attractive to Southwest, they'd already be there."

The local airport has positioned itself to be alluring no matter what happens with Delta, stressed William Robinson, the airport board's chairman.

"Cincinnati is one of only six airports in the United States having three parallel runways, for example," he said. "And such a competitive advantage can only enhance the attractiveness of the CVG location should changes in service providers turn out to be needed or beneficial."

There are still other aviation opportunities if Delta were to shut down.

For one, Delta's assets could be sold for pennies on the dollar in a liquidation.

Atlanta-based business consultant Harry Nolan, who wrote about Delta's financial decline in "Airline Without a Pilot," thinks some of Delta's routes and the brand itself could be worth something to other airlines.

He argues that low-cost carrier AirTran, which competes head-to-head with Delta in Atlanta, might be a good candidate to acquire the Delta name and some of its infrastructure if Delta doesn't survive bankruptcy.

Other industry observers think Delta is more likely to merge with another major carrier, such as Continental or Northwest Airlines.

Of course, Delta is still trying to get its financial house in order.

The dire scenarios hinge on whether an arbitration panel decides April 15 to grant Delta management's request to reject the pilots' contract. The airline's pilots have authorized a strike anytime after April 17 if they lose their contract agreement.

The pilots have said they don't want to strike -- they want Delta to back off its efforts to void the contract. And while many experts doubt the pilots would shut down the airline with a strike, others think they might just be fed up enough to do it. Still, with the fragile economic situation of the airline industry, the pilots won't find much comfort if they turn away from Delta.

"If the pilots walk off, it's a shutdown," Boyd said. "You swagger, you bluster and all that. But when it comes to, 'If we walk, we know for sure we won't have a job to come back to,' that's different. There aren't any pilots jobs to go to."
 

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Discussion Starter · #2 ·
From: http://www.bizjournals.com/cincinnati/stories/2006/04/17/story3.html
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If Delta disappears, AirTran could eye name, some assets
Cincinnati Business Courier - April 14, 2006
With a possible pilots strike threatening to kill an already bleeding Delta Air Lines, questions loom about the future of the airline and its CVG hub.

If a pilot strike forces Delta to cease operations -- and many experts think chances are slim that it will -- the airline's assets could be sold for pennies on the dollar in a liquidation.

Atlanta-based business consultant Harry Nolan, who has a new book about Delta called "Airline Without a Pilot," thinks some of Delta's routes and the brand itself could be worth something to other airlines.

He argues, in fact, that low-cost AirTran Airways, which competes head to head with Delta in Atlanta, might be a good candidate to acquire the Delta name and some of its infrastructure if Delta doesn't survive bankruptcy.

Other industry observers think Delta is more likely to merge with another major carrier, such as Continental or Northwest Airlines.

It's unclear, though, how interested any of those airlines would be in having a presence in Cincinnati that's anywhere near as large as the presence Delta has now.

"We carry a lot of Cincinnati passengers now from Dayton through our Atlanta, Baltimore-Washington and Orlando service," said AirTran spokeswoman Judy Graham-Weaver. "We are certainly keeping an eye on the CVG market and while we do have interest in it, we do not have current plans to add the market to our route map."

Southwest Airlines has hinted that it, too, is interested in Cincinnati but isn't ready to start service. And observers don't necessarily think Delta's absence, if the airline shuts down, would make the market any more attractive.

"Cincinnati could attract some of the low-cost guys," said Richard Gritta, a business professor and aviation expert at the University of Portland. "But if Cincinnati were that attractive to Southwest, they'd already be there."

If Delta and subsidiary Comair cease operations locally, airport insiders expect that the other airlines currently serving the airport would add flights to their own hubs. That way local travelers would still be able to get to all the same destinations, but the flights wouldn't be direct.

Experts say that kind of cut in direct service would devastate the Cincinnati/Northern Kentucky International Airport, where Delta operates its second-largest hub.

"For Cincinnati, it would be like Dayton," said Michael Boyd, an aviation consultant based in Colorado. "Dayton was a hub at one time; it won't be a hub again. That would be a tremendous economic hit for that area. But it won't be one that someone would rush in to fill."

The local airport has positioned itself to be attractive no matter what happens with Delta, stressed William Robinson, the airport board's chairman.

"Cincinnati is one of only six airports in the United States having three parallel runways, for example," he said. "And such a competitive advantage can only enhance the attractiveness of the CVG location should changes in service providers turn out to be needed or beneficial."

Even so, as a Delta hub, the local airport has direct flights to 122 cities daily. Experts figure a region this size should expect to have 41 direct flights daily without a hub.

Such a cut in service has dramatic implications for the region's economy. The Delta hub is a critical strength for the region, and businesses large and small count on the direct air service to get to clients and plants nationwide.

"There would be a ripple effect," said Darryl Laddin, chair of the bankruptcy practice at the law firm Arnall Golden Gregory LLP in Atlanta, where Delta operates its largest hub.

"That ripple effect is not only on the employees but also all those businesses who do business with the airlines and all the employees. You could see a ripple effect of bankruptcies."

Of course, all this hinges on whether Atlanta-based Delta even exists after April 17. The airline's pilots have authorized a strike anytime after that date if an arbitration panel grants the bankrupt airline's request to reject the pilots' contract.

The pilots have said they don't want to strike -- they want Delta to back off its efforts to void the contract. And while many experts doubt the pilots would shut down the airline with a strike, others think they might just be fed up enough to do it.

Delta CEO Gerald Grinstein has said even a brief strike would kill Delta. If Delta shuts down, its local subsidiary Comair would, too, a Delta spokesman said. That would wipe out the more than 90 percent of the flights at the local airport that Delta and Comair now control.

Still, all this hinges on a pilot strike, something many observers expect will be averted as Delta and the pilots continue negotiations.

"If the pilots walk off, it's a shutdown," Boyd said. "You swagger, you bluster and all that. But when it comes to, 'If we walk, we know for sure we won't have a job to come back to,' that's different. There aren't any pilots jobs to go to."
 

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i was trying to find a one-way flight from atlanta to cincinnati last week and it was like $400 on delta. why would it be so expensive to fly between the two hubs?
 

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Is Cincy in trouble if the Delta hub folds? That depends upon what you value most. If you're worried about the thousands of jobs that would be lost, jobs that the Cincinnati metropolitan area would replace in a matter of months, then I guess it could hurt a little. If you're worried about the complete lack of reasonable airfares out of Cincinnati due to Delta's dominance of the market, then no it won't hurt at all, in fact it will be wonderful.

I went to Travelocity to check on the lowest fares out of Cincinnati and surrounding airports to Seattle (far enough away that nobody is going to have goofy sale fares).

To Seattle on July 15th and returning on July 25th:

Columbus $337
Indianapolis $337
Nashville $350
Cleveland $376
Louisville $376
Cincinnati $506

Just to make sure that the cheap fares on those particular flights, even that far out, hadn't been taken, I also checked for July 29th to August 8th:

Columbus $310
Indianapolis $332
Louisville $337
Cleveland $346
Nashville $350
Cincinnati $494

For the tens of thousands of Cincinnati area residents that routinely drive to Columbus, Indianapolis and Louisville to fly somewhere, the newfound competition after the death of the Delta hub will be a godsend.
 

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Discussion Starter · #6 ·
I think the reason why it'd be hard to find a low fare between two hubs (Atlanta and Cincinnati) would be because they're both relatively fortressed by Delta, preventing competition.
 

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MilwaukeeD said:
i was trying to find a one-way flight from atlanta to cincinnati last week and it was like $400 on delta. why would it be so expensive to fly between the two hubs?
Monopoly. That's the downside to being dominated by one airline.
 

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CVG is pretty big for a city Cincinnati's size, I would just hope they could fill it again, aside from that, there were other jobs than airport jobs for Delta in Cincinnati. They actually have a pretty healthy reservations building that is all them downtown. All in all, it wouldnt be doomsday, shit happens and Cincinnatians will be able to travel easier and more frequently.
 

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Air fares into CVG are pretty expensive. It was the main reason I decided against going to Xavier for school. Even by going through OHare (I'm from Milwaukee), the ticket was pretty high. Add to that there is no cheap and easy way to get from the airport to even downtown Cincinnati, I couldn't financially see myself taking that trip more than 2 times a year. As others have said the the possible loss of Delta could be a blessing in disguise.
 

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From: http://news.enquirer.com/apps/pbcs.dll/article?AID=/20060429/BIZ01/604290335/1076/BIZ
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Last Updated: 5:18 am | Saturday, April 29, 2006
Delta wants out of CVG lease
BY ALEXANDER COOLIDGE | ENQUIRER STAFF WRITER
Unable to negotiate lower terms with bondholders, Delta Air Lines Friday asked a bankruptcy court judge to reject its lease agreements at the Cincinnati/Northern Kentucky International Airport.

Delta and airport officials said the action would not jeopardize the company's presence at the airport in Hebron.

"We want a more competitive cost structure," said Doug Blissitt, vice president of corporate real estate for Delta, who added the airline would negotiate a new arrangement with the airport if the leases were rejected.



Delta officials said the move wouldn't affect Cincinnati customers.

If a judge grants the motion, bondholders would be left holding the bag for $413.5 million in unsecured debt and the airport would lose about $400,000 in annual revenue. The Kenton County Airport Board would then have to negotiate a new lease with Delta over Terminal 3, Concourse B and other property, said Will Ziegler, the lawyer for the board.

The airport issued the bonds in 1992 at the time most of the facilities were constructed, but neither the airport nor taxpayers are ultimately on the hook for the bonds, Ziegler said. Delta's lease payments - roughly $30 million per year - were assigned to make payments to a trustee, UMB Bank of Kansas City, to pay bondholders.

Delta has been negotiating with UMB Bank and airport officials since December to draw up a new agreement to no avail.

Bank officials could not be reached Friday for comment.[/quote]
 
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