Merger Bid Generates Questions about Future Clout of Atlanta Airport

Lots of airlines fly to Hartsfield-Jackson International Airport --- but one dominates it.

Delta Air Lines has been king of the hill at the world's busiest airport since rival Eastern Airlines folded 15 years ago. Delta operates more than 1,000 of its roughly 4,000 daily mainline and regional partner flights out of the Atlanta hub, and it controls three times as many gates as its nearest competitor, AirTran.

Yet if US Airways succeeds in its $8 billion takeover bid for Delta, a merger throws into question whether the combined company would maintain all of those flights, gate leases and overall influence at the airport.

So far, the hostile bidder from Phoenix is saying all the right things. Doug Parker, US Airways' chief executive, said he regards the Atlanta hub as a strategic asset and plans to preserve Hartsfield-Jackson as a fortress.

"Atlanta is the key asset of Delta and would continue to be in the new Delta," Parker said in an interview last week.

But just how that "asset" will be used should US Airways prevail is unclear. A merger might result in the loss of Delta's Atlanta headquarters even if the hub survives, although US Airways hasn't shown its hand regarding a headquarters location.

Absentee ownership would raise questions for the Atlanta hub. Would US Airways care as much about the Atlanta airport as Delta, the biggest tenant, has for years? Would it cut the number of Delta routes and gates here? And how would it balance its existing hub in nearby Charlotte with Hartsfield-Jackson?

One or the other would have to give for the merger to achieve its purported cost and operations benefits, analysts say.

"It's a hard fact of economic life that there will be winners and losers in airline consolidation," said Dan Petree, dean of the college of business at Embry Riddle Aeronautical University in Daytona Beach, Fla.

"Atlanta has a very robust airport, and it's got good fundamental economics. But airline executives are human beings," Petree said. "They're highly interested in the welfare of the communities in which they live, and they tend to support the arts and education in those places.

"The fact that Delta has been based in Atlanta for so many years has clearly helped Atlanta," he said. "It's reasonable to question whether that would be the case if the decision-makers were somewhere else."

Political clout

As it is now, Delta is No. 1 at Hartsfield-Jackson --- by a long shot.

The airline and its regional partners lease 75 gates at the airport, far more than second-place AirTran with 26 --- a sore point with the latter, which has clamored for more.

Delta's presence --- both at the airport and through its headquarters --- also gives it outsized political clout. The airline was a prime backer of the fifth runway expansion, and when Georgia politicians floated the idea of privatizing city-run Hartsfield-Jackson to pay for multibillion-dollar sewer upgrades, Delta helped shoot down the notion.

Delta also has been a key player in just about all of the region's high-profile business successes since moving its headquarters here in 1941. Delta's deep roster of nonstop flights has helped the city attract new businesses, corporate headquarters and landmark events such as the 1996 Summer Olympics.

UPS, for example, said its 1991 decision to move to Sandy Springs was based in large measure on access to nonstop flights at Hartsfield-Jackson.

If US Airways is successful, or another carrier steps in to seize control of Delta, it would be mostly a psychological blow for Atlantans. Largely through Delta's international connections to Europe and Latin America, the city has come to regard itself as a world-class destination --- not just the biggest city in the Southeast.

The new owner would almost certainly keep operating a huge connecting hub at Hartsfield-Jackson, offering travelers a similar level of service. But the timing would not be good, given that Atlanta also has been wounded by a litany of recent corporate losses including Georgia-Pacific, BellSouth, Scientific Atlanta, the closure of Hapeville's Ford plant, and the pending shutdowns of Doraville's GM plant and two Army posts.

Overblown link?

Richard Aboulafia, airline analyst at the Teal Group, said the value of close relationships between corporate and civic leaders is overblown.

Airlines answer to shareholders, he said, not the communities in which they operate. Atlanta and other locales must make solid business cases for expanding routes or adding jobs because airline investments aren't charity.

"Delta Air Lines and the new South grew tremendously after World War II, and Atlanta has been the epicenter," Aboulafia said. "Those things would have happened with or without Delta. It didn't hurt that Delta's headquarters was is in Atlanta, but it wasn't the cause. Atlanta's economy and population made it a sensible place to expand --- and that's still the case today."

Aboulafia and other experts believe a US Airways-Delta combination would face difficult operational choices.

US Airways' connecting hub in Charlotte is about 30 minutes by air from Atlanta, and it's likely to make cuts there if it acquires Delta. Charlotte charges lower landing fees than Atlanta, but it has smaller terminals and two parallel runways instead of five. It handles 28 million passengers instead of more than 80 million, and has two foreign passenger carriers instead of six.

Parker, the US Airways CEO, said he doesn't plan to close either hub but would trim connecting traffic served by the two hubs to cut costs.

Mike Boyd, an aviation consultant in Evergreen, Colo., predicted that Hartsfield-Jackson's traffic levels would suffer short-term as a result. However, another aviation expert, Robert Mann, of RW Mann & Co. in New York, predicts the Charlotte hub would likely lose its status as a hub.

The two airlines' networks also conflict in the Northeast, where Delta has an international hub in New York and US Airways operates trans-Atlantic flights from Philadelphia, and in the West, where Delta has a Salt Lake City hub while US Airways has one in Phoenix.

"New York and Philadelphia draw from the same catchment area," Aboulafia said. "One of those has got to give."

JPMorgan analyst Jamie Baker speculated in a report that a Delta-US Airways linkup would allow "re-anchoring much of Delta's un-fed [New York] international flying to US Airways' feed-rich Philadelphia hub."

US Airways plans to cut about 10 percent of the combined network, but airline officials declined to identify where the reductions would take place.

Petree said Atlantans should evaluate any proposed airline combination in terms of whether it makes carriers here more competitive in a future that's likely going to include a good deal of consolidation among U.S. passenger carriers.

"There are going to be fewer legacy carriers in the future than there are today," he said. "There's strong pressure for consolidation.

"But no one knows how many network carriers the market will support or which ones will survive."


US Airways says it would keep its hub in Charlotte and Delta's in Atlanta if its takeover offer succeeds. But analysts say cutbacks at one or both are almost assured. Here's a look at the two airports:

Hartsfield-Jackson International Airport

* World's busiest airport

* 86 million annual passengers

* About 1,350 daily departures

* Five parallel runways

* Eight foreign carriers (Air Canada and Jazz, Air Jamaica, British Airways, Air France, KLM, Korean, Lufthansa)

Charlotte Douglas International Airport

* 11th in number of flights

* About 28 million annual passengers

* About 700 daily departures

* Two parallel runways

* Two foreign carriers (Air Canada, Lufthansa)

Source: Airports Council International

News stories provided by third parties are not edited by "Site Publication" staff. For suggestions and comments, please click the Contact link at the bottom of this page.