Feb. 21--Delta Air Lines will relinquish 14 of its 47 gates at Memphis International Airport and shrink its terminal footprint to fit a sharply reduced flight schedule.
Delta and United met a Feb. 15 deadline to notify the Memphis and Shelby County Airport Authority of plans to downsize leases in the fiscal year starting July 1.
Delta's rent payments for terminal space will go down, but airport officials weren't sure how much. The lost revenue should be less than $1 million out of a $115 million budget, chief operating officer Scott Brockman said.
United, which operates 15 flights a day through regional partners, will drop one gate and funnel its operations through a single large gate, Brockman added.
The two airlines were the first to take advantage of a new escape clause in the airport's lease agreement that spreads terminal and airfield costs among all airlines that use it. Delta, as the dominant passenger carrier, pays the largest share of terminal rent, while all-cargo FedEx pays no terminal rent but the bulk of landing fees.
Before the most recent lease agreement approved by the airport board last year, airlines had been obligated to retain fixed amounts of terminal space for the duration of multiyear leases.
When the lease was approved last November, airport officials said airlines no longer wanted to be tied to long-term commitments for terminal space, and the escape clause could benefit efforts to lure new passenger service.
Brockman and a Delta spokesman said the reduction in gates reflected Delta's needs for a schedule that was down to 97 daily flights in January from 140 a day a year earlier. They said the gate reduction shouldn't be read as an indicator of plans for further reductions, although airport officials aren't ruling that out.
"This basically is being done to align with the most recent reductions that we've had," Delta spokesman Anthony Black said.
The disclosure came in response to a reporter's query, following an Airport Authority board meeting in which president and CEO Larry Cox remarked that Delta might make further cuts.
Asked whether Southwest Airlines would be entering Memphis if Delta hadn't downsized, Cox said, "I think they were coming regardless of what Delta did." Southwest has announced plans to add flights by its AirTran subsidiary in Memphis in August, in advance of Southwest absorbing the AirTran brand.
Brockman said under existing lease terms, Delta has 76 percent of the terminal's leased space. The modification would reduce Delta's total to 73 percent of leased space.
Gates being relinquished are in Concourse B, where Delta has concentrated operations during successive waves of flight reductions after it merged with Northwest. The airport has about 70 gates in three concourses.
Even though Delta is giving up nearly 30 percent of its gates, the airline's terminal rent won't go down that much. The airport divides expenses by leased square footage to determine terminal rents. If the amount of rented space goes down and expenses stay the same, rental rates go up.
Higher rates would mean other airlines end up shouldering a larger share of terminal expenses.
Brockman said the breakdown won't be known until the budget process is further along.
Copyright 2013 - The Commercial Appeal, Memphis, Tenn.
