Thursday, June 12, 2008

Delta and FedEx CEOs Upbeat About Memphis Hub

Posted By on Thu, Jun 12, 2008 at 4:00 AM

Aerotropolis lives.

The chief executive of Delta Airlines says the Memphis airport hub should prosper under the merger of Delta and Northwest Airlines, although high fuel prices are here to stay and will cut the volume of business.

Aerotropolis is the name for a massive long-range development around Memphis International Airport including FedEx, passenger airlines, and other businesses. The Memphis Regional Chamber of Commerce is betting heavily that Memphis has a bright future as America's low-cost, hassle-free airport in an era of airline mergers and expensive fuel bills.

Delta CEO Richard Anderson told chamber members Thursday that the Memphis hub "will continue to be an important part of the combined network" after the merger is completed later this year. It's expected to take 18 months to fully implement.

"The strength of a network puts Memphis and the communities we serve in a much better position," he said, adding that the combination of the two formerly bankrupt carriers is "about addition, not subtraction."

Meeting with reporters after his speech, Anderson said that if there are cuts in the number of airline employees and flights out of Memphis it would be "not as a result of the merger."

He said "the issue of fuel is a separate cause" of lower passenger traffic that will likely reduce employment and flight count because flying is not as affordable as it used to be.

Anderson said he expects the merged airline, which will simply be called Delta, to keep all of its current Northwest and Delta hubs including smaller ones such as Memphis and Cincinnati. In general, there will be fewer flights to leisure markets such as Orlando and Las Vegas and small markets in states such as Texas that are served by regional carriers, Anderson said. He said post-merger Delta wants to increase international business to 50 percent from the current 40 percent. He said a new Boeing 787 airplane is "a game changer" on the passenger side that represents "a quantum leap" in technology that bodes well for Memphis and international service.

Anderson also spiked a rumor that airlines will start charging passengers by weight in the wake of surcharges for extra luggage.

"We're not going to weigh passengers," he said.

He said Delta's decision to drop its contract with Memphis-based Pinnacle Airlines does not mean Northwest will do the same.

"The relationship between Pinnacle and Northwest is very important," he said.

Pinnacle CEO Phil Trenary was in the audience but did not question Anderson. In a brief comment after the meeting, Trenary said he hopes to keep Pinnacle operating at the same level it is now.

Anderson was introduced by David Bronczek, CEO of FedEx Express, who was equally upbeat. He said Delta-Northwest will be "the biggest, most powerful airline in the world" and the Memphis airport is "the best of the best."

One factor in favor of Memphis is weather, which Anderson said is the hardest thing about running an airline. He said he himself was delayed Wednesday by a thunderstorm in Atlanta.

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