Fuzzy math? Delta Air Lines CEO Richard Anderson told an enthusiastic Memphis audience this week that the pending merger of Delta and Northwest is "about addition, not subtraction." Hmmm.
Two airlines coming out of bankruptcy are combining, so one plus one makes two. So far, so good. The new airline will have a bigger global network than either one had as a stand-alone airline. More addition. All of the current hubs, including Memphis, will continue to be hubs. Still more addition. But surely Memphis can expect cuts in flights and employees, can't it, I asked Anderson? "Not as a result of the merger," Anderson said.
But clearly those things will happen as a result of higher fuels costs, up 83 percent in the past 12 months, and a drive for operating efficiencies. Different blame, same result.
Anderson laughed when asked about one "efficiency."
"We're not going to weigh passengers," he said, when asked if heavyweights might have to pay extra. Luggage is another matter. So far, Delta and Northwest have not followed the lead of American, United, and US Airways in imposing fees on checked bags.
Confidence booster: Anderson's reassurance about Memphis and its hub status was a welcome bit of good news in tough times. The crowd at the Memphis Regional Chamber of Commerce breakfast, estimated at 400 people, seemed unusually enthusiastic, applauding several times for Anderson and FedEx Express CEO David Bronczek, who introduced Anderson.
The chamber and the Memphis and Shelby County Airport Authority are going to market Memphis as Americas low-cost, hassle-free airport with shorter taxi times and better weather than Midwestern hubs. Memphis is the headquarters of FedEx. Memphis is a hub for Delta/Northwest -- soon to be called just Delta -- the world's giant in passenger travel.
The day after the Anderson speech, The Wall Street Journal ran a front-page story about factories bringing jobs back to the U.S. again because of soaring transportation costs. "The cost of doing business in China in particular has grown steadily," the story said.
If you're planning on attending the 2008 Olympics in Beijing you'll need solid-gold savings and the endurance of a marathon runner. Northwest's website lists a lowest fare of $1730 round-trip from Memphis to Beijing, with two stops and total travel time ranging from 24 hours to more than 40 hours.
Suggestion of the week: Now that we have been reassured about the long-term future of the airport, how about three more city "summits," or gatherings of movers-and-shakers organized by the chamber or someone else. One would be on the Memphis financial industry, another would be on government funding in the housing crisis, and the third would be on crime in light of last week's ratings showing Memphis in or near the lead in violent crime and a widely read story in the Atlantic Monthly quoting Memphis crime researchers.
The stock prices and market capitalization of publicly owned Memphis banks are down by 50 percent or more in the last year. The wealth effect on employees and individuals invested in those banks is enormous.
If you think this year is a hard one for city and county government to make ends meet, wait until next year. There's a property reappraisal coming in 2009, meaning lower home values and lower property tax collections. Rising home values and higher property appraisals meant more money for local government in the 1990s. Now comes the fall.
To capture the same amount of revenue, the property tax rate would have to rise. I ran into Shelby County Commissioner Mike Carpenter at the chamber breakfast, and he said not a meeting goes by without he and his colleagues talking about this elephant in the living room.
A crime summit with the mayors, criminologists Richard Janikowski and Phyllis Betts (quoted in the Atlantic story), the police director and sheriff and the new MCS superintendent Kriner Cash (who, in contrast to Herenton, wants a separate school security force, not MPD) wouldn't stop the flight of Memphians to the suburbs but it would possibly reassure those who are staying.
Small change: A few months ago it looked like government in Memphis was on the verge of some big changes. Mayor Herenton said he planned to resign to seek the school superintendent job. That would have triggered a special city election and resulted in some major churning among division directors and appointed positions. It likely would have spilled over to Shelby County government and, of course, the Memphis City Schools central office. It was all talk. What happened last week was small change, much closer to a new U.S. Secretary of Education School than a new presidential administration.
One of Cash's first jobs will be to get an accurate enrollment count. MCS says it has 113,000 students, down from 118,000 a year ago and 121,000 in 2004-2005. I don't think anyone really knows. A supposedly definitive study by MGT of America in 2003 used two different numbers -- 118,200 in some places and 113,730 in others. A shrinking system means fewer state dollars. MCS and every other school system has every incentive to come up with the largest possible number.
Pegging the graduation rate is even harder. MCS says it is around 69 percent. But U.S. Education Secretary Margaret Spellings says districts use wildly different ways of measuring this, and she wants a uniform national standard.
A better measurement is to simply count high school graduates, which is what school is all about. That number should be available in June each year, a couple weeks after the last graduates march across the stage. In 2007, there were 5,886 graduates, but some schools produced more than 300 while other schools produced fewer than 100. As accountability expert for the Miami/Dade County school system, which is three times as large as MCS, Cash should be able to get a handle on this right away for one of the "quick wins" he wants to achieve.