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Like it or not, a new day has dawned at Memphis International Airport. In the simplest terms, here’s what that new day looks like: “We’re not going to be a hub again,” John Greaud, the now-retired vice president of operations for the Memphis and Shelby County Airport Authority (MSCAA), says emphatically. “We’re going to be a local passenger airport. The people who live in Memphis, or people who come to visit Memphis — those are the people who are going to be our users.”Ripples are still flowing from Delta Airlines’ June 2013 announcement that it would end its hub operation at the airport. Those ripples have touched nearly every aspect of life around the airport, from the psyches of Memphis air travelers to the physical shape and size of the airport itself. Gone are the days when a full menu of nonstop flights took us to a hundred points domestic and abroad. Gone are the days of three big terminals streaming with air passengers looking for connecting flights. Gone are the days of big revenues and big-ticket sales. And gone are the days of all those passengers jamming the numerous restaurants, newsstands, and coffee shops, and leaving piles of profits and tax dollars behind them.But gone, too, are the days of a single air carrier dictating ticket prices and some airport policies. Gone are the days of shuttling to Democrat Road to pick up or return a rental car, of shuttling miles away from the terminal or walking from a parking lot in the distance. Soon to be gone as well are the days of fluorescently lit and low-ceilinged concourses. It’s difficult to believe that just four years ago, the MSCAA hosted the 2011 Airport Cities World Conference, with hundreds of airport executives attending from around the globe and a keynote speech given by Richard Anderson, CEO of Delta Air Lines. The event signaled Memphis’ coming-out as a genuine “aerotropolis,” a phrase coined by futurist John D. Kasarda (who also spoke at the Memphis conference) to describe how major airports were now not just airports, but “magnets for businesses, trade, information exchanges, and leisure activities.” According to Kasarda, such mega-hubs would become “urban realms in their own right, driving and shaping the very fabric of the new cities they are creating.”Somehow, in its eager march to a brighter future, Memphis got kicked off the bus.How did we get here?Airport leaders say this new day was inevitable, that “Jesus himself” could not have prevented Delta’s de-hub. They are re-inventing the passenger airport from top to bottom, from air service to customer service. They want Memphians to be proud of MEM (the airport’s three-letter designator by the International Air Transport Association). But the leaders realize getting there will require a fight.“I’ve prefaced a lot of my remarks [to local groups] with, ‘Folks, when I started this job a year-and-a-half ago, things were tough and they may well get worse before it gets better,’” says Jack Sammons, chairman of the MSCAA. “But we’ve got a plan and it will, indeed, get better. Well, it certainly has already gotten better.” While Sammons might see a better situation, more than a few doubting Thomases argue otherwise. Some blame the MSCAA for not doing enough to stop Delta’s de-hubbing decision. Business leaders — especially those who rely heavily upon air travel to conduct commerce — remain concerned over the fact that flights from MEM have dropped so precipitously in just a few years. A popular public Facebook group called “Delta Does Memphis,” boasting nearly 5,500 members, sees the shrinking airport as a physical sign of real defeat that feeds into a deepening sense of Memphis as a backwater town unworthy of a hub, and that the situation somehow invalidates our claim to be a “major American city.” A December 2014 post from “Delta Does Memphis” summarizes the majority sentiment concisely: “The airport is a joke and a total embarrassment for the city of Memphis.”Before we move forward, let’s go back. Actually, let’s go way back to 1978.That’s the year Congress passed the Airline Deregulation Act. The new law removed government control over fares, routes, and market entry of new airlines into commercial aviation. Similar reforms had come to the rail and trucking industries in the Nixon and Ford Administrations. So economists and think tanks pushed for (and won) similar rules for the aviation industry during the Carter Adminstration. The Deregulation Act up-ended the airline industry, and there were winners and losers. For instance, the Government Accountability Office has reported that median air fares fell 40 percent from 1980 to 2006 (but they rose about 4 percent from 2007 to 2012). But also, well more than a hundred airlines have filed for bankruptcy since deregulation. In the last decade, deregulation and bankruptcies paved the way for mega-mergers of some of the airline industry’s biggest players. United Airlines and Continental Airlines merged in 2012. Delta Air Lines and Northwest Airlines merged in 2009 into what was then the largest commercial airline in the world. At the time of the Delta/Northwest merger, the government did not protest. Instead, the merger passed painlessly through the anti-trust review at the Department of Justice, which issued a statement at the time saying the merger would “benefit U.S. consumers” and was “not likely to substantially lessen competition.” But the federal government changed its tune when U.S. Airways and American Airlines announced their merger in 2013. Antitrust regulators said that while the past mergers helped to lead the industry out of bankruptcy, this new merger would, indeed, hurt consumers and competition. Even Tennessee’s Attorney General Bob Cooper joined in the protest. His office united with six states, the federal government, and the District of Columbia in a complaint to block the merger.“Studies show that Tennessee’s four major airports in Nashville, Memphis, Knoxville, and Chattanooga will experience fewer flights to certain destinations and travelers will pay more for remaining flights,” Cooper said at the time. “If this merger is completed, consumers will face decreased competition and increased prices because airlines can cut service and raise prices with less fear of competitive responses from rivals.”Tennessee and the other parties later dropped their complaint against the merger. In exchange, the new American Airlines agreed to divest itself of some slots at Reagan National Airport and LaGuardia International Airport to make way for low-cost carriers. The two airlines made the marriage official in December 2013, but it will still likely be more than a year before they fly under the singular “American” banner.While the U.S.Air/American merger tale offers at least a peek inside the workings of (and even the legalities of) modern-day mergers, there’s no doubt that the merger that matters most in Memphis is that of Delta and Northwest. The basic economics seem quite simple: Delta had a hub in Atlanta while Northwest’s hub was in Memphis; they were just too close together and the new Delta had to pick a city. This made sense to aviation experts at the time. Looking at the entire chessboard, they understood Delta’s play and correctly predicted its next move. “The reality is Delta needs to build its overall connectivity from positions of strength, and Memphis brings no value to the carrier as a connection point,” reads a June 2013 report from the CAPA Centre for Aviation. “As Delta has been cutting service from Memphis, the carrier has been strategically building up other markets, most notably Seattle, as it leverages feed from partner Alaska Air Group from its extensive network to fuel its long-haul services from Seattle, which include both of Tokyo’s airports, Narita and Haneda, as well as Beijing and Paris.”And Delta’s move came as little surprise to airport leaders in Memphis. “When Delta and Northwest declared bankruptcy in the same courthouse at the same time on the same day, we started preparing to close the hub,” Greaud says. “Because we suspected it was just a matter of time. So what did we do? We started figuring out how to get rid of as much debt as possible as quickly as possible in addition to keeping our overall costs as low as possible.”Delta began shrinking its flight schedule here. Then, it made the de-hub official in June 2013. That decision pulled about 230 employees from Delta operations here and resulted in the termination of about three dozen flights to and from Memphis. Vitriol flowed from the flying public, from business leaders, and from elected officials. In the 2008 run-up to the Delta/Northwest merger, U.S. Rep. Steve Cohen (who was skeptical of the merger deal) was assured by company officials the deal would not cost Memphis flights or jobs, “two promises that have been broken,” read a news release from Cohen’s office.The cost of doing businessIn November 2010, Delta had 209 daily departures from Memphis. The airline flew but 91 daily flights through here by April 2013. From 2010 to 2013, the airline exited or reduced capacity on 93 percent of the routes it served through Memphis. Fewer flights, of course, also meant fewer passengers. In 2001, about 19 million passenger seats were available in and out of MEM. That number was slashed by 57 percent by April of 2013 when 8 million seats were available, according to a 2013 report from Campbell-Hill Aviation Group. As the number of seats decreased, the cost of those remaining seats took off. During Delta’s tenure, fares rose at MEM well above the national average, a fact that was to gain national attention as Memphis began frequently to show up around the top of ticket price rankings in publications like the New York Times and The Wall Street Journal.From 2000 to 2011, average fares at the Memphis airport were 15 percent higher than the U.S. average. At one point in 2004, fares were 19 percent higher here. The Greater Memphis Chamber of Commerce convened a panel of airline executives on the high prices in 2011. They said, overwhelmingly, that the lack of competition at the airport (read: Delta dominance) and the high cost of jet fuel were to blame. By 2013, Memphis had the highest domestic fares among the top 75 U.S. airports, according to Campbell-Hill. (The U.S. Department of Transportation, however, reported last January that, while fares here were still above the U.S. average by about $86, prices had fallen about 7.5 percent to around an average of $449.)"The relentless pursuit of frequent and affordable air service"Bad news stacked up. Change was in the air.MSCAA chairman Arnold Perl abruptly retired in 2012 after 16 years as chairman and 30 years on the board. Then, longtime airport president and CEO Larry Cox retired in January 2014 after 41 years of service. Jack Sammons, a businessman and former Memphis City Council member, took the reins as Authority chairman. Scott Brockman, a 12-year MSCAA veteran, became airport CEO in 2013 after turns as the airport’s CFO and as COO. The airport’s bad news was bad enough to unite the mayors of nearly every Shelby County city and the heads of some of the largest organizations in town. Together, they had formed the Mid-South Air Service Task Force in 2012, with the goal of addressing the decline in seat capacity and the rise in air fares, and to develop a strategy for air service overall. The group was comprised of public and private stakeholders throughout the Mid-South. But that group was dissolved abruptly in July 2014 with a straightforward letter to the stakeholders from task force chairman George Cates. He said the need for the task force was called into question by Airport Authority leaders and “while we have the highest respect for Messrs. Sammons and Brockman,” a meaningful relationship between the two groups never formed.“The new (Memphis and Shelby County Airport Authority) leadership is focusing significant effort on developing new air service and sees the (Task Force) as redundant to its mission,” Cates wrote. “We do not agree with that view, but unless the (Airport Authority) were to identify a productive and collaborative role for the (Task Force), there is no value in continuing unilateral (Task Force) operations.”At the time, especially after Cates’s letter, it seemed the relationship between the MSCAA and the task force didn’t end amicably. “Well, that couldn’t be further from the truth,” Sammons says. “That’s the way The Commercial Appeal positioned it.”Instead, Sammons and Brockman say that the airport and MSCAA and the Task Force were simply duplicating efforts. That wouldn’t have been so bad, they say, but both groups were fighting for face time with time-starved airline executives. Sammons remembers asking a Southwest Airlines executive about the task force concept.“They said, ‘Let me be frank with you. We ain’t got the time to meet with multiple parties.’ And to me, that was kind of the end of it,” Sammons says. “Listen, George [Cates] and I, and all of us, we all have the same goal. It’s the relentless pursuit of frequent and affordable air service. And there ain’t no pride in authorship.”Brockman says the decision to disband the task force was a collective one and the backlash came from another place entirely.“I think part of it was a misconception at the time that the airport was doing nothing,” he says.The accidental hubLook at the data and listen to experts, and the real wonder is that Memphis ever had a hub at all.There’s a slide in the 2013 Campbell-Hill consultants’ report titled: “Memphis Has a Smaller Population, Fewer Local Passengers, and Lower Median Income than All Other Failed Or Declining Hubs Except One.”The other “one” is San Juan, which had a 2011 median household income of $20,592, according to the report. Here’s how MSCAA board member Jon K. Thompson explained it to an airport tour group last year: “Memphis is a poor city. Memphis has a 1.3 million population but only 400,000 can afford to fly. Little Rock has an 800,000 population and 425,000 can afford to fly. Nashville has a 1.8 million population and 850,000 who can afford to fly.”New, low-cost carriers have brought down the cost of ticket prices, Thompson said, which has increased the number of Memphians who can afford to fly. But the problem is more basic (and more widespread) than that. Memphis, he said, needs to up its average household income, improve education in science and engineering, provide more manufacturing jobs, and attract more young talent to live here. The Campbell-Hill report included a list of failed hubs since 1990. It’s a long list that features cities far from losing their “major American city” status. Chicago. Dallas/Ft. Worth. Denver. Las Vegas. Los Angeles. Baltimore. Nashville. Yes, Nashville. When American Airlines pulled out of Nashville in 1996, Nashvillians feared the same things Memphians fear now — service blackouts, increased travel time, and higher business costs. It took nearly 20 years and a lot of re-invention since the American de-hub, but Nashville International Airport (BNA) is just recently back up to where it was before. BNA reported more than 10 million passengers in its 2013 fiscal year for only the second time in its history, the first being in 1993 when it was an American Airlines hub. In 2013, BNA announced 14 additional nonstop flights to New York LaGuardia, Los Angeles, Cleveland, Newark, Pittsburgh, Pensacola, Boston, and Athens, Georgia. That airport is now served by 10 airlines and offers 380 daily arriving and departing flights, including nonstop service to 50 markets. Delta also has reduced service at Cincinnati/Northern Kentucky International Airport (CVG) last year. That airport, like MEM, finds itself in re-invention mode and is similarly focusing on local passengers while trying to attract other carriers, especially low-cost carriers. Cincinnati business leaders are actively engaged there to keep that airport’s single international flight to Paris. But they do it, mainly, by buying tickets. Proctor & Gamble is located in Cincinnati, as is GE Aviation, which is a joint-venture partner with France-based Snecma in manufacturing jet engines.The long and winding roadWhen Sammons talks about successes at MEM since the Delta de-hub, he points to quality air service. That may seem a laughable concept to the “Delta Does Memphis” crowd (as the deluge of flight eliminations still pours forth from the Atlanta-based airline), but Sammons insists he and Brockman have “burned a lot of jet fuel” over the last few months to move the ball down the field.“We’ve added 22 flights since November of last year,” Brockman says, somewhat defensively, on the topic of air service progress. “We have air service with Southwest to their markets. Everybody said, ‘You’ve got to get Southwest.’ We got it, OK? And it’s grown. People said, ‘You have to get competition going west.’ Well, we got Frontier to Denver.”Attracting air service is a complex and competitive card game. Airlines watch closely when another airline opens a flight in a city. They read the news, looking for some deeper, hidden meaning. Secrecy in meetings with airport officials and airlines is a foregone conclusion, say Sammons and Brockman. Put the situation on par with economic development officials and their negotiations to bring new industry projects to Memphis. Why so secret? Smaller airlines especially don’t want the hub carrier to know they’re trying to compete in their market. As soon as they do, the hub carrier will use their size to “beat them before they ever get in the game.” Also, the negotiations aren’t straight forward. “We can’t just beat the sh*t out of (airlines) about, ‘Hey, why aren’t you gonna give me a flight?’” says Sammons. “But, you know, you tell them about the exciting environment we have in Memphis, the exciting opportunities, and say, ‘Here’s a chance to become the hometown airline in Memphis. It was Delta, but that girl ran off with the tennis pro and took our Corvette. We’re pissed.’ People in town are ready to tear up those Delta SkyMiles cards and find a new girlfriend.”In a more formal step forward, the Airport Authority announced in December that it had hired a senior manager of air service research and development. Brockman says the person in the position will “wake up every morning eating, breathing, sleeping, and living air service development” in Memphis, which includes understanding what the community wants and needs.Will Livesay was hired for the post and began working in mid-December. He had worked for American Airlines since 2008 as a senior analyst of network development, looking for new domestic routes for the airline.But at the very end of the day, airport leaders know the same facts and repeat the same mantra: Memphis air service will never come from a single, large carrier anymore. Instead, air service in Memphis will be “a mosaic of frequent, affordable air service.”Our minimalist futureHuge, yellow earth movers have been digging and hauling dirt around the airport since November. Crews have been removing the southern end of the A and C concourses, and that activity may be the most visible sign of the new day at MEM. Fewer flights. Fewer passengers. Fewer retailers. The passenger airport has shrunk in every way imaginable. And those earth movers are ensuring the airport will shrink physically, too.“This is our future,” Greaud says. But airport officials aren’t shrinking the airport’s footprint for the sake of doing so. The move is mainly about two things: moving people and moving airplanes.The airport is currently designed for 85 gates. It only leases 22. Those are spread out over three big concourses, which were all needed when Delta was going strong here. Now that Delta is less of a factor, those inactive gates make for huge gaps at the airport. In short, parts of the airport have become ghost towns. That becomes important to restaurants and retailers as this spreads foot traffic very thin. Many Memphis airport businesses have closed in the wake of the de-hub. “It’s the equivalent of watching the Grizzlies play in the Jerry Jones dome [AT&T Stadium] in Dallas with 3,000 people,” Sammons says. “You go in there and you say, ‘Man, they ain’t nobody in this deal,’ you know?”To correct this, the plan is now to focus all the airport’s activity (now spread over the A, B, and C concourses) into one place, namely, the B concourse. The consolidation is slated for the summer of 2015.The project is just one part of a $114 million, federally funded concourse modernization plan that will take between five and seven years to complete. Included is the addition of moving walkways, expansion of boarding areas with added passenger seating, raised ceilings, increased natural lighting, and doubling the width of the B concourse. “If we bring everybody to Terminal B, we widen the hallways, we raise the ceiling, and bring fresh sunlight into the building,” Sammons explains. “Then, when all the gates have activity, people are all of a sudden like, ‘Hey, this is a hot deal.’”The move is also expected to focus the foot traffic in the airport, which is good news for retailers looking to lure customers. The modernization plan will eliminate the unwanted gates and the resulting excess of gates will still leave plenty of room for growth, Greaud says. But the Airport Authority is convinced that eliminating the gates will do more than that. The reconfiguration is expected to make it much easier for airlines to move their planes in and out of the airport. With the airport’s current design, planes only have one-way access to and from the “courtyard” areas of the B concourse, because the south ends of the A and C concourses are in the way. This wasn’t a problem when Delta had their hub at the airport because they could better coordinate when their own planes were coming or going. Now, with multiple airlines taking up more space at airport, it’s harder to coordinate entry and exit traffic. Demolishing the south ends of the A and C concourses will create a larger taxiway, airport officials insist, allowing planes to come and go at the same time. The modernization plan is hoped to also have a softer impact on the psyches of Memphis air travelers. “We want everyone who comes through the place to say, ‘Dang, what an awesome facility. Memphians ought to be proud,’” Brockman says. “Then we want Memphians to say, ‘That’s my terminal. Yeah, I’m home, man. This is my terminal.’”
