Delta Air Lines has notified the U.S. Department of Transportation (DOT) that it plans to stop serving up to 24 smaller U.S. domestic markets.
The changes will affect Essential Air Service (EAS) markets that Delta serves through its Delta Connection regional-airline partners. Delta Air Lines has decided to make the service cuts or changes in connection with retiring the 32 Saab 340B turboprops currently operated within the Delta Connection network, and to halt $14 million in annual losses that Delta incurs in operating the routes. Some 50-seat regional jets are also to be retired from Delta Connection operations.
According to Delta Air Lines, flights in the 24 markets depart with, on average, 52 per cent of seats filled and load factors to and from some locations are as low as 12 per cent. This compares to the Delta network’s overall domestic system load factor of 83 per cent for 2010. Weak demand in some markets has led to flights occasionally operated with no passengers on board, says Delta.
“While Delta would prefer to continue serving these communities, the new reality of mounting cost pressures faced by our industry means we can no longer afford to provide this service,” the airline says in a statement. “As we continue to strengthen our business, Delta is retiring the Saab turboprops and some 50-seat jet aircraft, which will hinder the financial viability of serving these smaller markets.”
Atlanta-based Delta says it has taken a number of steps to respond to added cost pressures. The airline previously said it would reduce capacity this fall by 4 per cent and retire 140 aircraft. Delta says it has already reduced its facility costs at 170 airport locations and 10 cargo locations across the system, saving more than $80 million annually.
Delta says its notification to the DOT that it is discontinuing service in the 24 markets under current subsidy-funding arrangements provides the DOT the opportunity to select a new carrier to begin service in the affected EAS communities within a 90-day period. The carrier says it will continue to serve the affected communities through its Delta Connection partners until the DOT selects a replacement carrier and appropriate funding is available.
In some cases, says Delta, it is coordinating with other carriers to bid on the routes. In addition, Delta says it plans to continue service in some subsidized and non-subsidized markets, as long as the DOT provides a higher subsidy rate so Delta can fly larger regional jets on the routes in question.
The EAS program was created to ensure that small communities continue to have access to passenger air service. In many cases, airline service in EAS markets is subsidized by the government.
According to Delta Air Lines, the Airline Deregulation Act of 1978 provides that if a carrier is held in beyond the 90-day notice period, it is entitled to receive compensation “to pay for the fully allocated actual cost to the carrier of performing the …service … plus a reasonable return on investment that is at least 5 per cent of operating costs; and to provide the carrier an additional return that recognizes the demonstrated additional lost profits from opportunities foregone [by continuing to be held in and providing service].”
Delta says it will offer customers booked for travel in the markets alternative transportation choices or refunds. The airline also says it will reach out to customers who have provided full contact information in their reservations to arrange alternate transportation or refunds. Customers wishing to make changes to reservations also can contact Delta Reservations at 1-800-221-1212.
The 24 communited affected by Delta’s decision to cut service are:
● Thief River Falls, Minnesota (IATA code TVF); EAS-subsidized; 12.0 per cent average load factor achieved by the Delta network;
● Greenville, Mississippi (GLH); EAS-subsidized; 27.6 per cent load factor;
● Devils Lake, North Dakota (DVL); EAS-subsidized; 30.3 per cent load factor;
● Watertown, South Dakota (ATY); EAS-subsidized; 35.0 per cent load factor;
● Muscle Shoals, Mississippi (MSL); EAS-subsidized; 35.7 per cent load factor;
● Fort Dodge, Iowa (FOD); EAS-subsidized; 39.1 per cent load factor;
● Hibbing, Minnesota (HIB); EAS-subsidized; 39.2 per cent load factor;
● Alpena, Michigan (APN); EAS subsidized; 39.5 per cent load factor;
● Tupelo, Mississippi (TUP); EAS-subsidized; 41.0 per cent load factor;
● Jamestown, North Dakota (JMS); EAS-subsidized; 42.1 per cent load factor;
● Mason City, Iowa (MCW); EAS-subsidized; 45.9 per cent load factor;
● Pierre, South Dakota (PIR); Not EAS-subsidized; 47.4 per cent load factor;
● Iron Mountain, Michigan (IMT); EAS-subsidized; 48.7 per cent load factor;
● Sioux City, Iowa (SUX); Not EAS-subsidized; 51.4 per cent load factor;
● International Falls, Minnesota (INL); EAS-subsidized; 52.5 per cent load factor;
● Brainerd, Maryland (BRD); Not EAS-subsidized; 52.6 per cent load factor;
● Hattiesburg, Mississippi (PIB); EAS-subsidized; 53.7 per cent load factor;
● Escanaba, Michigan (ESC); EAS-subsidized; 55.2 per cent load factor;
● Aberdeen, South Dakota (ABR); Not EAS-subsidized; 55.6 per cent load factor;
● Pellston, Michigan (PLN); Not EAS-subsidized; 58.5 per cent load factor;
● Bemidji, Minnesota (BJI); Not EAS-subsidized; 59.3 per cent load factor;
● Sault Ste Marie, Michigan (CIU); EAS-subsidized; 60.0 per cent load factor;
● Waterloo, Iowa (ALO); Not EAS-subsidized; 61.4 per cent load factor; and
● Butte, Montana (BTM); Not EAS-subsidized; 65.3 per cent load factor.