Five Michigan markets are among those Delta Air Lines is threatening to abandon, saying a lack of passengers makes flying to the nation’s tiniest airports unprofitable.
Airports in Alpena, Iron Mountain, Escanaba, Pellston and Sault Ste. Marie would lose service starting Oct. 13 if the Atlanta-based airline gets approval from the U.S. Department of Transportation to ax flights to those cities.
But a federal subsidy program with which Delta has contracted may keep at least some of the flights operating through next year.
Delta said Friday it wants to pull out of 24 underperforming markets around the country, the result of rising fuel costs, less-than-profitable passenger loads and the retirement of old Saab propeller-driven planes used to serve the nation’s smallest airports.
Among the Michigan airports, all but Pellston are subsidized by the federal Essential Air Service program, which overall spends about $200 million annually to ensure small, rural airports get service, even if their passenger loads wouldn’t normally support a profitable operation.
“It’s a combination of the fleet retirement, the high fuel costs and the low level of demand,” Delta spokeswoman Kristin Baur said. “It has made it unfeasible to achieve sustained profitability in these markets.”
As The Detroit News reported last month, the Republican-controlled U.S. House voted this spring to eliminate the EAS program, citing it as too costly. The Democrat-controlled Senate kept the funding in place while reauthorizing the Federal Aviation Administration act.
Negotiators between the two chambers have yet to hash out a deal ahead of the end of the 2011 fiscal year, which runs through Sept. 30.
Delta didn’t indicate whether the Capitol Hill debate about the EAS program factored into its decision on the 24 airports, but in some cases the airline is seeking more federal aid to continue to operate in unprofitable destinations.
In Pellston, Delta wants a subsidy. It doesn’t receive one now. “We’d like to continue to offer service to Pellston,” Baur said, “but … we’re asking for a subsidy to continue serving that community with our CRJ regional jet.”
In Sault Ste. Marie and Escanaba, the airline is interested in keeping service if it receives a higher subsidy. Sault Ste. Marie has the highest average passenger load among the five targeted Michigan airports at 60 percent, according to Delta statistics. Escanaba’s rate is 55.2 percent.
In the case of Alpena, Delta is not interested in staying. The airport there has an average passenger load of 39.5 percent, the lowest among the five Michigan airports to which Delta may discontinue service.
Ultimately, the Transportation Department could hold Delta to its current EAS contracts, which all originally were set to expire next year.
Delta committed to keeping local service in Michigan, Minnesota and other areas served by Northwest prior to the 2008 Delta-Northwest merger. Many routes were flown by the tiny Saab aircraft operated via contract regional carriers.
But volatile fuel prices have made it difficult for Delta and its fellow network carriers to reach a point of profitability as last year’s resurgence in air travel has slowed while consumers remain uneasy about the economy’s recovery.
Delta’s retirement of its Saab fleet will help stem $14 million in annual losses, the company said.
Many flights to rural communities have too many empty seats, Delta said. The airline’s flights in and out of Sault Ste. Marie are an average of 60 percent full, well below Delta’s overall average of 86.3 percent in June.
Other carriers may take over
Flights in the 24 affected U.S. markets departed with 52 percent of seats filled on average during the past 12 months — far below the company’s overall average. Some locations are as low as 12 percent, and occasionally may have no passengers on board, the airline said.
Other airlines may bid to pick up those subsidies, Delta said. In Iron Mountain, Great Lakes Airline intends to submit a bid to take over service, according to Delta’s filing with the government.
Pellston Regional Airport Director Kelley Atkins said he’s not concerned his airport will face a shut-off of passenger service. The airport is part of the EAS program because it has only one carrier.
While it’s possible another airline will bid to pick up the service under EAS, Atkins says Delta is looking to offset costs and wants to stay in Pellston, which boasts higher volume in the summer months from tourists.
“They have the ability in Pellston (to sell) tickets for more money than what they would at other airports,” he said.
Bill Mosley, a Transportation Department spokesman, said the agency will put out requests for proposals to other airlines to serve communities that receive the subsidy.
Selections typically take place within 90 days, he said.
“If it takes longer, we’d hold the incumbent carrier in place so there’s no disruption in service,” Mosley said.
The government will have a chance to select a new airline to service the affected communities within 90 days, and Delta said it will serve the affected airports through its Delta Connection partners until the Department of Transportation selects a replacement and higher subsidized funding is available.
About 200 workers affected
Delta said customers who have booked flights in affected markets will be offered alternative transportation or refunds.
The carrier is retiring its 34-passenger Saab turboprops and the next aircraft in its lineup is a 50-seater regional jet, Baur said.
The retirement of the Saabs — the slowest and among the least fuel-efficient in Delta’s fleet — was announced last year. Before the phase-out, the company was operating 49 of the turboprop aircraft; the fleet has since been slimmed to about 20.
All told, about 200 Delta employees could be affected by the company’s move to pull out of the 24 markets nationwide, an average of about eight employees per destination.
Baur said the company has a wholly owned regional subsidiary — Regional Elite Airline Services — operating the ticket counter, check-in and baggage staffing in the affected markets, and will continue working “until a determination has been made whether the service will be continued.”
If Delta moved forward with its pull-out, “we’d look to offer relocation options for employees or packages if they didn’t want to leave their locations.”
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