Delta and Northwest Merger: Observations from Cincinnati

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In the past few weeks there have been numerous Delta news stories announcing increased reductions in capacity, routes being eliminated, and bleak forecasts as demand for flights decrease and fuel costs increase. This is especially true at CVG, the Cincinnati/Northern Kentucky International Airport.

The Merger and CVG

It has been nearly 9 months since the October 30, 2008 merger between Delta and Northwest. With the merger came an overlap in services and routes that has lead to cuts in routes and personnel in an attempt to begin the process of right-sizing the new company. Unfortunately for the new Delta, the swine flu epidemic, higher fuel prices, and a further decrease in demand as a result of the economy have made the transition from two airlines into one a bit tougher.

In March, articles discussed Delta’s plans to shrink its overall capacity 6% to 8% by this year’s end. The latest news has Delta increasing their reduction in capacity to 10% with international flight capacity being reduced by 15%. The reduction in capacity, as seen by fewer routes and smaller planes replacing larger planes on various routes can be seen at many airports including CVG.

It has recently been announced that routes are to be suspended from CVG to Frankfort and London this fall. These suspensions coupled with recent domestic CVG route cuts does not bode well for CVG remaining a viable Delta hub considering the nearly 50% reduction in flights out of Cincinnati during the past three years. This is the new Delta: A more efficient airline with the Midwest largest Delta hubs being Detroit (DTW) and Atlanta (ATL) and Cincinnati being relegated to secondary hub status.

The Effect on Delta’s Frequent Flyers

A reduction in capacity will most certainly result in a reduction in the overall number of seats available for award tickets. With reduction in supply, demand for the seats will likely increase. This is especially true in the current economic climate where people, generally, are looking to stretch their dollars further and take advantage of reduced cost or award ticket options. With the demand increasing and the need for Delta to right their financial ship, I expect the SkyMiles costs for award tickets, on average, to increase.

One bright spot for frequent flyers: a decrease in capacity should lead to higher passengers per plane, the Passenger Load Factor, and an increased chance that flights will be oversold. If more flights are oversold that means there are more chances for being bumped.

My Prescription

If you are flying out of Cincinnati prepare yourself for fewer direct flights, fewer destinations, and more connections through Detroit and Atlanta. For those looking to use their SkyMiles for award tickets, be prepared to find fewer and fewer “deals.” I would recommend you use your SkyMiles sooner rather than later as they will likely continue their decrease in value.

For More Information

06/16/2009: Delta details suspended and reduced international services: Minneapolis Airlines/Airport Examiner
06/16/2009: Airline passengers could get a 1-2-3 punch: Los Angeles Times
06/15/2009: May traffic down at CVG: Cincinnati Enquirer
06/12/2009: Delta to cut routes, capacity: Atlanta Journal-Constitution
06/12/2009: Delta, American announce more capacity, job cuts for fall: ATW Online
Delta takes its time to get Northwest merger right: USA Today

Editorial Note: Opinions, analyses, reviews or suggestions expressed on this site are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed.

About The Weekly Flyer

The Weekly Flyer writes about travel from a business traveler perspective. He travels the world every week accumulating points and miles along the way.

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