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Airline Hubs and Air Traffic Trends

Consolidation of air carriers has caused a steady retreat of hubs from mid-sized metropolitan areas like those of the Fourth District. Of the eleven largest airlines before the 1978 deregulation, the “legacy” carriers, all but three have folded or been absorbed via mergers. Since 1990, 15 metro areas have felt the sting of losing an airline hub. In the Fourth District, Pittsburgh lost its home-grown US Airways hub around 2004, and Cleveland will be losing its United Airlines hub this year. The Cincinnati/Northern Kentucky airport, while still nominally a Delta hub, has seen passenger departures reduced from over 10 million in 2005 to fewer than 3 million in 2013.

While losing a hub costs a region a major employer, it does not preclude ample air service. Passenger volume is relatively high in some metro areas that have never had a legacy carrier hub. Comparing trends in passengers per capita, it is evident that air service adjusts to meet the metro area’s demands after the through-traffic of a hub ceases. Cleveland is unlikely to see declines as dramatic as those in Cincinnati and Pittsburgh because its hub was not handling nearly as many connecting passengers.

The 12 most-populous metropolitan areas in the United States all have legacy carrier hubs except Boston. Boston is similar to Seattle, Portland, San Diego, and Tampa in that it is a large metro area with a robust air travel market, but no hub. These metro areas have no legacy carrier hubs in spite of their size in part due to their location. All are in the geographic corners of the nation, and three of these corners are served by hubs in other cities: New York, Los Angeles, and Miami. Flight distances and travel times favor central locations for hub activity. This enables the mid-sized metro areas of Minneapolis, Denver, and Salt Lake City to operate major hubs. At least two metro areas, Las Vegas and Orlando, do not have hubs, but their airports carry hub-like volumes of tourists and conventioneers.

Figure 1: Passenger Departures and Population of Carrier Hub Cities

Since 2000, passenger volume has been pretty steady at the nation’s airports, with dips after the 9/11 terrorist attacks and the most recent recession. Air traffic in Cleveland, Columbus, and Dayton all follow the national trend. But Pittsburgh and Cincinnati are very different. Both had levels of air traffic that were far higher in 2000 relative to their populations than the other Fourth District metro areas. Massive reductions in hub operations have dropped their levels to below the national average. Cleveland’s future air traffic trends may differ from Pittsburgh and Cincinnati’s, since passenger volume in Cleveland has never been particularly high, even though Cleveland served as a hub for Continental Airlines and its successor, United. At its peak, Cincinnati/Northern Kentucky had nearly 227,000 departing flights per year. Cleveland Hopkins and Akron-Canton together had only 94,000 departures in the most recent year of data.

Figure 2: Domestic Passenger Departures Per Capita in the Fourth District

Data on traffic volumes before and after hub closures suggests that Pittsburgh and Cincinnati have lost more traffic than other cities whose hubs closed. In Boston, the hub operations that ended in 2007 were small relative to the service demanded by local travelers. Growth in local demand has replaced the lost hub traffic. St. Louis lost its hub status with American Airlines in 2010, but so far, passenger volumes have remained relatively high. Raleigh-Durham and Nashville lost American Airlines hubs in 1995. The airports did see declines in traffic after that, but they were offset by strong population growth in these areas and the economic expansion of the late 1990s.

Figure 3: Domestic Passenger Departues Per Capita in Regions with Hub Closures

In the near future, forecasting and speculation will continue regarding which other hubs might be closed. We would expect the hubs that are currently handling the least traffic to be the most vulnerable. Salt Lake City, Philadelphia, Detroit, and Minneapolis are the four smallest hubs as measured by the most recent 12 months of passenger departure data. Cleveland and Memphis, the two hubs that are in the process of closing, were carrying fewer passengers per capita than the average city that is neither a hub nor a tourist destination. Philadelphia is also not handling particularly high traffic given the size of its local market. Salt Lake City and Minneapolis both have departures that exceed the local demand in similar proportion to the other high-volume hubs.

Figure 4: Domestic Passenger Departues Per Capita in Regions with Smaller Hubs

As Cleveland anticipates the loss of its hub, there is a tendency to focus on the experiences of nearby Cincinnati and Pittsburgh. However, we have seen that Cincinnati and Pittsburgh were handling high volumes of connecting passengers relative to their regional populations. They had a lot of traffic to lose. The experience in Cleveland and Memphis may be more similar to that in Boston and St. Louis. Like the latter two cities, the hubs closing this year were not handling passenger volumes in excess of what would be expected given their populations.

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