DFW Airport Bracing for $20M Loss With Delta's Cuts

Delta's decision yesterday reverberated throughout the metroplex: the elimination of 3,600 local jobs and slashing of 235 daily flights at DFW. The upshot is Delta has turned its back on Dallas/Fort Worth for hubs in Atlanta, Cincinnati and Salt Lake City. The new flight schedule will go into effect by Jan. 31, 2005.

Delta's landing fees, terminal rents and other charges would have generated about $25 million in revenue this year and was projected at $35 million for 2005. Airport officials already have kicked in talks with other carriers to backfill Delta's dark gates and are eyeing ways to cut costs, but not employees despite the barebones downsizing by one of the airport's original airline tenants and its second largest carrier.

Delta wasn't committed to any gates in the under-construction International Terminal D so the action won't stall the July 2005 opening or simultaneous ribbon-cuttings of the SkyLink people mover and Grand Hyatt Hotel. Likewise, the pullout isn't expected to impact the airport's $2.7-billion bond program or any ratings.

"Delta has made a business decision that it believes is best for its future and its employees," the DFW board says press release. "DFW will continue to work with Delta to make its transition and operations at DFW as smooth and efficient as possible."

Delta's restructuring will drive a 21.4% reduction in DFW's total departure and 10% cut in landed weight. The net reduction in revenue is expected to total $20 million.

In the past three years, the DFW board has put cost reductions in place to save tenant airlines nearly $81 million. This year, landing fees were reduced twice to drive a projected savings of $20 million. Because DFW is a residual airport, airlines are responsible for all debts, but also receive a refund at the end of the fiscal year if revenues exceed expenses. The tenant airlines have received a total of $23.3 million in refunds since 9/11.

DFW International Airport is ranked as the world's third busiest with 2,000 flights per day and 57 million passengers per year. "With the most capacity of any airport in the world, DFW is fortunate to have the size, competitive cost structure and local market strength to 'backfill' many routes reduced by Delta," says Jeff Fegan, the airport's CEO.

Year to date, Delta and its partners, ASA, SkyWest and Comair were responsible for 5.6 million passengers at DFW or about 16% of its total passenger traffic. The last year's traffic totaled about 9.3 million passengers, of which 6.4 million were connecting travelers and the balance were local passengers. An average day for Delta in Dallas is 57 mainline departures and 204 regional jet takeoffs by Delta Connection partners.

Delta's cuts will eliminate flights to Montgomery and Mobile, AL; Tallahassee and Fort Walton Beach, FL; Savannah, GA; Lexington, KY; Alexandria, Lafayette and Monroe, LA; Columbus, MS; Columbia and Charleston, SC; and Beaumont/Port Arthur, TX.