Business

Lexington flyers have lots of air options

When I covered the airline industry for The Atlanta Journal-Constitution, it was in turmoil: airlines were losing millions, workers were losing their jobs or suffering pay cuts, and fares were less predictable than the weather.

Twenty years later, not much has changed. If anything, things have gotten worse.

The latest sign of turmoil came last week, when Delta Air Lines announced it would rearrange its hub at Cincinnati-Northern Kentucky International Airport. Delta will close one of its two concourses — it operated three until 2008 — and lay off 840 workers May 1. However, Delta plans to hire 100 workers for other jobs there.

Delta's shift from 50 gates to 28 is largely an effort to operate more efficiently after previous flight cutbacks in Cincinnati. Delta didn't announce further cuts to its summer flight schedule, but the fall schedule is anyone's guess.

Since a merger with Northwest Airlines gave Delta hubs in Detroit and Memphis, it has shifted a lot of Cincinnati traffic there, and to its main hub in Atlanta. That trend is likely to continue, giving Central Kentucky passengers fewer options as they compare schedules among the Cincinnati, Louisville and Lexington airports.

Lexington's Blue Grass Airport has weathered the turbulence well. Lexington will see a 15 percent increase in available airline seats this year over last, said Brian Ellestad, the airport's marketing director.

Although there are two fewer flights most days to Cincinnati from Lexington, Delta has added one to Atlanta and two to Detroit, plus increased capacity to Memphis through larger aircraft. American Airlines on April 6 will restore a daily flight to Chicago that was cut in September 2008. Last month, Air Tran Airways began flights to Orlando and Tampa Bay on alternating days.

The airline-industry development that has helped Lexington the most in recent years has been regional jets — smaller aircraft that are as fast and comfortable as big jets, but which make frequent service to smaller cities more economical.

It seems illogical that huge, heavy aircraft can fly — and that airlines can lose millions of dollars year after year and still stay in business. The laws of physics explain flight; airline economics is a testament to cash flow and rolling debt.

Things were a lot simpler before airline deregulation in 1978; airlines operated like regulated utilities. It was a stable system with well-paid employees and profitable airlines — and high fares for passengers.

The competition sparked by deregulation has been mostly good for passengers: more flights and cheaper fares. But it has been boom and bust for the industry — mostly bust. The world's airlines are expected to lose $5.6 billion this year, and that's a big improvement over 2009, when they lost $11 billion, and 2008, when they went $17 billion into the red.

Airline economics, an executive once explained to me, is all about "butts in seats." Since the 1980s, airlines have used sophisticated computer programs to sell as many seats as possible for as much money as possible. But because there's nothing more perishable than an unfilled airplane seat, some are sold incredibly cheap.

Airlines are capital intensive because of the high cost of aircraft; labor intensive because of the need for highly trained employees; and fuel intensive.

Big swings in oil prices such as we've seen in recent years often determine whether airlines have a good year or a horrible year. And high-fare business travel, the airlines' bread and butter, suffers every time the economy slumps and advances in digital communication make it easier to skip a business trip.

What might the future hold for Central Kentucky travelers? To paraphrase Bette Davis, fasten your seatbelts, it's going to be a bumpy ride.

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