Sunday, November 23, 2003

St. Louis struggles to rebuild hub

By James Pilcher
The Cincinnati Enquirer

ST. LOUIS - In the turbulent final days of Trans World Airlines, this city's business leaders lined up at the airline's headquarters with their checkbooks out.

They paid millions for advance tickets, just to keep the airline afloat and air service at a high level in this Missouri city that could be a big brother to Cincinnati.

That commitment to strong air service is being challenged as never before.

More than two years after the merger with American Airlines, the last vestiges of TWA are being swept away in St. Louis, which had enjoyed a $5.5 billion annual economic impact from the TWA hub at Lambert-St. Louis International Airport.

On Nov. 1, American drastically shrunk the Lambert hub, cutting half its flights along with 1,500 jobs. The hub was already smaller than it was before the Sept. 11 terror attacks. After the attacks, the airline cut close to 35,000 jobs throughout its system and 6,000 at Lambert.

Officials at Cincinnati/Northern Kentucky International Airport and throughout the Tristate are watching closely what is happening to our west to see what happens when a hub is downsized or cut altogether. Many airline experts say that even with the St. Louis changes, there are still too many hubs in the United States, especially in the Midwest.

"St. Louis would die to have what Cincinnati has right now," says Keith Holcomb, an American MD-80 pilot and official with the St. Louis branch of American's pilots union. "What I fear here is that we'll have the reverse effect on what the airport has meant in the past, with companies leaving."

Dwindling numbers

American, the world's largest airline, had major hubs in Chicago and Dallas when it bought TWA in 2001. Now, many travelers from St. Louis will have to go through those hubs if they want to use American.

The airline now serves 72 cities from St. Louis - 29 fewer than before the cuts, with Kansas City and Detroit among those dropped. However, low-fare carrier Southwest serves most of the eliminated routes, including Kansas City.

The number of American's big-jet departures is down to 53 from 213 before the change, with regional jets being used more extensively. Lambert also used to be a jumping-off point to Europe, but now has no direct trans-Atlantic flights.

Reaction to the moves ranges from resignation to the outrage expressed by St. Louis resident Barry Horner. "Before all this happened, all the American flights I was on were full," Horner says. "Now it's going to be a huge hassle to fly out of here, and that could hurt American in the long run."

Most St. Louis officials don't express much disappointment publicly, but do say they're committed to getting back the level of service they had with the full hub.

"We were very spoiled here in St. Louis, because we could get just about anywhere in the U.S. from here," says St. Louis Mayor Francis G. Slay, who has formed a task force to come up with solutions for the city-owned airport. "Now we have to get aggressive again."

Total effect yet to be seen

No estimates are available on the total impact the cuts will have on the region's economy, which is driven by such companies as A.G. Edwards, Anheuser-Busch, Boeing (which has a military jet plant next to Lambert) and Reuters news service. Reuters, which has one of its four major international centers in St. Louis, lost a direct transportation connection to its London headquarters with the hub cuts.

So far, airline employees have been most affected. More than 5,000 airport jobs - roughly 25 percent - have been lost since 9-11.

"How I feel about all this depends on the day," says pilot Holcomb, who was laid off Jan. 30, six years to the day that he was hired by TWA. "I'm upset about the merger, but I also realize it could have been worse if TWA just went out of business."

American's side of it

American officials say the new system is a realignment. They stress the hub is not going away, even though connecting traffic will now account for 30 percent of total passengers instead of the former 70 percent of the total.

"We're doing this to focus more on St. Louis originating passengers, and to deal with the market realities that have made carrying connecting traffic much less rewarding than it used to be," says American vice president David Cush. "What we'd rather have is two strong hubs serving the middle of the continent than three.

"What the leaders and civic community will have here will be sufficient to lure business and serve what is already here," Cush says.

Meanwhile, the airport continues a $1.2 billion runway project that is on schedule to open in 2006, even while the facility's Concourse C sees little traffic . Airport officials say the new runway will still be needed, even with fewer flights.

Airport spokesman Michael Donatt says the new runway will ease delays caused by the current runway capacity. "And we're thinking that the runway will give us an added attraction for other carriers."

Still, both the airport and American acknowledge that tough discussions are coming about landing fees, the fees airports charge airlines for the use of the runways. With the dropoff in traffic as well as the reduced total weight, the airport will need to make up some of the shortfall somehow, especially with such a large bill to pay.

Competitors step in

Other airlines already are trying to fill the gap for a market that generates nearly 6 million passengers who start or end their journey in St. Louis annually. Delta Air Lines, for example, has added 149 seats a day between Lambert and Cincinnati, Delta's second-largest hub.

And Southwest has added two destinations - Los Angeles and Fort Lauderdale/Hollywood, Fla. - from its $100 million concourse built by the city of St. Louis in 1998.

"The biggest impact apart from the airport not being as full of people is that it's going to take longer to get where you want to go from here," says Bill DeRoze, vice president and general manager for the central region of TQ3 Travel Solutions, St. Louis' largest corporate travel agency. "But we haven't yet seen any drop-off in bookings, and we don't anticipate a huge impact on fares either way."


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