By James Pilcher
Enquirer staff writer

Chapter 11 bankruptcy reorganizations of US Airways and United Airlines gave smaller low-fare carriers the entre to invade or expand at the big carriers' so-called "fortress hubs."

But as Delta Air Lines faces possible bankruptcy, many airline experts say the Atlanta-based carrier is likely to further fortify its hub at Cincinnati/Northern Kentucky International Airport.

That might be good news for the more than 4,300 Delta workers based in Cincinnati, but it could make it more difficult for a discount airline to slip into the market, analysts say.

"If anything, bankruptcy is going to make Delta more competitive, and they have already shown how aggressively they defend their turf," said Mike Boyd, president of The Boyd Group, a Colorado-based aviation-consulting firm.

The nation's third-largest carrier, Atlanta-based Delta has lost more than $5 billion since the Sept. 11 terror attacks, including $1.96 billion in the second quarter of this year alone. In a regulatory filing Monday with the Securities and Exchange Commission, the airline said it is burning through cash because of pressure to keep fares low and high fuel prices. Delta says it must costs, including $1 billion annually in pilot compensation.

But the airline and its pilots are not talking. And investor confidence continues to erode. On Wall Street Tuesday, Delta stock lost another 6.5 percent of its value, closing at $3.72 a share.

Status quo at CVG?

Delta owns more than 90 percent of the local market, which has allowed the airline to charge much higher fares. A Department of Transportation report shows Delta passengers from Cincinnati pay 56 percent more than the national average on many flights.

As a result, travelers from Cincinnati sometimes fly from Dayton, Louisville or Indianapolis, where low-fare airlines operate.

Delta's dominance of local gates has given it the muscle to fight off low-cost competition. Major carriers often lower fares and add flights to counter forays into a hub market by low-cost carriers.

"The problem for us is that we serve too many markets," said Bob Holscher, aviation director for the local airport.

That makes it difficult for to compete head-to-head against Delta on a particular route, Holscher said. Still, Holscher said the airport will continue to woo discount airlines.

Delta officials won't comment on what could happen to the Cincinnati hub under a Chapter 11 filing. However, analysts say reorganization probably would not affect the local operation, since it is a mainstay for Delta and its regional affiliate, Comair.

Boyd said the local market is not big enough to fight over. While Southwest Airlines started service to Philadelphia in May, a little over a year after US Airways emerged from Chapter 11 reorganization, Cincinnati, "is not a huge plum," Boyd said. "The inn is full, if you will. That is a lot different than say, Philadelphia, where the metro area is much larger and the potential traffic is much greater."

Low cost strategy

Southwest says its Philadelphia flights are profitable and it intends to expand in the fall. Meanwhile, US Airways says its aircraft are much fuller on routes where it has matched or beat its competition's prices, but the airline is losing money because it has not cut costs enough.

Southwest spokeswoman Brandy King would not comment on Southwest's view of Cincinnati in light of a possible Delta bankruptcy. But overall, she said the airline considers cities that are overpriced, underserved and can immediately support 15 flights a day.

With the Delta/Comair capacity for local flights, that would seem to put a damper on Cincinnati's hopes.

"Cincinnati may be overpriced, but if anything, it is way overserved because of the hub," said analyst Sam Buttrick of UBS Investment Research. "It's not coincidental that Cincinnati has virtually no discount service."

Another airline that has been courted by local officials is Orlando-based AirTran, which competes against Delta in Atlanta and entered Philadelphia before Southwest.

AirTran vice president of planning and sales Kevin Healy won't comment on future markets. But he said the airline is expanding flights and destinations from Dayton, which already pulls fliers away from the Cincinnati airport.

Independence Air, the new low-cost carrier based in Virginia, also could be a possibility. But the airline is planning to begin service to Dayton, Columbus and Indianapolis later this month, apparently freezing out Cincinnati.

Even if most experts think discount carriers will not try here, at least one refuses to shut the door.

"Delta will hysterically defend its turf in ways that appear to make no economic sense, but under bankruptcy, that could be a little more difficult for them," said Darryl Jenkins, professor at Embry-Riddle Aeronautical University. "Delta could be vulnerable. But the only way to find out is to wait and see if someone tries and makes it work."

In the meantime, Delta's talks with its pilots over wage concessions have not resumed and the clock is ticking toward the airline's announced hope of having a plan of restructuring to cut its costs by the end of August.

E-mail jpilcher@enquirer.com