Reading through some random news bits today I came across a story about Delta choosing to cancel service to Columbia, Missouri. Service cuts to a mid-size market are nothing new. Neither is the reason cited: the operations were losing money according to Delta officials. But there’s a catch to this story, one that raises the question which is the title of this post.
The story suggests that Delta lost $900,000 last year providing 3 daily flights to Columbia. Cutting a route with that level of loss isn’t particularly surprising. But what if they were offered a $3 million package over 2 years to keep the service? A similar package was offered to American Airlines, guaranteeing $3mm in revenue, in order to entice the Dallas-based carrier to initiate service. Delta was rather upset by that offer; they were operating without any guarantees since federal Essential Air Service funding for the operation ended in 2008. And when the city came back with a similar guarantee offer to Delta the answer was "No, thanks."
To be fair, a $3mm guarantee over two years comes out to just over $4,100 daily on average. And so it is entirely possible that with the revenue guarantee they’d still lose money on the operations. Still, it is interesting to see that, even with guarantees from the local government, Delta is walking away from the market. And American will quite happily take those same guarantees and run their 19 weekly flights.
At least we have some indication now of why Frontier is showing up with twice weekly service to Orlando. I wonder what their revenue guarantee package looks like.