When guarantees aren’t enough to keep flights running


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.

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Seth Miller

I'm Seth, also known as the Wandering Aramean. I was bit by the travel bug 30 years ago and there's no sign of a cure. I fly ~200,000 miles annually; these are my stories. You can connect with me on Twitter, Facebook, LinkedIn and .

3 Comments

  1. Living in Columbia, the fact that they were losing money kind of surprises me. Passenger counts at the airport were at all-time highs, and so were airfares.

    I have traveled for business for the last 4 years, and only 6 or so times has it made financial sense to fly out of COU using Delta. On average, a direct flight from COU to ATL was $300-$400 more than flying out of STL or MCI. When gas costs me $50 and parking another $40 for a 6 day trip, there was no option.

    While I’ll miss having Delta as an option, they were horribly overpriced here.

  2. Subsidy did not prevent AirTran and WestJet from pulling out of ACY. The subsidy ended and the passenger numbers were so bad that both the government and the airline said they wanted out.

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