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Departure of United Airlines Hub From Cleveland Sparks Contentious Debate

Thursday, February 6, 2014 at 8:05 AM

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This week's announcement that United Airlines was trimming 60% of its flights from Cleveland Hopkins Airport sent shock waves through the region. City leaders had been negotiating with the United to retain hub status for Hopkins ever since the carrier merged with Continental Airlines in 2010. The true implications of the cutback provoked some contentious discussion on 90.3's Sound of Ideas, Wednesday. ideastream's David C. Barnett has this report

In making its announcement earlier this week, United indicated that the amount of business it was doing at Hopkins didn’t justify the cost of maintaining a hub in Cleveland.  It argued that regional flights were too costly to maintain.

In assessing the impact of of United’s decision to cut back, Airline industry analyst Helane Becker believes other carriers will compete more for Cleveland travellers’ business, offering them more choices and lower fares.

HELANE BECKER: The whole idea of keeping the hub in Cleveland --- I know there’s a lot of cachet to have a hub, but pragmatically, your fares are higher than when you are connecting.  It’s not a horrible thing to have happened, it’s just kind of sad.

To Kelly Tompkins of Cliffs Natural Resources, it’s more than sad.  While acknowledging it was good that Hopkins will keep its connections to important national and international cities, Tompkins notes that his company will be losing important flights to other locations.

KELLY TOMPKINS: Given our business and where our locations are, we have a lot of traffic to cities like Montreal, Toronto and Duluth.  For example, between Montreal and Toronto, last year we flew about 500 United flights, over the course of the year --- on average 10 Cliffs people a week, going to those two destinations.

The Cliffs executive says the higher costs associated with United’s Cleveland hub service are worth it, considering the reduced productivity of his employees waiting at other airports for connecting flights. 

Economist Ken Mayland is also pessimistic about United’s decision, calling it a sucker punch to the Cleveland market.

KEN MAYLAND: While probably not the most important factor for economic development and company location decisions --- those factors are cost of labor, the availability of skilled labor and taxes --- certainly, the availability of good travel infrastructure is a factor in attracting and keeping companies and this is clearly a significant loss.

The debate in the studio led to some strong words from listeners.  Dave from Solon suggests that civic boosters who were surprised when United CEO Jeff Smisek made the cutback announcement hadn’t been paying attention.

DAVE IN SOLON: This was a business tsunami that was known to be happening, and the failure to get out in front of it three or four years ago is inexcusable.  When Jeff came out and said that Cleveland has been losing business here for ten years, what does that tell you?  You think the hub was going to stay?

Port Control Director Ricky Smith counters that the city had, in fact, seen the writing on the wall and spent countless hours negotiating with United, but to no avail.  Smith said the city is now looking to the results of another strategy.

RICKY SMITH: And that is the 60 other airlines that we spent tireless hours negotiating with, preparing them to come in and fill whatever service we might lose from United.  I think that is a healthier proposition in the long term than convincing a hub carrier to stay that was destined to leave.

Positively Cleveland’s David Gilbert is in charge of selling the city to potential conventions and other events.  He says he hasn’t seen any concern from the convention planners he was working with.

DAVID GILBERT: I’m not sugar-coating it.  I don’t think anyone is saying we would rather not have a hub than have a hub.  But, we also don’t think it’s going to be any significant loss to the travel and tourism industry.

Gilbert notes that Cleveland’s biggest competitors for conventions are places like Columbus, Pittsburgh, Nashville and Indianapolis --- all cities which do not have an airline hub. 

Tags

Economy, Regional Economy/Business - Analysis and Trends, Regional Economy/Business - News, Community/Human Interest, Government/Politics, Transportation

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