Hopkins International on the brink

Local industry commentators have been discussing the merger between United and Continental and the effects it might have on the city. The general consensus has been negative, according to Cleveland news media.

This is because Continental currently uses Hopkins International as one of its four travel hubs, and this creates significant employment opportunities for ground crew and passenger service workers. The airport saw over 11 million people pass through its terminals in 2009, according to the Federal Aviation Association.

This means that Continental, and its subsidiary and partner companies, need to keep 3200 people employed at the airport. In addition, the status of Hopkins International as a travel hub brings in business opportunities as it is a convenient city to fly to, and commercial prestige can be gained through companies situating their head quarters in Cleveland.

Just as Lake Erie and Cuyahoga River were integral to the initial growth of Cleveland into a manufacturing hub, and later a service-oriented economy, the status of Hopkins International is now vital to the expanding ambitions of the city’s leadership. Already the city has managed to attract the head quarters of several large US companies, such as Eaton Corporation and KeyCorp, but further growth is need in order to compete with Ohio’s major commercial and travel centre, Chicago.

The merger between Continental and United could therefore be devastating, if Continental were to relocate its operations, removing Hopkins as a travel hub, the city would suffer significantly.

When US Airways pulled out of Pittsburg in favor of Philadelphia in 2004, the airport suffered badly, becoming largely stagnant, with flight numbers dropping to 170 from over 500 during the US Airways tenure.

The number of people employed at the airport, just by US Airways, fell from over 12,000 to less than 2000.

Pittsburg has now somewhat recovered, and has become a travel hub for a number of low-cost operators, but it will never again see the large passenger numbers and prestige that came from being a US Airways travel hub.

The same fate may await Cleveland’s Hopkins International, with some commentators already telling Cleveland news media that the merger may be a good thing after all, as Continental’s low-cost partners, such as ExpressJet, CommutAir and other US low-cost airlines, may relocate their travel hubs to Cleveland, as Hopkins International has begun reducing service fares, already down by 17% compared to last year, in order to attract more airlines to the airport.

In addition, if the merger went through, Hopkins would inevitably act as an alternative destination for airlines with Chicago’s O’Hare as their destination, and would gain prestige as a reliever airport. Such a scenario is merely a best case one, according to some, as it would do little by way of enhancing Cleveland’s position in relation to Chicago.

It’s a bit like looking for the silver lining in the cloud.

“There would definitely be a risk of losing hub status," said Richard Aboulafia, a Teal Group airline analyst.

And it is the hub status that is so pivotal. Businesses do not want to relocate to, or invest in, a city that has limited direct connections to other major cities in the US and the world.

The writing on the wall seems ominous. Already Continental has suspended the only non-stop flight between Hopkins and Europe, a Cleveland-London route. In addition, connecting Continental flights, with passengers transiting through Hopkins, have been cut-back as well.

Robert Mann, an airline consultant and head of R.W. Mann & Co. told Cleveland news provider, Cleveland.com, that of the 170 daily Continental flights at Hopkins, 140 of them are on smaller regional places carrying only 50 to 70 passengers.

The airline has further reduced its Hopkins operations by a whopping 24%.

“Anybody in leadership that knows anything here can tell you we're not a hub,” a senior Continental employee, who asked not to be named, told Cleveland.com. “They keep it [the hub status] that way to keep Cleveland leadership happy.”

Meanwhile, talks between United and Continental have stalled over disagreements regarding the sale of shares. As finances are worked out by the airlines, the airport has some breathing room to formulate a strategy.

“We’re preparing for the worst possible scenario,” airport director Ricky Smith said.