The world’s largest airline is turning the screws on Hartsfield-Jackson Atlanta International (ATL), threatening to move some flights if the two sides can’t reach agreement over fees before airline leases expire in September 2010. !Delta Air Lines said in a letter to ATL that it is “prepared to commit to another 30-year lease” but only if costs per enplanement are limited and improvements are made in processes for agreeing on major capital expenditures and operating costs.
“We believe this is the best way to ensure Hartsfield-Jackson protects its important competitive cost advantage over other hub airports with which it must compete,” Delta Air Lines’ vice president of corporate real estate John Boatright said in a Jan. 13 letter to ATL Aviation General Manager Benjamin DeCosta. The letter said the expiration of current leases will “place in question the future investments that Delta and our peers will be willing to make in Atlanta.”
A spokesperson for ATL did not immediately reply to requests for comment for this story.
In the letter, Boatright expressed frustration both in the size of a potential fee increase and the airport’s alleged reluctance to engage in lease negotiations.
“Since October 2007, Delta and other airlines have made repeated requests of the Department of Aviation to advance long-term airport lease negotiations – all to no avail,” the letter said. “In fact, at one point in 2007, twice-monthly negotiating sessions were agreed upon but rarely occurred due to airport management’s failure to make addressing such matters a priority.”
One proposal from ATL would double costs per enplaned passenger, Boatright’s letter claimed.
“In a business where airports are our factories, a cost escalation from $5 to $10 per enplanement – as proposed by the latest version of the airport’s capital improvement plan – would make it unlikely that we could continue to grow and invest profitably at Hartsfield Jackson,” the letter said. Instead, Delta would consider moving connecting flights to other hubs, some of which were acquired with Delta’s 2008 purchase of !Northwest Airlines.
Although Delta is the dominant carrier at ATL, AirTran Airways also has a strong presence. Together, the two carriers make up about 93% of traffic at ATL. AirTran spokesperson Tad Hutcheson told The Associated Press that it is prepared to act if fees go too high at ATL.
Negotiations have not yet started but AirTran has been talking with the airport and working with them, according to Tad Hutcheson, vice president of marketing and sales for AirTran Airways. “We find ATL officials very cooperative.” However, he goes on to say that, “AirTran Airways is against anything which raises our costs and we are willing to work with Hartsfield-Jackson Atlanta International Airport on a long-term strategic plan to maintain the low-cost status it employs today.”
Hutcheson told ARN, noted that AirTran had proved its mettle when it moved flights from Fort Walton Beach to Pensacola, Fla., in 2001 due to a price increase at Fort Walton Beach. “We look at each market on a flight by flight basis and eventually the unprofitable flights are reduced and ultimately eliminated,”
ATL, meanwhile, has some robust expansion plans that, if implemented, would likely raise fees for airlines. The airport’s $6B-plus capital improvement plan is under way and it had spent about $1.9B as of July 31. The proposed Maynard H. Jackson Jr. International Terminal is the biggest project moving forward, although it remains in jeopardy due to lack of available bond financing in the current economic recession. The planned terminal will have 12 wide-body aircraft gates and cover more than 1.2 million sq. ft.