America West Airlines said Monday it will close a hub in Columbus, Ohio, because the operation loses $25 million a year, a decision that will mean phasing out nearly all of the company’s 49 daily departures to 15 destinations.
By mid-June, the Tempe-based carrier will eliminate 12 regional 50-seat jets from the America West Express fleet. The company will retain just two flights per day from Columbus to hubs in Phoenix and Las Vegas so that customers can connect to 44 other destinations, said Janice Monahan, America West spokesman.
“It’s a very difficult decision, but the right decision,” she said. “It’s a step we must take to enhance our financial position, which benefits everyone associated with the airline in the long run. We’ve had consistent unprofitable flying in Columbus.”
The hub was established in 1991 to connect passengers with the central and eastern United States. Using about a dozen gates at Port Columbus International Airport, America West carried 21 percent of passengers in 2002, making it the area’s largest carrier. The eighth-largest airline in the nation, America West has lost money for nine straight quarters. Shutting the hub will have little impact on East Valley and Scottsdale travelers because the airline offers nonstop service from Phoenix Sky Harbor International Airport to most East Coast markets, Monahan said.
“That’s played a role in diminishing the value of Columbus as a hub,” she said.
Last year, roughly 190,000 America West passengers went through Columbus to connect to other flights, the company said. America West Chairman and CEO Doug Parker said the industry has far too many hubs.
“America West simply will not retain unprofitable portions of its operation in hopes that things might one day get better,” he said in a statement. “To that end, we have made the decision . . . to concentrate our assets in our stronger hubs in Phoenix and Las Vegas. This is a most difficult decision for us because it impacts our loyal customers, the city of Columbus and, most importantly, our employees.”
About 65 America West employees will remain in Columbus. The remainder of the approximately 400 Columbus-based employees will be offered the opportunity to transfer to other positions at America West. Those who choose not to relocate will receive severance packages.
While concerned for other America West employee groups, unions for flight attendants and pilots praised the decision, adding none of their members is based in Columbus.
“It shows us Doug Parker and his management team are looking at . . . containing costs and looking for markets that are profitable for the airline to fly in,” said Bill McGlashen, president of the Association of Flight Attendants Local 66.
About 20 aircraft mechanics could lose their jobs, said Pat Porter, Teamsters Local 104 business agent.
“Any time you close a maintenance station, I think it’s a big hit,” he said. “That thing’s been there for several years. We hate to lose anybody. There’s a chance some of them will say ‘I can’t afford to move’ and will elect to take the furlough.”
In Columbus, where business and political leaders have been supportive of America West, the news was disappointing.
“It’s going to definitely be a detriment to our economic development efforts as far as attracting new business and investment,” said Christina Fitzer, a spokeswoman for the Greater Columbus Chamber of Commerce.
The area will be left without direct flights to Los Angeles, Hartford, Conn., and Fort Myers, Fla., popular destinations for corporate travelers, Fitzer said.
“When business are deciding to locate someplace, they want to be sure they can get to and from their business partners, customers and vendors,” she said, adding that the closing of the hub has been rumored for 1 1/2 years. David Stempler, president of the Air Travelers Association, a passenger advocacy group, said ceasing operations is a sign of tough economic times.
“There’s a lot of hubs in that region, so they’re up against a lot of competition from Chicago O’Hare, Detroit, Cincinnati, St. Louis, Memphis, Pittsburgh. I mean, they’re all clustered around there,” he said.
Merrill Lynch analyst Michael Linenberg, who studies America West, says jettisoning Columbus makes sense for the airline.
“They’re getting rid of an operation where they were losing money,” he said. “It’s an unprofitable hub. Airlines right now are facing financial hardship, so I think it’s a prudent move on their part. There’s no hidden agenda. What you see is what you get.”
Because a large number of regional jets are deployed by many airlines throughout the East, an abundance of capacity exists relative to demand in the markets served by Columbus today, said Scott Kirby, America West executive vice president of sales and marketing.
Beginning April 1, America West will phase out 12 Columbus-based regional jets, all of which are operated by Chautauqua Airlines under the America West Express banner, from its fleet. All 12 jets will remain with Chautauqua, which plans to supply service for Delta Airlines.
“Fortunately for the people of Columbus, America West faced major airline competition on nearly every route that we are discontinuing, so the city will not lose significant nonstop service to any market," Parker said.
Once Columbus is closed, America West will have to eliminate service to LaGuardia Airport in New York because perimeter rules at that airport prohibit flights beyond 1,500 miles, precluding service from Phoenix and Las Vegas.
However, the airline will continue to serve the New York metropolitan area through John F. Kennedy and Newark (N.J.) international airports. In the first quarter of this year, the company expects to record a pretax charge of approximately $10 million to $15 million resulting from the elimination of the hub.
The charge is related to the costs to terminate certain contracts, the write-off of leasehold improvements and employee transfer and severance expenses.
Standard & Poor’s Ratings Services said its rating and outlook on the company are not affected by the closing. Shares of America West Holdings, the parent company of the airline, were up 2 cents, or 1.1 percent, at $1.83 on the New York Stock Exchange.