In small-city retrenchment, Delta pulls out of Sioux City

  • Article by: WENDY LEE , Star Tribune
  • Updated: April 5, 2012 - 9:44 PM

Twin Cities to Sioux City. At one point this made sense for Delta Air Lines -- and nine passengers who wanted direct flights to those destinations.

But Delta pulled the plug on the route this week. Its 50-seat regional jets were flying half-empty at a time when fuel costs have soared, making the stops unprofitable for the airline.

Delta offered two daily flights to Sioux City, Iowa, from the Minneapolis-St. Paul International Airport under a government program that promotes air service to small communities. But as the airline looks for ways to cut costs, it's exiting several money-losing markets out of MSP. Other routes that have been dropped include Devils Lake, N.D., and Fort Dodge, Iowa.

"It's primarily because of the cost," said Bob Herbst, founder of AirlineFinancials.com. "Their focus now is strictly on making money."

The move also is part of a larger shakeout under way in the airline industry. As carriers consolidate and become more efficient, they are dropping smaller markets that they've traditionally serviced.

On average, only nine of the 75 passengers each day flew directly to the Twin Cities or to Sioux City, according to the Metropolitan Airports Commission. The majority of passengers were connecting through MSP to destinations such as Chicago, Phoenix or Orlando.

Flights to Sioux City, which has a population of about 82,000, were only about 60 percent full on average, according to the Metropolitan Airports Commission. By comparison, the average Delta flight out of MSP is more than 80 percent full.

Delta spokesman Trebor Banstetter said in an e-mail that the regional jets used in Sioux City were the least fuel-efficient in the fleet.

"With the high cost of jet fuel, these markets are no longer sustainable," Banstetter said.

Sioux City was once a busy airport with four airlines, but the city has shed most of its passengers in recent years as the nearby airport in Omaha has become more popular for travelers. Sioux City couldn't compete with the lower fares airlines could offer out of Omaha. Delta eventually became Sioux City's lone carrier.

New carrier is in bankruptcy

Now that Delta is out, American Airlines is replacing it as Sioux City's only airline. Instead of the Twin Cities, American will offer service to and from Chicago, a move hailed as a win for Sioux City travelers wishing to connect to more destinations and travel to the area for business.

Chicago "becomes an excellent gateway, and it's our second-largest hub," said American Airlines spokesman Ed Martelle.

Whether the airline thrives in Sioux City remains to be seen. American entered Chapter 11 bankruptcy protection last year and is in the process of renegotiating its union contracts and lowering operational costs.

Herbst said he expects more airlines to pull out of smaller markets. At current fuel prices, a 50-seat regional jet would need to have a passenger in nearly every seat just to break even, he said.

"Anything in the airline industry when it comes to routes is subject to cancellation," Herbst said.

But Martelle said American doesn't start service in communities with the intent of dropping it later.

"At this point, no one knows what [American] is going to look like at the end of the Chapter 11 restructuring process. Analysts have their point of view. It doesn't always reflect reality."

Wendy Lee • 612-673-1712 Twitter: @striblee

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