New, improved MSP may need to look beyond Delta

As recently as 2004, the Twin Cities could claim title to the 16th-busiest airport in the world, ahead of Miami, San Francisco and New York's JFK. Last year, Minneapolis-St. Paul International Airport ranked 32nd, trailing not only those locales but also less glamorous ones such as Charlotte, N.C.

Welcome to the incredible shrinking airport, where 16,000 new parking spaces help obscure the fact that 5 million fewer people got on or off an airplane in the Twin Cities in 2009 than in 2005. Passenger traffic is down again this year, to levels last seen during the 1990s, before the airport embarked on $3.2 billion worth of improvements.

Airport officials aren't sure if MSP has ever experienced five consecutive years of lower traffic. "It has certainly been unusual," airport spokesman Patrick Hogan said. "Historically, we grew an average of 3 percent a year."

The Metropolitan Airports Commission, which runs MSP, thinks a decade's worth of lost travelers will find their way back to MSP by 2013 or 2014 -- in time for the commission to embark on another $2 billion worth of airport improvements.

Don't count on it. Travel will pick up when the economy does, but cracks have appeared in the superfortress hub model that drove MSP's growth. The sale of Northwest Airlines to Delta in 2008 and continued consolidation in the industry mean MSP may have to rely on multiple carriers, rather than one, to lift it back among the ranks of the top airports in the world -- or even the United States.

Delta insists that the Twin Cities remains a vital hub, and that the reductions over the past two years were in response to the economy. Delta spokesman Trebor Banstetter says the airline's schedule for October already includes seven additional destinations and a 9 percent increase in daily departures.

But it goes without saying that MSP will never be as critically important to Delta's future as it was to Northwest, which sometimes seemed to stake its very survival on driving out potential competitors. When Frontier Airlines launched low-fare service between the Twin Cities and Los Angeles in 2004, Northwest dropped its fares, added flights that left at the same time as Frontier's, and launched new nonstop service between Los Angeles and Frontier's hub in Denver. Frontier surrendered the L.A.-Twin Cities route after three months

Back in Minnesota, Delta and those same regional partners, which include Pinnacle and Comair, carried 2 million fewer passengers in 2009 than in 2008. Passenger numbers continued to drop, by another 595,000 or so, through the first eight months of 2010.

None of this suggests that the Twin Cities will become another flyover Midwest capital -- see Des Moines or Pierre, S.D. -- where getting to Point B means going through Point C first.

A scenario like those in Pittsburgh or St. Louis, which saw hometown carriers depart or disappear shortly after gleaming new terminals opened, also seems unlikely, at least anytime soon. For one thing, a $245 million loan from the MAC includes provisions that require Delta to maintain a significant presence in Minnesota until 2020.

But that same agreement gives Delta plenty of flexibility to reduce flights and swap larger "mainline" jets it operates for smaller planes flown by its regional carrier partners. In 2009, more than half of all Delta's daily departures at MSP were operated by regional carriers, and that share continues to climb in 2010.

Contrast that with Atlanta where, through August, Delta had boosted the number of passengers flying on its big jets by 2 million, while reducing the number of people flying on its regional carriers.

It's puzzling, then, that the airport's long-term plan makes a $1 billion-plus bet on Delta, which already controls 103 gates at MSP. That plan, which Hogan said will be "demand driven," calls for expanding the Lindbergh terminal and turning the entire facility over to Delta and its partners.

Here's the thing: Since 2005, other airlines have managed to increase their market share at MSP. Southwest Airlines, on pace to carry more than a million passengers to and from the Twin Cities in 2010, gets most of the attention, but other big airlines have quietly chipped away at Delta's dominance.

Between 2005 and 2009, AirTran almost doubled the number of passengers it carried. U.S. Airways carried more than 900,000 passengers last year, vs. 117,000 in 2005. Frontier's traffic grew by almost 50 percent during the same period.

In light of that, Delta's decision to shift more flying to smaller jets is a measured and economically sane response to the reality of increased competition, said William Swelbar, a long-time airline industry analyst who also teaches at the Massachusetts Institute of Technology.

"When you look at the airports in the U.S. that are growing through this recession, they have one thing in common: a large number of low-fare carriers," Swelbar said.