September 2003 - September 2004

As if American's problems weren't enough for DFW to worry about, the airport's second largest carrier, Delta Air Lines was also what the media referred to as "financially troubled."

Delta had been serving the Dallas - Ft. Worth area since the 1930's, when it flew passengers and mail from Ft. Worth to Charleston, SC with stops in Dallas, Shreveport and Monroe, LA, Jackson, and Meridian, MS, Birmingham, AL, Atlanta, and Augusta, GA and Columbia, SC. Delta later moved to DFW when the airport opened in 1974. Like American, it developed a hub at DFW in the early 1980s and later added a satellite terminal connected by underground walkway to its main gates in Terminal 4E (Now Terminal E)

Delta's presence at DFW had steadily declined from 1991, when it flew nearly 35% of all passengers. Although Delta had attempted to restructure and strengthen its DFW hub using regional jets flown by its Delta Connection affiliates back in January, 2003, its efforts had failed. Regional jets were suitable for flights under an hour and a half, but most passengers preferred mainlne jets for longer flights. As Delta replaced more mainline jets with regional jets, some of their customers switched to American, which still offered frequent flights on the larger jets on heavily traveled routes.

Despite the gloomy outlook for both Delta and American, in March 2004, DFW was considering yet another bond sale -- this time for a new baggage handling system.

By the summer of 2004, Delta's DFW market share had fallen to half of its 1991 peak and continued to drop as American expanded, fuel prices skyrocketed and low-fare AirTran Airways and others added service.

In August, Delta -- which said it needed to radically lower costs to survive -- announced that it would have to restructure and the changes could include cuts at DFW.

For the second time in 15 months, DFW Airport officials assessed the potential damage of a major airline bankruptcy as well as their options.

Most analysts were hoping for a best case scenario where Delta trimmed the DFW hub as American had done in St. Louis the previous year, substituting even more regional jets for larger "mainline" aircraft and changing the schedule to target local traffic instead of connecting passengers. Airlines want more local traffic because it's more profitable.

Everything an airline does for a local passenger -- check-in, boarding pass, handling checked luggage, etc. -- they have to do twice for a connecting passenger. Having to do their procedure only once to get the traveler from Point A to Point B is more cost efficient for the airlines.

Local traffic is also more profitable for the airports. Connecting passengers don't generate much revenue for an airport. They generate a Passenger Facility Charge on their departing flight, and they might buy a magazine or soft drink at one of the concessions, but that's about it.

Local traffic -- someone starting or ending their trip at the airport, rather than just passing through -- also generates Passenger Facility Charges and concession sales, but they provide additional sources of revenue from parking (residents flying out) and rental car fees (visitors flying in.)

A Dallas Morning News article reported:

D/FW Airport board chairman Max Wells is among those worried about Delta's future here. The carrier is D/FW's second largest, but it operates a larger hub in Salt Lake City in addition to its main hubs in Atlanta and Cincinnati.

"Delta is Salt Lake's only hub airline, so what wouldn't they do to keep them?" Mr. Wells said, adding that D/FW may not have the same kind of flexibility because of its commitments to its No. 1 carrier, American.

Working together Delta's move could affect D/FW's huge bond portfolio, though it is unsure how much. Airport officials, who last month secured the last portion of financing needed to complete the airport's $2.71 billion expansion, have hired consultants to help analyze what the airport can do as Delta considers restructuring plans.

Delta operated 28 gates at D/FW, comprising most of Terminal E and a satellite operation. Those gates were under "exclusive use" leases, meaning the airport couldn't shift another airline into the space unless Delta agreed.

Dallas, Ft. Worth and DFW waited, fearing the worst and hoping for the best.

On September 8, 2004 Delta Air Lines made the announcement that they would be closing the DFW hub on January 31, 2005. Not downsizing the hub. Closing the hub. At the time, Delta operated 256 daily flights to 66 cities from DFW and accounted for 17% of all DFW travelers. After January 31, 2005, the vast majority of those flights would be gone, leaving 21 Delta flights to its three remaining hubs in Atlanta, Cincinnatti, and Salt Lake City and leaving Delta with a 3% market share at DFW. It was worse than anyone had expected.

Delta's CEO, Gerald Grinstein expressed a "personal measure of sorrow" for the D/FW move. But he added that "a commanding market presence is critical, and we didn't have it in Dallas."

Delta's decision was a blow to North Texas and would further reduce choices at DFW. Delta would be giving up 24 of its 28 gates in DFW's Terminal E, which back in 1973 had played host to DFW's opening party - where an elaborate array of food, drinks and music greeted Texans dressed in their finest.

Back then, those in attendance at the gala event never dreamed that thirty years later, half of the original airlines that signed on to serve DFW would be bankrupt and out of business; Delta would be pulling up stakes and retreating to Atlanta, leaving only a handfu of flights; and American -- who now controlled 70% of DFW's traffic -- would be fighting to stay out of bankruptcy.

Reductions by Delta would result in lost rent, landing fees and concession dollars for DFW and would cost the airport an estimated $35 million. The impact was expected to rise to $50 million in annual revenue in subsequent years.

Delta's departure also robbed DFW of the prestige of being one of only two airports in the nation to boast two hubs run by legacy carriers. (Chicago, where American and United both have hub operations is the other airport.)

DFW's new International Terminal D and Skylink people mover was scheduled to open the following summer and Delta's announcement couldn't have come at a worse time. Unless DFW could find a way to persuade new carriers to serve DFW, the loss of revenue would mainly affect American Airlines in the form of higher landing fees and terminal rents.

Tune - Can't Take My Eyes Off You
Frankie Vali

(Sung by DFW)

(Instrumental Intro)

We got some bad news today
Delta is goin' away
With major projects and such
We're gonna mi$$ them so much

When Delta told us, we cried
And felt all nauseous inside
They won't be paying, you see
For Skylink & Terminal D

Well it just hardly seems fair
We thought they'd always be there.
This news makes us wanna freak
We'll be financially weak

Delta, you've been here for years
And as we choke back our tears
We built this big Taj-Mahal
Who's gonna pay for it all?

Delta, Delta, don't you leave us, we
Can't a - fford - it, please believe us, so,
Delta, Delta, don't you leave us, oh
Please don't leave us - n-o-o-o-w.

Oh Delta Air Lines
Please don't go away
Now Delta Air Lines
We really wish you'd stay
Oh Delta Air Lines
Trust in us when we s-a-y
Please, Delta Air Lines,
Tell us that it's not so
Now, Delta Air Lines
We hate to see you go
We really hoped you'd be here to help us p-a-y

But Delta said with a sigh
Your costs are gettin' too high
And AA's just way too strong
That's why we're sayin' so long.

We hope that it's not too late
For us to con-so-li-date
Might as well turn out the lights
(You're losin' two hundred flights.)

Delta Delta, don't you leave us, we
Can't a - fford it, please believe us, oh,
Delta, Delta, you deceived us, oh
Please don't leave us - n-o-o-o-w.

Oh Delta Air Lines
How dare you go away?
Now Delta Air Lines
We're gonna make you pay,
Oh Delta Air Lines
Trust in us when we s-a-y:
Oh, Delta Air Lines,
Tell us that it's not so
Now, Delta Air Lines
We hate to see you go
Oh Delta Air Lines -
Please don't leave us this way (Fade)