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Small towns could be hit hard by Delta cutbacks

By Adam Reiss, CNN
Delta says it is looking at other airlines to pick up the slack in some of the markets.
Delta says it is looking at other airlines to pick up the slack in some of the markets.
STORY HIGHLIGHTS
  • 24 cities across U.S. scheduled to lose Delta service
  • "Loss of all air service would be devastating," one mayor says
  • 2nd mayor says city spent millions on its airport
  • Airline says it's been talking with the cities for a year to prepare them
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New York (CNN) -- Sioux City, Iowa, had a recent concert with Elton John and Cee Lo Green.

Acting Mayor Tom Padgett says it's not clear how that would happen in the future without airline service.

The city is one of 24 around the country that Delta Airlines has announced it can no longer afford to service.

"Loss of all air service would be devastating, though it is my belief that one way or another we will get an airline," Padgett said.

Facing mounting cost pressures, including the cost of fuel and losing some $14 million a year, the airline plans to cut flights to small cities that are not profitable for it anymore. The cuts would have a huge effect on the economy and be a devastating blow to small towns mostly in the Midwest.

Other affected cities are in Alabama, Iowa, Michigan, Minnesota, Mississippi, Montana, North Dakota and South Dakota.

Delta says flights in these markets on average leave with 52% of the seats filled, with some locations as low as 12%. This compares to a domestic system load factor of 83% for 2010.

Weak demand in some markets has led to flights occasionally operated with no passengers on board.

Delta has filed a 90-day notice to terminate service to the cities and is retiring the Saab turboprops and some 50-seat jet aircraft, planes that allowed the airline to fly small numbers of passengers.

"We have been talking to these communities for over a year and trying to prepare them for the change," Delta spokeswoman Kristin Baur said.

Delta was flying to these cities in conjunction with the Essential Air Service (EAS) program, created to ensure small communities continue to have access to passenger air service.

In some cases, airline service in EAS markets is subsidized by the government to the tune of $200 million a year. Those subsidies are scheduled to expire in 2013 if not approved by Congress.

Delta says it is looking for additional funding in nine markets and looking at other commuter airlines to pick up the slack in other markets. It's working with Great Lakes Airlines to take over some of the Midwest cities that would lose service, Delta said.

Mayor James Wallin of Brainerd, Minnesota, says the local government spent $21 million to refurbish the second-largest airport in Minnesota over the last several years.

"We have a lot to lose if we don't continue providing airline service," he said.

Delta says it will continue to serve the affected communities through its Delta Connection partners until the Department of Transportation selects a replacement carrier and appropriate funding is available. In some cities, Delta is coordinating with other carriers to bid on the routes.

Devil's Lake, North Dakota, Mayor Richard Johnson says he is disappointed but insists his town will still receive service because Delta is contractually obligated to find a replacement provider until its contract with the town expires. Losing a "key, vital service" for the National Guard training facility would be unfortunate, and the Guard would be "greatly inconvenienced" by losing the airline, he said.

All the major airlines have been cutting back due to the recession and high fuel prices. Now the industry remains focused on 29 major hubs and the cities that feed those hubs, which accounts for 70% of all passenger traffic, according to Delta.

Delta plans to reduce its capacity this fall by 4% and retire 140 aircraft. It has reduced its facility costs at 170 airport locations and 10 cargo locations across the system, saving more than $80 million annually.

These are the cities Delta says would be affected:

Muscle Shoals in Alabama; Fort Dodge, Mason City, Sioux City, Waterloo in Iowa; Hibbing, Alpena, Iron Mountain, Pellston, Sault Ste Marie, Escanaba in Michigan; Thief River Falls, International Falls, Brainerd, Bemidji in Minnesota; Greenville, Tupelo, Hattiesburg in Mississippi; Butte in Montana; Devils Lake, Jamestown in North Dakota; Pierre, Watertown, Aberdeen in South Dakota.