Our friend Jeff at Urban In-fill has an interesting post worth reading that ponders Ohio’s transportation and economic future as a result of consolidation in the airline industry. As you probably know, Continental is merging with United and Delta is merging with Northwest. Delta has already cut back on flights at Cincinnati and while Cleveland looks to keep its hub for at least five more years, the future is very uncertain.
Now, with two mega-carriers (Delta and United) covering the US, Cleveland and Cincinnati become redundant when managing economies of scale. They’re too close to larger hubs and essentially create little, if any versatility for their associated airlines.
The airline business is playing itself out as it must to survive and it’s outcome will likely impact Ohio economics. In the mean time the Federal government is offering the State of Ohio funding to create a passenger rail system that some Ohio politicians want to stop.
If Ohio’s Cleveland and Cincinnati airline hubs shut down or are reduced to near-nothing capacity and the State of Ohio does not create a passenger rail system, a tremendous amount of national traffic will simply bypass Ohio completely.
Understand that one new passenger rail line will not outweigh the job losses at two airport hubs. However, one passenger rail line, a line that starts a larger system, can have an impact on both airports as it connects both Cleveland and Cincinnati. It is far more economical for an airline to rely upon another method of transportation to get passengers from nearby cities into their hubs than it is to fly them there themselves.
When I was commuting to Cincinnati while working for Delta, I had a choice of about seven or eight daily flights. Imagine the scheduling requirements of flying an aircraft for less than an hour and less than 200 miles. It’s also fuel-intensive because the majority of the flight time is spent ascending.
Imagine the savings in labor costs if those same passengers arrived by rail. Delta would have no costs associated. Amtrak would, of course, but Amtrak is looking for customers and Amtrak can transport them more efficiently with diesel fuel than an airline can with jet fuel. Additionally, bringing passengers into a hub city by train reduces air traffic congestion – adding further efficiencies for the airline.
Failure to invest in an Ohio passenger rail system is going to have long-term negative effects for every single resident of Ohio. Our manufacturing base has been reduced dramatically and it could very well be that our service industry falls next should the airlines begin the true consolidation that is needed to make them profitable.
The airlines have no allegiance to the State of Ohio. One would expect, however, that it’s politicians would.
I don’t want to predict too much doom and gloom. After all, Cleveland and Cincinnati are big enough markets that they should continue to attract plenty of air service, at least as much as Columbus, which seems to do well economically even without an airline hub. Ticket prices might even drop as Delta and Continental as more competition enters to fill in the gaps created by Delta and Continental. However, it is easy to see that without a hub, there would be fewer direct flights to fewer destinations.
What I think is just as concerning as the loss of economic benefits created directly by the airline industry is the indirect losses. Air service is a huge economic generator. Many people depend on it weekly to do business. If you are a senior executive for a large national or international company, you probably travel a lot. These are the people who make decisions about where offices should be. Their salaries do not limit them to places with more affordable housing options like Ohio. They will locate the corporate headquarters where it is convenient for them. If you’re traveling weekly, do you want to be located in Des Moines and travel through Chicago for all of your flights, or do you just want to live in Chicago and have direct flights to everywhere?
I think that is what is at stake here. Without hubs, Ohio risks becoming flyover country like Iowa. There’s nothing wrong with Iowa of course, but it’s hardly an international hub of business. I think with Ohio’s population base and excellent public and private post-secondary educational institutions, it can do much better. Without the air service though, it becomes a less attractive place for business.
To continue with Jeff’s main point, creating an multi-state rail network that is interconnected with airports could really help to link smaller cities to the big hubs and keep them attractive as places of business. Cleveland and Cincinnati become more attractive because they are connected to Chicago. Columbus becomes more attractive because it is central to Cleveland and Cincinnati. Smaller cities like Springfield can attract companies and workers that just need access to the economic hubs within the state.
In my opinion, creating transportation connectivity and options is one of the best reasons to build rail lines like the 3C corridor, but the benefits will be very hard to measure quantitatively.