The Airport: Delta deal best way to keep flying high

Anyone who’s ever bargained hard with a salesperson knows successful negotiations are often not easy. The degree of difficulty in reaching common ground often increases with the complexity of the deal or the amount of money involved.

That realization puts in context the city of Atlanta’s haggling with Delta Air Lines over a new lease at Hartsfield-Jackson International Airport. Reaching a mutually agreeable pact governing the most-active airline at the world’s busiest airport is no small matter, even during the best of times. Factor in the Great Recession that’s thrown gale-force turbulence at the airline industry and negotiations become even more of a high-stakes give-and-take. In a real sense, the traveling public and our regional economy have a lot riding on the outcome.

After months of work, the teams overseen by Atlanta Mayor Shirley Franklin and Delta Air Lines Chief Executive Richard Anderson reached a tentative agreement that the Atlanta City Council’s transportation committee is due to next review on Monday.

In this election year, it’s understandable if the CEOs of the city and Delta are at least a bit nervous that the council won’t approve the seven-year agreement before Mayor Franklin leaves office at year’s end. That’s a valid concern, given the hard-to-overstate importance of a thriving Hartsfield hub to the Atlanta region and the state of Georgia.

In our view, it’s fair that councilmembers in coming weeks should question this and that in the contract in order to test its rigor.

But they should move fast enough to ensure a vote is taken by early December. And when the roll is called, they should vote yes to approve the lease extension.

Why should the council behave like 747 pilots who’re throttling up jet engines for a fast takeoff roll?

For one, acting quickly will bring a measure of stability to Hartsfield and Delta, giving both entities the ability to move forward on mid-range plans. That’s important, given the rough state of the economy and the airlines, which are a volatile business to begin with.

The deal’s not perfect, but neither are the times. In the most-recent fiscal quarter, the airline industry posted a net profit margin of -10.4 percent, according to Yahoo Finance. Delta’s share of that is a $1.2 billion net loss so far this year.

The lease extension helps keep Delta’s costs competitive with other hub airports. In return, it’s fair for city and airport officials and the rest of metro Atlanta to expect Atlanta’s hometown carrier to keep its flag planted here and keep Hartsfield-Jackson at the center of its operations universe.

Delta’s the biggest airline here, but certainly not the only one. That’s led to concern by the Federal Aviation Administration and others about whether the extended lease unduly squeezes out other carriers that might covet Hartsfield’s gates.

Competition’s most always a good thing in a free-market system. The airline business is a bit tricker, though, especially at major hubs like ours. Hub carriers tend to dominate their home turf as they route a large percentage of flights through these clearinghouses. The sheer volume of a hub airline’s departures and arrivals can freeze out other, so-called “spoke” carriers that try and shoehorn their way into lucrative markets. Such moves often lead to lower fares.

The revised lease deal will leave the city with five gates under its control that would be reserved for new entrants or expanded service by non-hub airlines. That’s not a lot, but it’s a start, and may be all we need until the economy recovers.

And doing what we can to safeguard this hub has a big payoff. It can best be seen by watching the billboard-sized, ever-changing arrival and departure monitors at Hartsfield. Want multiple daily departures to Europe? We’ve got ’em. Need to catch a lunchtime flight bound for Tokyo? You can do it nonstop from here. The global breadth of destinations served from Hartsfield is a key competitive advantage for this world-class business town. It’s one we must work hard to keep.

For those who might be tempted to play hardball, pushing to levy a planeload of new fees and contract conditions on Delta, they should read up on airline history. More than one city that’s basked in the advantages of hub service has found itself “de-hubbed” for various reasons as airlines abruptly shifted many flights elsewhere, leaving gates empty, runways quiet and local travelers scrambling for new options that likely cost more in either precious travel time or travel dollars.

Thus, the seven-year agreement that locks in costs and finalizes financing to complete the $1.4 billion Maynard H. Jackson International Terminal is a good deal, taken as a whole.

That’s not to mention that Air Tran’s a nice countervailing force against a Delta monopoly here. And, given slumping demand for travel and an economy that’s likely to recover in slow motion, there’s probably not going to be much flight expansion in the near future anyway.

The economy and air service will eventually recover. If we’re to best benefit from that renaissance down the road, the city council should ensure a new Delta deal’s in place before Mayor Franklin moves the last boxes out of her office.

Andre Jackson, 
for the Editorial Board

In coming weeks and months, we will look at major issues Atlanta must address in order to move forward as the economy recovers. Look for the designation “Atlanta Forward,” which will identify these discussions.