Airline Mergers and Urban Dynamics

Apparently there is a very good chance that Delta and Northwest will merge. Delta's three domestic hubs are in Atlanta, Cincinnati and Salt Lake City; Northwest's are in Minneapolis, Detroit and Memphis.

The distance between Atlanta and Memphis is only 380 miles. It is hard to see both hubs survive: Pittsburgh couldn't survive as a hub given its proximity to Philadelphia for US Airways (even though Allegheny, US Airway's predecessor) was originally a Pittsburgh company)and St. Louis couldn't survive as a hub after TWA's merger into American given its proximity to Chicago. Jan Brueckner and I have done separate papers showing that this is very bad news indeed for Memphis. My paper, moreover, shows that air cargo has little impact on local economic development, so the presence of FedEx at Memphis won't do much to soften the blow of a likely dehubbing there.