Delta has Minnesota over a hub

Though we don’t technically have a hometown airline anymore now that Delta has absorbed Northwest, the Atlanta-based airline still provides a fair amount of economic activity for Minnesota. And doesn’t it know it. Less than a month after Delta officials pledged to keep its Twin Cities hub, the company has made it clear there’s a significant maybe involved.

Thursday’s hearing at the Capitol was an exercise in veiled threats, centered around state-backed debt for Northwest, given years ago in exchange for a promise to keep the headquarters here.

Lawmakers don’t have a lot of clout in preventing Delta from closing Northwest’s Eagan headquarters, and former-Northwest-now-Delta official Ben Hirst got that point across pretty clearly without exactly saying so.

The legislators stressed that a deal is a deal.

Hirst’s response:

“To the extent that the Minneapolis airport has higher costs per enplanement than Cincinnati or Detroit or other competing airports in the Delta system, then all that happens there is that Delta has an incentive to locate flights through those airports rather than here.”

Translation: Push us, and we’ll close your hub.

Rep. Debra Hilstrom said Delta can’t just say they’re not going to honor the deal. To which Hirst replied the company would, if pushed, just write a check for what’s owed, adding:

“In uncertain times, liquidity means security for our company and for our people, so we would prefer to leave the bonds in place,” Hirst said.

Translation: If you push us to early repayment, we’d have less cash and we may have to close your hub.

That sent Rep. Ann Lenczewski on a new tack: repealing tax breaks Delta-Northwest gets.

Hirst’s response as quoted by Session Weekly:

Such actions could result in increased employment costs at the airport, which could force Delta to scale back its operations even further.

Translation: Fine. We’ll close your hub.

Oh, and about those taxes. Metropolitan Airports Commission spokesman Pat Hogan sent an e-mail today noting that the airlines pay them:

Airlines and other businesses at MSP DO pay property taxes. (I believe a look at the Hennepin County tax rolls will show that NWA pays millions in property taxes for its airport facilities.) What MSP tenants do not pay is the Statewide Commercial/Industrial tax. That tax was established to fund education. MSP is not in any city nor does it contain any residences that might use area schools, so the Legislature determined airport tenants should not be subject to that particular tax. Utilities, fire and polic protection are provided by the MAC, and airport tenants cover those costs through rent payments and other charges.

(I’m looking for Northwest employees who are in “limbo,” who don’t know whether they’ll be in Minnesota or Georgia. Please contact me.)

  • Jenny

    That headline says it all.

    I have been reading that Ohio and Memphis are not at all confident in keeping hubs, either.

    Who wants to go to Detroit? (Sorry, Detroit).

  • JD

    If NWA/Delta chooses to just write a check and leave, couldn’t those spaces and funds be used to incentivise another airline(s) to create a hub in MSP, or other airlines to expand their service here?