Airline Developments and the Denver Regional Aviation Cluster

If you are a regular reader of this blog you will probably notice that I frequently discuss developments in the airline industry and at Denver International Airport. The reason for this emphasis is this industry serves a dual economic role in Denver. It is part of the local economic base, employing a higher than national average concentration of workers in Denver (See my blog from July 4, 2007 for a discussion of the Metro Denver economic base http://aviewoftherockies.blogspot.com/2007/07/analyzing-metro-denver-economic-base.html) and air transport is a vital part of the regional transportation infrastructure impacting the area’s overall economic competitiveness. Air transportation is particularly critical to Metro Denver given its spatial isolation from other large metropolitan areas and its lack of a water port. The aviation cluster, has been identified as a sector targeted for recruitment efforts by the Metro Denver Economic Development Corporation (MDEDC http://www.metrodenver.org/industries-companies/industries/aviation.html). According to the MDEDC, the cluster contains 240 companies which employ more than 14,000 workers in the nine county Denver Metro Area.

I want to blog about a couple of recent airline developments which could have big impacts on economic development in Metro Denver. Southwest Airlines announced over the next few months it will be adding18 new daily flights to six new destinations from DIA: Los Angeles; San Jose; St. Louis; Philadelphia; Raleigh-Durham; and San Antonio. This will bring the total number of Southwest flights in Denver to 79 from 0 a few years ago. On balance this should have a positive economic impact for the region as it will increase connectivity to important national business centers, help drive down travel costs for businesses and consumers and add new jobs.

However, Southwest’s expansion has put competitive pressure on Denver-based carrier Frontier Airlines. It would be an economic development loss for Denver if Dallas-based Southwest drove Frontier totally out of business, costing Metro Denver a corporate headquarters in the aviation sector. Additionally, the new Southwest fights do appear to validate DIA’s facilities expansion plans discussed in my blog from July 30, 2007 (http://aviewoftherockies.blogspot.com/2007/07/dia-expansion-fullfilling-vision.html ).

The other big airline-related piece of news is the continued speculation about a merger between United and Delta airlines. Denver is United’s second largest hub after Chicago-O’Hare but Delta uses Salt Lake City as its regional hub. If the merger goes forward, the key economic development question for Denver will be - “Can the 'Mile High City' maintain its hub status, concentration of flights and number of employees post merger?” Given the Denver Metro Areas’ central geographic location, high quality airport facilities and population size, I am guessing the answer to that question would be “yes” but anytime a merger occurs it opens up the risk of a negative outcome. If the merged Delta/United, reduced its presence in Denver and Salt Lake City took over Denver's hub role, that would be a serious blow to the Metro Denver economy.

Photos provided courtesy of Denver International Airport.