One commodity that my staff are responsible for sourcing is travel-related goods and services.  While this post is a little off the topic of supply chain / procurement, it does have ramifications for a narrow aspect of travel sourcing—specifically what is called "lift" in the airline industry.

I believe that the airlines are financially "killing" mid-tier cities.

Mind you, it's not entirely intentional.  But it's happening nevertheless.  And unless the government coffers and influencers in mid-tier cities and hotel chains step up, those mid-tier cities and their supporting travel infrastructure (like hotel chains) are going to dry up.

I call it "The Railroad Effect."

Back in the day, towns were heavily dependent upon the railroads for the destinies of those towns.  For example, if you were the mayor of Wasilla, Alaska, and you couldn't get the railroad company to lay down tracks through or very near your town, your town was going to dry up and you wouldn't get re-elected.  When the use of railroads fell out of favor and a route was now longer used, towns that had sprung up along that route pretty much became ghost towns.  That's "The Railroad Effect," and that's happening right now with the airlines and mid-tier cities.

It's not news that airlines are dropping routes to reduce costs and improve profitability, and it's not news that those dropped routes almost always involve what the travel industry calls "second-tier" or "mid-tier" cities.   You can still get to mid-tier cities, but now it's going to require at least one stop.  In other words, it's much more painful and much more inconvenient to travel to mid-tier cities than to top-tier cities.  That pain and inconvenience, among others that the airlines have recently created, is what is driving business travelers to avoid mid-tier cities.  If a business traveler has the choice of attending a conference in a top-tier city with a direct flight or a conference in a mid-tier city with a multi-stop flight, which conference do you think the business traveler is going to avoid like the plague?

By dropping routes, the airlines are having the same impact on those mid-tier cities just like when the railroads didn't come to a town or ultimately left and created a ghost town.  That's The Railroad Effect.

Beyond dropping routes and creating multi-stop flights, what are those other inconveniences I alluded to?  How about charging for checked bags?  As much as I rant against surcharges, in a way, the checked bag surcharge makes sense—charge those that use "more" of a service than those that use less.  If I only have a carry-on, why should I have to subsidize someone who checks a larger, heavier bag?  Let them pay for that.  Great in theory, but bad in practice.

What's happening, and I've personally experienced this, EVERYONE is trying to bring carry-ons onboard.  Remember the nice little lull when the TSA nixed carrying liquids onboard?  Pretty much everyone began checking their bags.   Instead of what had been the traditional crush of passengers jostling for overhead space with their sharp elbows, the boarding process during the liquids ban was much faster and more congenial.

Those days of tranquility are over, and are even worse than they were prior to the liquids ban (primarily due to checked baggage fees).  Now, passengers have an "avoid at all costs" attitude toward checking bags.  Passengers, congenial not too long ago in the liquid ban era, will take you out in a New York minute over a few squares inches of prime real estate in an overhead compartment.  Passengers are harried, and flight attendants are being reduced to baggage handler referees as they scream on the PA system over the din of passengers to "please get out of the aisle and take your seats!"  Bags don't fit into an overhead or there's no space left?  To avoid the risk of their bags being taken off the plan and levied with the dreaded checked baggage fee, passengers have white-knuckle death grips on their bags and will fight tooth-and-nail to make sure their bags get crammed in an overhead compartment.

Airlines are now basically jam-packed buses in the sky.  And sometimes aren't much faster than buses (think of all the time you spend waiting for a delayed plane or on layovers to make your connecting flight).  Throw in another factor, like SARS, H1N1, or some other pandemic, and flying—especially on multi-stop flights—is even more unattractive.

All of the multi-stop routes, pain, and inconveniences mean that mid-tier cities will—at least, I predict they will—be sorry that they invested in that new convention center and other infrastructure created to lure business travelers.  How about the hotel owners?  Ouch!  Sure, they'll still get regional business, but that's little to get really excited about.

As I stated earlier, unless the economy gets better such that airlines start making money and add back dropped routes—or unless cities and hoteliers co-invest with the airlines to retain routes—those affected mid-tier cities are going to get whacked in terms of group and transient business travel.  And unless I can get a straight flight from Reagan-National to wherever the destination location is, I likely won't be making that trip unless I absolutely have to.  A lot of other people feel the same way about their local national airport / intended destination, and I think mid-tier cities are going to start feeling the effects if they haven't already.

See you in O'Hare!