More from MPR Regional flying relatively healthy (04/10/2003) Governor, NWA workers decry pay perks for airline execs (03/27/2003) Labor secretary says help coming for Northwest employees (03/25/2003) Thousands to lose jobs at Northwest Airlines (03/21/2003) Your Voice Join the conversation with other MPR listeners in the News Forum.

	E-mail this page			Print this page

Northwest's role in Minnesota economy diminishing
April 9, 2003

Minneapolis, Minn. — (AP) Although Northwest Airlines is a substantial player in Minnesota commerce, economists and airline consultants say the company's financial woes aren't likely to make or break the state's economy. "The airline industry is an important industry to the state," State Economist Tom Stinson said recently. "But the state's economy is not going to rise or fall based on the success of one firm in that industry."

However Northwest's future unfolds, the outlook for air transportation in Minnesota is no cause for alarm, Stinson said.

"Economic forces will ensure that air transportation is available in the Twin Cities whether it comes from Northwest Airlines or any other airline," he said. "If there are customers, the planes will be there."

However, if Northwest's cutbacks do cause economic pain, some airline experts say it's likely to be felt most in smaller cities such as Duluth or Rochester, rather than in the Twin Cities.

Joel Denney, an airline analyst at U.S. Bancorp Piper Jaffray, said that if Northwest experiences enough financial hardship, rival carriers could be tempted to move in.

If discount-priced carriers come in as a result of Northwest's financial troubles, it would be good news for Twin Cities consumers but irrelevant for passengers in other parts of the state who rely on Northwest's hub-and-spoke system to take them to connecting hubs in Minneapolis or Detroit get to the rest of the world, Denney said.

"There are many places that should care about hub and spokes," Denney said. "Hibbing will not have a Southwest flight. Ever."

Only two years ago, Northwest had 21,300 Minnesota employees, 31,000 customers flying in and out of the state each day and many local vendors that counted on the airline for $1 billion in annual sales. It paid $21 million in state and local taxes.

But Northwest has cut jobs by the thousands since then, trimming its flight schedules and finding other ways to reduce costs. The Eagan-based carrier lost $1.2 billion over the last two years due to the slow economy and aftermath of the Sept. 11 terrorist attacks.

Northwest employed 17,300 in Minnesota at the end of March, and the Minnesota Department of Economic Security says another 1,900 workers are slated to lose their jobs statewide in layoffs announced late last month.

After the current round of layoffs, "we'll be 50 percent smaller than we were," said Jim Atkinson, president of Local 33 of the Aircraft Mechanics Fraternal Association.

But some economists say the consequences of a smaller Northwest may not be as far-reaching as they appear at first glance.

In a state economy that employs more than 2.6 million people, Minnesota has 394 people still working for every job lost at Northwest in the past couple of years.

"It's too bad it's happening, but I don't think it really will have a huge impact," said Paul Anton, chief economist at Anton, Lubov & Associates in Minneapolis. "The numbers are still too small in the context of the whole economy."

In 2000, air transportation - a category that encompasses Northwest and all of its commercial airline rivals, charter carriers and companies such as Federal Express and United Parcel Service - was a $2.7 billion industry in Minnesota, 1.5 percent of the $185 billion value of all goods and services produced in Minnesota.

Air transportation nationally represented 0.9 percent of the U.S. economy.

"The misconception that the public has is that the whole (airline) industry can disappear," said airline consultant Adam Pilarski. "Of course, the industry is pushing that notion because they want taxpayers to bail them out."

Even if Northwest were to go under, rival airlines would claim the carrier's customers, Pilarski said.

"The people who want to fly are still here," Pilarski said. "The pilots and planes are still here. The airports are still here. The planes will be flown, some of them at least. The crews will find jobs, and the people will be served."

News Headlines

Related Subjects