A Black Eye for Cleveland?

NEW YORK (TheStreet) -- On Feb. 1, United Airlines (UAL) announced that it will demote Cleveland from a United hub to a mere spoke.

As United CEO Jeff Smisek wrote in his announcement, "Our hub in Cleveland hasn't been profitable for over a decade, and has generated tens of millions of dollars of annual losses in recent years. We simply cannot continue to bear these losses."

But is it also a major loss for the city of Cleveland? It could hurt the arts. What if it squeezes the middle class?

Cleveland has endured a long list of indignities: a precipitous decline in population, the closure of much of its heavy industry, the infamous fire on the Cuyahoga River. Both the city and its former baseball and football stadium have been nicknamed "the Mistake on the Lake." LeBron James broke its heart with "the Decision" to start playing for Miami's basketball team. Its most popular tourist talking point is its "Hastily Made Tourism Video."

And now, it is no longer a United hub.

Clevelanders saw this day coming when United and Continental merged in 2010. Cleveland was the Continental Midwest hub, and Chicago was the United hub. It doesn't come as a shock that Chicago won out.

The Plain Dealer described the change as "a psychological blow to Cleveland, a city whose tough attitude masks an often-shaky self-image."

More than that, it will eliminate nearly 500 jobs: 430 airport operations jobs and 40 catering jobs, by Smisek's count.

Cleveland is the latest in a list of Midwestern cities that have seen their airline hub status eliminated. In an interview, TheStreet's Ted Reed ticked off a list of former hubs in the region: Dayton, Indianapolis, Pittsburgh, Columbus, St. Louis. Now Cleveland. The airline industry has contracted substantially over the past couple of decades, Reed said. All of these smaller city hubs have shuttered, and Charlotte is one of the only smaller hubs standing.

David Gilbert, the head of Cleveland's visitors bureau -- optimistically called Positively Cleveland -- told the Plain Dealer the status change "doesn't say anything about who we are as a city. It doesn't say anything about the direction we're going, which is up. And the enormous amount of development going on isn't going to stop because we don't have a hub." He described the change as a business decision, not a personal verdict on the city.

Richey Piiparinen, a research fellow at the Levine College of Urban Affairs at Cleveland State University, agreed that the hub loss in itself isn't cause for hand-wringing. He thinks that Clevelanders won't terribly suffer "economic fallout from losing a Cleveland to Flint flight."

Pittsburgh, once a US Airways (AAL) hub, has exceeded Cleveland's economic development even after its hub closed down. "United isn't in the business of creating demand for flights; Cleveland is in the business of creating demand," Piiparinen said. If the city focuses on its economy and attracting businesses, that will be much more significant than its airport's legacy hub status, he said.

Yes, the estimated loss of $4 billion annually from the hub status will surely sting in an area that has lost population and jobs.

But United shareholders will profit, said analyst Helane Becker of Cowen Group. Maybe Cleveland can rely on its new Medical Mart and Convention Center downtown to draw in business.

Perhaps it isn't a total catastrophe after all. After all, as local DJ Allan Fee put it,  Cleveland has survived worse.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

Nora Morrison is a researcher, writer and editor on music, popular culture, and business topics. She is on Twitter at No Ticker.

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