Flight Blog

Mar 25 2008 That Dog Don't Hunt! BY adminTAGS How the Airport Works

 

A lot of you reading this blog are business people. You know full well the importance of perception. That is, how people perceive your business. You also know how frustrating it can be. You know how your business works. You know what services you offer—but there’s always that disgruntled customer out there who knows better than you.

 

I got a proverbial earful from an airport critic a couple of months ago via email. And brothers and sisters let me tell you, his perception is reality. Just ask him.

 

“I just saw one of your commercials on TV. Everyone of these folks that you are using to talk up your cause is flying on their company’s dime. I happen to know that everyone of them also uses the airport on their own dime."

 

I didn’t even bother to rebut.

 

“We, the citizens of Springfield, are spending millions of dollars on this new airport of yours when you cannot even fill up the present airport.”

 

I did rebut this one. First of all, we’re not building a new airport; we’re building a new terminal. Secondly, not one cent of Springfield tax money goes to the airport. The airport pays its own way. I could have written several pages about the deficiencies of the current terminal, but figured it wasn’t worth the effort.

 

There was a lengthy paragraph on fares.

 

“I was a salesman for over 20 years…I can count on both hands the number of times that I flew out of Springfield. The cost of flying out of here is unreal….”

 

I attempted to explain that the goal of the commercials was to get more people to use the airport; and the more people use the airport the cheaper fares are. I thought about suggesting that he should base his fare perceptions on current fares, rather than ancient history, but again, it didn’t seem worth the effort. I was right. He came back with this:

 

“I know your passenger volume has more than doubled, but prices are still higher. That dog won’t hunt!”

 

Excuse me?! Has this airport ever said that Springfield fares would become equal to Kansas City or St. Louis? No. We’ve only said that prices would go down as passenger volume goes up. And by the way, that dog does hunt…

 

The proof came the day after the email exchange in the form of the new leakage study. The study concludes that in the past three years we’ve seen an 18 percent improvement in the number of people using the airport—these are people who previously left the market to fly from cheaper airports. This tells me two things: fares are less than they used to be and the vast majority of customers have decided the difference in price isn’t worth the drive to airports in Kansas City, St. Louis or Tulsa.

 

We need your help. The next time you hear someone tearing down our airport challenge them: do they know that Springfield has a low cost airline in the form of Allegiant Air? Do they know that Allegiant roundtrip fares are sometimes less than $200? Do they know that shopping for tickets ahead of time will sometimes narrow the difference in cost between Springfield and other airports to just $30 or $40? Do they know that bad mouthing the airport serves no purpose other than to perpetuate the myth that Springfield is always higher? Please educate them!

 

As columnist George Will once said, "You're entitled to your own opinion, but not your own facts!"

0 Comment(s) | Add comment

Mar 13 2008 State of the Industry BY adminTAGS Airlines

 

The last couple of weeks have certainly been interesting in the airline industry; not so much for what has happened, but for what hasn’t happened.

 

A month ago the industry grapevine burned up with rumor after rumor about a possible merger between Delta and Northwest Airlines. Merger talks reportedly were going full steam until it came time to get buy in from the pilots union. That’s when things came to a grinding halt (at least that’s the way it appears to be). Now, it’s dead quite.

 

Meanwhile the price of oil continues climbing. Yesterday it reached $110 a barrel. This week the average price of jet fuel is $3.10 a gallon. That’s up more than 60 percent in the past year.

 

At some point fuel prices will force the airlines to start cutting flights. But when? It’s a tricky question to answer because the flying public continues to fly despite higher fares; the airlines reported robust February passenger numbers. At what point will customers balk at the higher fares? And then there's fuel hedging. The practice gives the airlines some breathing room, but for how long?

 

Here's an interesting story from Reuters about airline fuel hedging. Stay tuned…

0 Comment(s) | Add comment

 

The posting on Spirit Airlines has evolved into a conversation about Branson and air service. You may want to catch-up before reading on...

 

Mike has several questions:

 

"Well, what data did the developers of the new Branson Airport currently under construction use that justify a multi-million dollar airport for the city? Are they using the build it and they will come strategy? I don't think they had only charter service in mind. Based on how many people visit Branson when they get a carrier I think it will open itself to the entire country as a destination market. What would you do if one of the big carriers into Springfield pulled out and went to the new Branson Airport? Or, what could happen if an airline like US Airways decides to fly to Branson and use a big jet like a 737 that could also mean cheaper ticket prices compared to flying into Springfield?"

 

Mike...I can't speak for the Branson airport developers. You'll need to ask them what data they used. You wonder what the Springfield airport would do if a big carrier pulled out and went to Branson?  That's not going to happen.

 

As for your question about US Airways... It's hard for me to imagine how this implausible scenario would mean cheaper ticket prices compared to Springfield. That's not how the industry works. Absent external forces (which I'll get to in a moment), air service and the price of tickets is largely determined by supply and demand: prices are cheaper in large markets and more expensive in small markets. Low-cost carriers (LCCs) are not going to consider daily service into any market that doesn't guarantee them roughly 238,000 enplanements (people getting on an airplane) a year. That's how many bodies just one LCC would want. And then they would provide service to just one destination.

 

Now what about those external forces? Here's an example. Over the years ski resort towns in Colorado have done different things to gin up air service. For example, local businesses have pooled money that is offered to airlines for service. They might say to the airline, "If you provide us this service, we'll guarantee your revenue: if the plane isn't 70 percent full, we'll pay you for the empty seats." The hope is that the service will grow strong enough that it doesn't have to be subsidized. This approach is fraught with problems, including 1) the service often doesn't grow and businesses grow weary of paying the subsidy, and 2) the airline demands more money. There are dozens of other issues I could raise here and you probably have at least as many follow-up questions. So, I'll close with this...

 

The Branson project faces several challenges, the least of which is the volatility of the commercial airline business. Since 9/11 the airlines have been running by the skin of their teeth. Profit margins are slim. Bankruptcy is common. High fuel prices and labor unrest are constant worries. The expansion of routes, or the addition of new service, is done with extreme caution. Given this business climate, getting an airline to jump into an unproven market will be a tough nut to crack. And before airlines could be persuaded to jump in, there would have to be proof positive that hundreds of thousands of people across the country are willing to pay air fare to Branson.

 

Don’t get me wrong. It is not my intent to cast dispersions on the Branson airport. We wish the Branson project good luck and best wishes. I'm just saying they face some HUGE challenges. If the developers can pull it off, they deserve our applause.

0 Comment(s) | Add comment

Feb 29 2008 Economic Downturn Affecting Airport? BY adminTAGS Misc.

 

Cliff wonders:

 

"Has the airport noticed a decline in travelers since the recent economic problems. I wonder what effect this downturn will have on not only the airline industry but our airport as well. I fear we may lose service to some cities." We haven't had a decline—yet. In fact, passenger numbers were up in January by five percent. If we're going to see a decline in passenger numbers, it probably won't happen for another month or two. That's because a lot of people flying right now booked their flights weeks, or even several months ago.

 

As for your concerns about losing service, there is that possibility. We'll be doing well this year if we get by without any service cuts. See previous discussions on this topic by clicking here and here.

0 Comment(s) | Add comment

 

Blogging again from San Antonio...

 

We've got a lively discussion going on the blog about the idea of United touching down in Jefferson City, MO as it flies between Springfiled-Branson and Chicago O'Hare. Jeffcitylocal blogs these thoughts:

 

"The United Airlines flight between Springfield and Chicago that is operated by SkyWest flies right over the Jefferson City area. I would like to know if you think it is possible to create an en-route stop at the Jefferson City Airport? Currently the airport is not certified as a commercial airport and would only need a few upgrades if at all to handle commercial traffic since years ago it was served by a commercial carrier. Having 2-3 arrivals and 2-3 departures would I think is very practical to serve Jefferson City, the Lake Area, Columbia, other communities along the highways 50, 54, and 63 that all interchange next to the Jefferson City Airport . Would you mention this idea to some officials at the Springfield Airport and SkyWest to see if this can happen?" Greg doesn't like this idea at all and responds, in part: "Not trying to sound rude here, but we have few enough flights as it is and I hate having to change planes. I would have zero interest in having to stop in Jeff City en route. On top of that I doubt the airline would want to foot the bill for the extra cost to land and take off from Jeff City.

 

Jeffcitylocal...I understand where you're coming from. Essential Air Service is close to blowing the coup in Columbia and every other EAS market in the state. And I don't want to rain on your parade, however... There's not a snow ball's chance that United will drop by MidMo on its way from Springfield-Branson to Chicago.

 

Greg mentioned one of the reasons: extra cost. Stopping in Jefferson City would burn a lot more fuel. With oil hovering around a hundred bucks a barrel, all the airlines burn as little fuel as possible. Here are some more reasons: 1) Your proximity to STL Lambert, KC International and the Springfield airport. From the airline's perspective, you just need to drive to one of those airports. 2) We (the Springfield airport) estimate average United load factors (percentage of sold seats) on the Springfield-Chicago route at more than 70 percent. That's on both 50 and 70 seat regional jets. I'd guess that the airline would have to charge hefty MidMo fares to make a Jeff City drop by worth its while. It would certainly be a lot more than the subsidized EAS fares out of Columbia. Would you be willing to pay them? 3) Stopping in MidMo would mandate bumping the arrival slots at O'Hare at least an hour later. Other United slots would have be be juggled to accommodate. That's not an easy thing to do at one of the most congested airports in the country.

 

I could go on, but you get the idea. I hope some of you can chuckle with me when you note the differences in how jeffcitylocal and Greg perceive the Springfield air market. People in MidMo would kill for our service. For Greg, Springfield "has few enough flights as it is." That's my lot in life...I can't please anybody!

0 Comment(s) | Add comment