Flight Blog

Feb 29 2008 Economic Downturn Affecting Airport? BY sgf-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.


Feb 26 2008 United Touch Down In Central Missouri? BY sgf-adminTAGS United

 

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!


Feb 26 2008 Greetings from San Antonio BY sgf-adminTAGS Southwest

 

I'm blogging from Texas this evening because I'm attending a national air service conference sponsored by the American Association of Airport Executives. This is one of the conferences where you get a chance to talk to others in the airport/airline industries and find out what's going on across the country.

 

This afternoon I listened to a speaker that I know many of you would find interesting: the director of network strategic planning for Southwest Airlines, Lee Lipton. I know if some of you were here you would chew his ear about the absence of Southwest in the Springfield-Branson market. For those of you who haven't followed these past blog conversations, click here and here and catch-up!

 

Anyway, one point made by Mr. Lipton caught my attention because it vividly illustrates the financial conundrum facing all U.S. airlines. According to Lipton, Southwest presently has to sell the first 95 seats on every flight BEFORE the flight makes money. That's 95 seats out of 137 on every flight — the 96th passenger puts the flight in the black. Put another way, if the flight is 69.3 percent full (these percentages are called "load factors"), the airline only breaks even.

 

It wasn't that long ago that most airlines were modestly content with a 70 percent load factor. What's changed? Energy prices. I hate to think about what it's like right now for those airlines that aren't as efficient as Southwest...


Feb 11 2008 Questions About Leakage BY sgf-adminTAGS How the Airport Works

 

John has several questions about the leakage posting:

 

"12% leakage sounds really good. But, just a retired truck driver being curious...how did you guys figure out that is was 12%. Did you survey residents? I also noticed that the report said that 13% of the 8 million people that visit Branson fly, but only 10% of those fly through Springfield? That number seems low...how did you figure that. Do you think that if the airport raises that number...say to 50% will you be able bring more low fare airlines and lower existing prices for us locals?"

 

The 12 percent figure comes from two separate studies:

 

  1. "Traffic Capture Analysis" conducted by the Boyd Group, a nationally recognized aviation consulting and forecast firm. The company conducted the study in the 4th Quarter of 2007 and used data gathered from about 145 airports, including Springfield. The data for each airport includes the population of each airport's service area and demographic information. Simply put, an airport can expect to have a certain number of passengers based on the personal income of the service area. The study also looked at the number of passengers in comparable markets and at Branson tourism data.
  2. "Resident Market Survey" conducted by Jenry Henry and Associates in the 3rd Quarter of 2006. This was a telephone survey of people living in the service area of the airport (a 70-mile circle around Springfield). Based on survey responses, the survey concluded that "nearly 85% of resident commercial airport customers flew out of SGF on their last commercial flight."

Bottom line: we have two studies, done independently of one another; each using different methodology, that reached the same conclusion.

 

As for the question concerning Branson tourism... The Boyd Group Study looked at Branson tourism data and at departing passenger survey data generated at this airport. Departing passenger surveys are done three times a year at the airport. Surveyors ask departing passengers a bunch of questions, including, "purpose of trip?"

 

Do I think capturing more Branson bound tourists will help lower fares? Sure. Assuming there are a million Branson bound fliers to capture. But I have to point out that the question is based on the assumption that there's a total of 1.03 million passengers out there flying to Branson and that the Springfield airport is capturing 103,000. The study considers both of these numbers "generous" and I agree.

 

What tends to get lost in discussions about Branson tourism and airports in one simple demographic fact: the average household income of a Branson visitor is $59,800 (according to 2007 Branson tourism data). The average household income of a typical flyer is $93,400 (according to the Travel Industry Association).


 

faucet2.jpg Today I have some really good news to report: our airport has seen an 18 percent decline in the number of customers leaving the market to fly from other airports. The news comes from a leakage study we commissioned late last year. The results just came in. “Leakage” is the aviation term used to describe customers leaving the market to fly from other airports. It’s typically caused by two things: cheaper fares at other airports and more non-stop destinations.

 

The last time we did a leakage study was in 2005. The finding back then was that 30 percent of our potential customers were leaving the market to fly from other airports. A study in 1997 reached the same conclusion. We expected that the new study might show some slight improvement, but the 18 percent decline blew us away.

 

What does the finding tell us? It tells us that Springfield fares are still high, but not as high as they used to be. It also says that the vast majority of customers are deciding the difference in price isn’t worth the drive to airports in Kansas City, St. Louis or Tulsa.

 

The study cites two reasons for the improvements: the addition of Allegiant Air service in April 2005, and the addition of Delta service to Atlanta in December 2005.

 

As many of you know, Allegiant flies from here to Las Vegas, Orlando and Tampa. Round trip tickets are sometimes as low as $200. Before Allegiant’s arrival, it cost twice or three times as much to reach those cities. As for the impact of Atlanta service, that has less to do with cost and more to do with connections. The service makes it much easier to connect from Springfield to the East Coast and Europe. 12 direct destinations. While the study doesn’t mention it, I think that’s another reason for the leakage improvement. Nine of those destinations are big hub airports. This makes it possible to reach most places from Springfield with only one connecting flight.

 

What’s the practical, real world impact of this improvement? I think it’s a strong selling point for new or additional service. As the author of the leakage study put it, “Airlines generally prefer existing strong capture rates rather than the potential to recapture traffic with new service. In the age of $95 oil, most airlines don’t want to work any harder chasing passengers than they have to and most are also risk adverse."  

 

Bottom line: when we’re talking to airlines we’ll use this study to show them the strength of the market. If you give us the seats, we’ll fill them.