Misperception #3: The Airport Can Order the Airlines to Fly Wherever We Want!

 

Before reading this blog entry, be sure to read the accompanying entries, Cameroon Monkeys and Leaky Windshields , Misperception #1: Airport Uses City Tax Money, and Misperception #2: Airport Sets and Controls Ticket Prices.

Based on the email we get, a significant minority believe that an airport can order service from the airlines a la carte. If that doesn’t work, the thinking goes, we demand the service and the airlines comply.

Here’s how it really works…

An airline is a private business. Private businesses do what they want. We can plead. We can tell them that this is a wonderful place to live and work and that we deserve their service. We can offer them breaks on landing fees and money for advertising. We can fall on our knees and beg. But in the final analysis there’s only one thing that matters: does the airline think it can sell enough seats in the market, at the price that it wants, to make the service worth its while?

There are other airline considerations. Does the city wanting the service fit well into the airline’s network? “Network” refers to the different routes the airline flies and how those routes connect to one another via the airline's hub airports. What sort of revenue quality does the city offer? Here’s a simple example of revenue quality: can the airline fill every seat in a 50-seat airplane and charge $100 a seat…or can it fill the same airplane to 60 percent capacity and charge $250 a seat? The plane that’s 60 percent full has better revenue quality. Airline math gets even more complicated…

Here are some other airline revenue measurements:

  • Revenue passenger miles
  • Available seat miles
  • Average stage length

Airlines also want to know about the area:

  • What’s the per capita income in the metro area? The ten county region?
  • What’s the effective buying income of the metro area? The region?
  • How fast is the area population growing? The region?
  • What are the major sectors of the local economy?

I imagine there are quite a few questions on this subject—ask away!

 

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