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Misperception #2: Airports Control & Set Ticket Prices

Apr 23 2010

The airport controls and sets ticket prices! When we face this charge it's usually within the context of a comment like, 'ticket prices are "outrageous" and it's the airport's fault!' We tell people ticket prices are set by the airlines, not the airport. They come back with, "Whoever is in charge of this should be fired. Don't tell me it is the airline's fault. They have to raise prices because your airport charges so much for fuel and space for them to park the planes. Wake up!" That's a real quote.

Here's how it really works...

Airlines set ticket prices, not airports. And this airport doesn't sell fuel to the commercial airlines. Each airline has its own contract with the oil company. As for fees we charge airlines, landing fees are currently $1.18 per 1,000 pounds. Exclusive use space (offices, ticket counters) has an annual rent of $40.69 per square foot. Joint use space (ramp, gates, tug areas, runways, etc.) is figured out using a formula based on an airline's market share. When you add up these costs, and figure the averages, here's what you come up with: the Springfield airport charges airlines $4.77 for each passenger that gets on a plane. In the jargon of the industry, this is called, "cost per enplanement."

Enplanement costs vary. In places like San Francisco and Pittsburgh, it's over $13. Moody's Investors Services says the median airport enplanement cost in the United States is $6.25. So here's the takeaway-our airport charges are below the median-so low that the Federal Aviation Administration (FAA) had told us that we ought to raise them. The rates do go up at a pre-programmed rate of three percent a year (covering the average rate of inflation), but we have respectfully told the FAA that we have no intention of making large rate adjustments. We strongly feel that low rates are one of the reasons why we have such good air service for a small market. All of this leads to the obvious question: if the airport doesn't control ticket prices, and if it isn't charging the airlines outlandish rates, why are prices higher here? (I challenge the basic premise of that question, but more on that it a minute...)

Some don't like the answer, but here it is: we're a small market airport. Ticket prices tend to be higher in small markets and cheaper in larger markets. Remember the economics' law of supply and demand? The larger the supply of seats, the cheaper the price; the smaller the supply of seats, the higher the price. Airports like Tulsa, Kansas City, St. Louis have a larger supply of seats than we do. There are other economic factors at work, such as lack of competition, but supply and demand is a large part of the equation.

As for the basic premise of the question...

Those who think it always cost more to fly from Springfield are living in the past. It was true 10-15 years ago, but these days it frequently cost less, or the same, when compared to Tulsa, St. Louis or Kansas City.

I recently heard from a would-be-customer who talked about having to drive to Tulsa to fly to Las Vegas. He had compared the cost of American Airlines from Springfield to Las Vegas, to the cost of Southwest Airlines from Tulsa to Las Vegas. Our conversation went something like this... "Have you heard of Allegiant Air?" I asked. "No, and don't try to change the subject..." He started ranting.

I continued. "I'm going to the Allegiant web site right now. Let's see, here's a $39 one-way fare from Springfield to Las Vegas. And if you return on Wednesday that's a one-way fare of $79. That's a total base fare of $118." There was silence on the other end for what seemed an eternity. Finally, "oh."

The persistent misinformation about airport charges and fares has been frustratingly difficult to stamp out thanks in part to the local media's willingness to parrot it, and in some cases, lie about it. Case in point... A couple of years ago Journal Broadcast Group allowed an employee to get on the air and deliver this lie: "There are several airlines that are already very upset — several might be over stating it — but more than one — and are considering pulling out of Springfield, because of this new terminal ... jets will have to taxi further to get to it and will spend at least $100 per flight in extra fuel because they'll have to taxi further."

The line had been crossed from misinformation to disinformation—it was pure fiction, and, we had hoped, a tale that had run its course.

Then last Monday, déjà vu. The Springfield News-Leader resurrected the disinformation, and lent it credence, through the anonymous comments it allows on its website: "It was estimated before the terminal was built that the new terminal location would add approx. $100 in fuel cost to each flight vs. the old terminal."

It's a sad commentary on the state of American media when rumor, innuendo and lies are presented as "fact." We live in an age where "information" is abundant, but knowledge is in short supply. If you hear a whopper about the airport, please set the record straight. Disinformation is destructive — not only to the airport — but to Democracy in general. Climbing off the soapbox now.


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