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46 Passenger Air Service Development Techniques
activities, including commercial aeronautical activities offering services to the public at the air-
port.
· Exclusive rights: to permit no exclusive right for the use of the airport by any person provid-
ing, or intending to provide, aeronautical services to the public.
· Fee and rental structure: to maintain a fee and rental structure for the facilities and services
at the airport that will make the airport as self-sustaining as possible.
See Chapter 8 for additional information on airport incentive programs.
Summary
· Most small communities remain connected to the national aviation system through network
airlines' hub-and-spoke systems. While those systems may not provide as many nonstop
opportunities as some travelers might want, they nevertheless generally offer competitive one-
stop alternatives.
· With the growth of the U.S. low-cost industry segment, increasing numbers of Americans have
access to the competition in many larger markets. Leisure travelers in many markets also ben-
efit from niche carriers' service to major leisure destinations.
· Increasing levels of competition--especially from LCCs--have helped push down average air-
fares for the vast majority of U.S. passengers.
· Even in "normal" times, providing service to smaller communities is a challenging proposi-
tion for airlines because of the need to match limited passenger demand--and its correspond-
ing limited revenue--with the right amount of capacity, while controlling operating costs.
Network airlines provide service to small communities by extending service from their hubs
with code-sharing regional carriers. Those regional airlines offer many advantages for legacy
airlines in allowing them to extend their branded networks and provide seamless travel to
communities that could not support service from larger aircraft.
· Over time, the fleet used by regional carriers has tended to increase in size. Changing regula-
tory safety requirements increased the costs of operating smaller aircraft. Evolving aircraft
technology and provisions in airline-labor agreements led to a proliferation of regional jets in
the late 1990s, which passengers tended to prefer over turboprops with visible propellers.
· However, the cost of operating all these aircraft has soared in the last couple years because of
the price of fuel. Coupled with the effect that energy costs have had on the economy as a whole,
most major airlines have announced significant cuts in service beginning in late 2008.
· Fuel costs dramatically influence the viability of RJ service to some smaller communities. As
their operating costs have increased and passenger demand has dropped, markets that might
have been marginally profitable have suddenly become very unprofitable. These changes have
forced airlines to re-examine their service options.
