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148 Marketing Guidebook for Small Airports 14.3 ARNOLD PALMER AIRPORT 14.3.1 BACKGROUND Historically, Latrobe was served by US Airways Express, with nonstop service to Pittsburgh. At its peak, it received 9 nonstop flights per day. Before US Airways' bankruptcy in 2002, Pittsburgh was a major hub for US Airways. As it went through bankruptcy (twice) in the 20022005 period, one of the key actions it took was to dramatically "size down" the Pittsburgh hub. Latrobe's service was a casualty of the downsizing because it lost nonstop service in May 2004. Latrobe was left without any commercial air service. In addition, since it is located only 60 miles from Pittsburgh, it did not qualify as an Essential Air Service city. Thus, it could not look to the government for subsidized sup- port for air service. It had to rely on its own resources. Today, Latrobe has two daily nonstop flights to Detroit on Northwest Airlines. This service began in April 2006. The steps the airport and community took to secure this service and to provide important marketing support are the subject of this case study. Latrobe was selected for this study because of its success in mobilizing com- munity support to regain air service. 14.3.2 FINANCIAL SUPPORT--A PREREQUISITE FOR ANY NEW SERVICE The airport recognized that if it were to interest a carrier to serve Latrobe, it would have to provide a financial incentive to reduce the risk associated with the new service. As noted, Latrobe did not qualify for subsidy under the Essential Air Service program. Apart from funds raised within the community, the only source that could provide sufficient funding to underwrite any new service was the Small Community Air Service Grant program. Latrobe applied for and was successful in securing a $600,000 grant. This grant and $109,000 of "in-kind" con- tributions from the community gave the airport a reasonable financial base with which to approach an airline. 14.3.3 CARRIER SELECTION--WHICH AIRLINE TO TARGET The next issue the airport faced was which airline to approach for service. There are several factors which enter into the decision-making process. If the new flights were going to succeed, Latrobe needed service into a major hub. The more connecting opportunities presented to potential Latrobe passengers, the better the chance that they would use the new service. Based on historic passenger demand during the period Latrobe had service, the logical assumption was that any new service would be flown with small turboprop equipment, instead of regional jets or larger jets. Thus, the potential carrier had to have a division that operated "express"-type equipment. The operation of this type of equipment also meant that the hub needed to be within 300 miles of Latrobe. Among carriers operating turboprop equipment, which carrier(s) would be interested in serving Latrobe? When Latrobe lost commercial air service, the logical alternative for Latrobe residents was to drive to the nearest con- venient airport for air service. Pittsburgh is the nearest large airport, located 60 miles from Latrobe. Therefore, the airport concluded that any carrier with a large presence at Pittsburgh would probably not be interested in
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Case Studies 149 inaugurating new service to Latrobe, because the carrier would already be capturing the Latrobe residents who are driving to Pittsburgh for air service. Targeting a carrier with a limited presence in Pittsburgh would most likely produce the best results. For this car- rier, the Latrobe passengers would represent a new source of revenue to their system. Another consideration focused on the companies/industry located in the Latrobe market area and their travel patterns. For an air carrier to succeed in Latrobe, it would need to provide convenient service that met the travel demands of local businesses. International travel, especially to the Far East, was an important consideration because a number of companies located in Latrobe have international ties. Several air carrier hubs met theses criteria in terms of equipment type, distance, and connections to the Far East, including Northwest's Detroit hub. This subsection outlines the major considerations in determining which airline to approach. Of particular inter- est was the work done by the Latrobe community before and after the start of the new service. 14.3.4 COMMUNITY ACTIVITIES After losing the US Airways service, Latrobe airport management concluded that a top priority in successfully attracting new service must be to make the community aware of what would be required to attract a new air- line. To effectively convey this message, the airport manager formed a task force consisting of the head of the Latrobe Area Chamber of Commerce as well as two advertising executives from the Latrobe-based WestMedia Group. (The members of the task force were interviewed for this case study.) The purpose of the task force was to educate the region--businesses and the general public--as to the impor- tance of commercial air service to the region, and what it would take to attract a new carrier. Many communities have a sense of "entitlement" when it comes to air service. The fact that Latrobe had already lost commercial air service and did not qualify for subsidized service removed any thoughts in this vein. The starting point in the educational process was to convince the community to recognize that the airlines' perspec- tive of Latrobe's business potential was critical. In other words, the community needed to "think like an airline." Without government subsidy, the community came to realize that the market must stand on its own and that the air- line had to be convinced that the market had long-term potential. Airlines generally look to the business community and its support as a gauge of the long-term potential of a market. Latrobe knew that if it was going to convince a carrier to serve Latrobe, it needed the active support of the business community. The key phrase is "active support." The community concluded that merely telling an airline the business community will support the new service is less effective than having the key business lead- ers themselves deliver this message. For that reason, the business community was included in the "pitch" to the air carrier for new service. This proved to be exactly the right approach because Northwest's first agenda item when it visited Latrobe was to meet with local business leaders. Convincing the business leaders to actively participate in the process involved all members of the task force. Since most businesses naturally focus on the "what's in it for me?" aspect of any transaction, part of the educational process was making sure that Latrobe businesses understood the importance of air ser- vice to the region's economy and what benefits were in it for them. The airport found that in this area, peo- ple not directly associated with the airport can make significant contributions to the process. Doing so
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150 Marketing Guidebook for Small Airports eliminates the self-serving aspect of having an airport employee tell area businesses how important air service is to the region. In constructing the educational campaign, one of the factors the task force focused on was community pride. The previous loss of air service was a significant blow to the community and touching that nerve was a key ele- ment in the campaign. The fundamental lesson here is that a realistic assessment of the community's strengths and weaknesses is the starting point for any campaign of this nature. The group had multiple educational tasks: making sure the community and businesses knew what an airline would be looking for before it began service; demonstrating why air service is important to the region's eco- nomic well-being; and persuading the business community that, if the new service is successful, all parties stand to benefit economically. To make the community aware of "what it would take" to get an airline, multiple channels and venues were used including articles and editorials in newspapers, chamber of commerce functions, open houses at the airport, and speaking engagements at numerous business/social functions such as the Rotary club. In terms of expense, many of these activities were more "time" intensive than "money" intensive. The more expensive part of the campaign came with the announcement of service by Northwest because the community bore the responsibility to provide marketing for the new service. 14.3.5 MARKETING BUDGET AND MEDIA SUPPORT The initial marketing budget was set at approximately $100,000 spread over a 2-year period. Broad media cov- erage was critical to making sure a wide audience was reached with the message about why air service is important to the region and what it will take to support a new carrier. Obviously, the task force did not have unlimited funds with which to deliver this message. The advertising executives were especially effective in craft- ing a wide-ranging media campaign at very reasonable rates. The executives delivered a very simple message to the area's media outlets. Air service generates significant economic activity and all parties stand to benefit in the long term if air service is effective. Help us now and you stand to gain in the long term. A marketing brochure was also created (see Exhibit 14.1). Advertisements announcing the new service were run in both newspapers and radio. This is the area where the educational groundwork proved beneficial because the media outlets recognized the value of air service and helped the airport task force stretch its promotional dollars. It was a cooperative effort. Billboard ads were also used, and the airport donated tickets to be used as prizes in fundraising events for local organizations. One of the objectives of the advertising campaign was to create a brand image for the new service, focusing on convenience and amenities. The convenience aspect touts the ease and time savings of using Latrobe ver- sus going to Pittsburgh, and the amenities focus is the free parking available at Latrobe. It is noteworthy that "redundancy of message" was the advertising focus of the task force. In practical terms, this meant that rather than full-page newspaper advertisements a few times a year, the task force opted for smaller ads that were run weekly. For radio, the task force opted for four 15-second commercials instead of one 60-second spot.
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Case Studies 151 14.3.6 SUMMARY--LESSONS LEARNED One of the most important lessons was the focus on the "education" that was required for both the community as a whole and the business community in particular. For the community, the critical message was the impor- tance of air service to the economic well-being of the region. For the business community educational mes- sage, the focus was on how important these businesses were to any potential air carrier and how their support was critical to its ultimate success once the new service began. In many cases, it is assumed by airport management that the community recognizes the important role air ser- vice plays in the area's economy. It is also assumed that the business community recognizes its importance in the air service process as well. Neither of these assumptions should be made without a great deal of fore- thought. The second critical lesson is the recognition that other members of the community can be instrumental in get- ting the necessary support for the new service. Task force members and airport management can lend credi- bility to the project as a whole and provide much needed expertise in specific areas (e.g., media channels and key contacts with business leaders). But the entire process begins with a realistic self-assessment of the community's strengths and weaknesses and how to capitalize on the strengths and address the weaknesses. 14.3.7 ADVICE AND SUMMARY OFFERED BY LATROBE AIRPORT MANAGEMENT "There is a sense of pride from Airport management that is a well known fact. Every Airport manager in this country knows his or her airport inside and out. There is seldom a question that can't be answered on any issue inside those fences. Take the time to learn about the airlines' position and what they have to deal with. Take the time to know your community and what makes them tick. Low prices are good but if they don't keep the air- line profitable or at least breaking even, they are not going to stick around. Every day there is a need to ques- tion "what will make this operation better?" not only for the airport but for the airline, the passenger, and the employees. Empower your people and community to make a difference, and don't be afraid to tell them the truth. They can make informed decisions as long as you stay honest. And by all means, don't take it personal, you may have a 95% load factor 7 days a week and the airline may still need to make a reduction. You just never know." (Gabe Monzo, Airport Manager, 2007)
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152 Marketing Guidebook for Small Airports Exhibit 14.1--Portions of Latrobe Marketing Brochure.
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Case Studies 153 Exhibit 14.1--Continued. Source: Arnold Palmer Regional Airport