Effects of Airline Industry Changes on Small- and Non-Hub Airports (2015) / Chapter Skim
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Pages 59-72
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From page 59... ...
59 C H A P T E R 4 4.1 Introduction To be responsible stewards of an important part of the community's essential infrastructure and to be responsive to their stakeholders, airports need to understand the forces driving the future of airline services in the United States. In addition, small airports need to understand the actions that they and their communities can take to retain and attract air services.
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From page 60... ...
60 Effects of Airline Industry Changes on Small- and Non-Hub Airports passengers aboard a flight allows the airline to determine what percentage of a flight's revenue is attributable to the individual flight (referred to as segment profitability) and the revenue derived from supplying passengers across the airline's network through connections to other flights (known as beyond profitability)
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From page 61... ...
Air Service Development Programs 61 • Airport revenue may not be used for – Destination or tourism marketing – General economic development/marketing not related to the airport – Direct subsidies to air carriers – Guarantees of passenger revenue, ticket sales, or seats filled – Influence of ticket prices A report issued by GAO in 2003 (GAO 2003b) found that the most common ways that small communities have attempted to obtain and retain air service include conducting studies to determine whether adequate demand for new or enhanced service exists, marketing to increase passenger demand, and offering financial incentives to airlines.
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From page 62... ...
62 Effects of Airline Industry Changes on Small- and Non-Hub Airports and advertising as part of a community incentive program. Other community partners, particularly the media and billboard owners, may provide in-kind assistance through free or reduced advertising rates.
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From page 63... ...
Air Service Development Programs 63 are a host of costs associated with establishing a new ground station at an airport including training of new personnel. Airports also charge for the use of their property including landing fees, terminal rental fees (e.g., baggage claim, ticket counter, and gate and ramp services)
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From page 64... ...
64 Effects of Airline Industry Changes on Small- and Non-Hub Airports the success of the route and indicates to the carrier that the new service may be self-sustaining without future subsidy. Many communities place performance requirements on the carrier as conditions for the payout of the revenue guarantees.
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From page 65... ...
Air Service Development Programs 65 Travel banks, unlike revenue guarantees from local governments, indicate to the airline the community's commitment to use the proposed service. Travel banks also indicate the interest of the business community, which often provides the greatest source of funds to the travel bank and which is typically the type of client the air carrier is most interested in securing for new service (typically high-yield customers)
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From page 66... ...
66 Effects of Airline Industry Changes on Small- and Non-Hub Airports 4.5 FAA and DOT Programs for Small Community Air Service Although federal programs designed to promote air service at small communities are not the main focus of this ACRP project, a short review of the programs is necessary because the programs are closely linked with airport and community ASD efforts. In some cases, the marketing incentives offered by airports make use of grant funds from the SCASD program.
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From page 67... ...
Air Service Development Programs 67 Of the 23 projects completed as of September 30, 2005, 22 contained a marketing component. Most airports (19 of 23)
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From page 68... ...
68 Effects of Airline Industry Changes on Small- and Non-Hub Airports two to four round trips a day with small aircraft between small communities and major hub airports. Exhibit 4-5 provides an overview of the EAS program from FY2002 to FY2013.
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From page 69... ...
Air Service Development Programs 69 4.6.1 Structure of Airport Incentive Programs More than 81% of the airports have an existing air service incentive program, while 19% do not. (The values sum to more than 100% because airports can offer multiple incentives.)
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From page 70... ...
70 Effects of Airline Industry Changes on Small- and Non-Hub Airports 11% of airports need more time to evaluate the results of the incentive program. Exhibit 4-8 shows the responses to the question of whether an airport's incentive program has resulted in new service or enhanced existing service.
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From page 71... ...
Air Service Development Programs 71 Exhibit 4-10. Has your incentive program made a difference?
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From page 72... ...
72 Effects of Airline Industry Changes on Small- and Non-Hub Airports may make a difference. About one-third of airports without an existing incentive program plan to implement a program within the next 1 to 3 years.
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