Effects of Airline Industry Changes on Small- and Non-Hub Airports (2015) / Chapter Skim
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Pages 99-141
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From page 99... ...
99 C H A P T E R 6 6.1 Selection Process From the list of case study airports described in Chapter 5, the research team identified five airports that had particularly noteworthy community involvement (either positive or negative) or innovative incentive programs (see Exhibit 6-1)
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100 Effects of Airline Industry Changes on Small- and Non-Hub Airports during Day 1 of the site visit to the case study community, the BGSU team conducted informal interviews with key local economic development officials and selected business leaders to gain insights into the importance of air service to the region's economy and how it facilitates travel and tourism, attracts new businesses, and connects the region to the rest of the country. The research team investigated the existing strategies used by the community to retain or attract new commercial service.
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Focus Groups 101 (including Small Community Air Service Development (SCASD) grant applications and consultant reports)
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102 Effects of Airline Industry Changes on Small- and Non-Hub Airports 6.3.1 About TOL Toledo Express Airport (TOL) , in Swanton, OH, is a non-hub commercial service airport that serves a primary catchment area (1-hour drive)
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Focus Groups 103 increased since 2012, the airport only retains 7.6% of the passengers originating in the Toledo area. Nearly 83% of the trips originating in the Toledo region use DTW,5 as shown in Exhibit 6-2.
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104 Effects of Airline Industry Changes on Small- and Non-Hub Airports The area's heavy reliance on the automotive industry amplified the decline during the recent recession. Local supply chains were broken and the automotive industry moved some of the parts production back in-house.
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Focus Groups 105 Exhibit 6-5. October flights at TOL (2001–2013)
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106 Effects of Airline Industry Changes on Small- and Non-Hub Airports period. Officials at TOL note that a confluence of events have led to the drastic decrease in flights and seats at the airport including the rise in fuel costs; the de-hubbing of several regional airports including Cincinnati, Pittsburgh, and Cleveland; the emergence of nearby Detroit network hub for Delta; the decrease in average airfares at Detroit due to the increase in LCC; and the replacement of smaller turbo-prop aircraft such as the Saab 340 and the Beech 1900 with larger 50-seat regional jets that require increased demand to ensure profitability of routes.
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From page 107... ...
Focus Groups 107 In 2011 (after an unsuccessful application in 2010) , the DOT awarded TOL a second SCASD grant of $750,000 to support a minimum revenue guarantee and marketing assistance for new service to Denver (DEN)
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108 Effects of Airline Industry Changes on Small- and Non-Hub Airports Airport during the last year. No hands were raised.
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Focus Groups 109 • Need for better regional marketing of TOL and the destinations from Chicago, particularly in the areas furthest from Detroit. A final theme that emerged from the local economic development focus group was the need for better marketing of available flights on American Eagle and Allegiant from TOL and also the connectivity available from American Eagle's hub at Chicago O'Hare.
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From page 110... ...
110 Effects of Airline Industry Changes on Small- and Non-Hub Airports When participants were informed that TOL had an ongoing "Check TOL first" campaign, many said they were unaware of the program. Participants suggested that the lack of awareness was due to a lack of a sustained marketing of the flights available at the airport.
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Focus Groups 111 STS Route Map (as of July 1, 2014) Green-Alaska Airlines 6.4.1 About STS Charles M
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112 Effects of Airline Industry Changes on Small- and Non-Hub Airports approximately 112,000 passengers, up 6% from 2012. STS is limited in its ability to attract jet aircraft commercial service, because its primary runway is only 5,020 feet long.
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From page 113... ...
Focus Groups 113 the region's employment. Financial activities and the construction industries have also suffered losses of 24.2% and 29.0%, respectively.
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114 Effects of Airline Industry Changes on Small- and Non-Hub Airports 6.4.3 History of ASD at STS Recent history of air service development at STS begins in 2001 when SkyWest Airlines was directed by United Airlines to end its STS-SFO and STS-LAX routes despite strong performance. The decision by United Airlines in 2001 to abandon the successful SkyWest commuter routes was based on internal airline policy factors and was not related to the effects of the September 11th terrorist attacks.
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From page 115... ...
Focus Groups 115 of the service. Additionally, the AAC worked to market the new service in both the Santa Rosa and destination markets.
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116 Effects of Airline Industry Changes on Small- and Non-Hub Airports has generated a large amount of support." Second, the STS airport manager noted that the lack of turnover of Alaska Airlines executives over the years has led to the building of stable and productive personal relationships that have resulted in brand loyalty within the community. As an example of this loyalty, STS officials refused to offer Delta Airlines incentives when they proposed adding service from STS to LAX to compete with Alaska.
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Focus Groups 117 of the experience." Another participant noted, "You walk out onto the tarmac -- it's like you are an actor or something. It is practically glamorous.
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118 Effects of Airline Industry Changes on Small- and Non-Hub Airports noted, "I think we should replicate the model that we used with Horizon. We had committees.
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Focus Groups 119 6.5 Redding Municipal Airport (RDD) Key Attributes Hub designation: Non-hub Airport Governance: City Owned and Operated (City of Redding)
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120 Effects of Airline Industry Changes on Small- and Non-Hub Airports 6.5.1 About RDD Redding Municipal Airport (RDD) , in Redding, California, is a non-hub commercial service airport that serves a five-county (Shasta, Siskiyou, Trinity, Tehama, and Plumas)
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Focus Groups 121 to 2013. To reverse the trend of declining air service at RDD, airport officials applied for and received a $500,000 SCASD grant from the U.S.
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122 Effects of Airline Industry Changes on Small- and Non-Hub Airports Source: GRA Analysis of OAG Data Exhibit 6-15. October flights at RDD (2001–2013)
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Focus Groups 123 $500,000 to support a minimum revenue guarantee to reduce the risk to Delta for starting SLC service. Additionally, the SCASD grant included a $600,000 travel bank to support the proposal.
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124 Effects of Airline Industry Changes on Small- and Non-Hub Airports the EDC President, airport manager, and consultant decided to develop an innovative travel bank/ revenue guarantee program funded entirely by contributions from local businesses and residents. The air service support program would require a minimum pledge of $2,000 that would be split (either 90/10 or 80/20)
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From page 125... ...
Focus Groups 125 • Despite the success of their travel bank program, participants noted that they would be willing to use that money as a revenue guarantee to attract new service Another major theme that emerged from the conversation was that while the investors in the Redding travel bank were proud of raising over $1 million in ticket pledges, they realized that the air carriers were much more interested in minimum revenue guarantees. One investor noted, "I think the travel bank is a good thing, and I'm surprised we got to the level that we did.
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From page 126... ...
126 Effects of Airline Industry Changes on Small- and Non-Hub Airports 6.6.1 About FAR Hector International Airport (FAR) in Fargo, North Dakota, is a commercial service smallhub airport that serves a primary catchment area of southeastern North Dakota, northeastern South Dakota, and western Minnesota.
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From page 127... ...
Focus Groups 127 6.6.2 Local Economic Activity Analysis The economy of the Fargo catchment area has seen significant gains in employment (see Exhibits 6-19 and 6-20)
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128 Effects of Airline Industry Changes on Small- and Non-Hub Airports when our community woke up." Following the disruption of air service, the mayors of Fargo and Moorhead established an air service task force to help recruit new air service and support incumbent airlines. The task force consists of the Greater Fargo-Moorhead Economic Development Corporation, the Chamber of Commerce of Fargo-Moorhead and West Fargo, and the Fargo-Moorhead Convention and Visitors Bureau.
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From page 129... ...
Focus Groups 129 from FAR. Also in 2005, the airport applied for and received a SCASD grant for $675,000 from the DOT to provide marketing, start-up cost offsets, and a revenue guarantee for nonstop service to Phoenix (PHX)
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130 Effects of Airline Industry Changes on Small- and Non-Hub Airports Following the announcement of the new Delta service to Salt Lake City which was a result of the SCASD grant, officials at FAR continued their efforts to expand both low-cost and network carrier air service. From 2006 to 2011, FAR experienced a series of air service gains and losses that resulted in a small increase in flights but no net growth in seats (Exhibits 6-21 and 6-22)
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From page 131... ...
Focus Groups 131 In early 2008, Delta announced that it was ending the Salt Lake City (SLC) service due to high fuel costs.
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132 Effects of Airline Industry Changes on Small- and Non-Hub Airports manager noted that while the organizations involved in air service development in Fargo work well together, it is important to remember that each organization has a distinct role that it must play. In discussing the distinct role between the Chamber and the EDC, the airport manager noted, "As a past Chamber board chair and past board member for over 10 years, I know that economic development is not the Chamber's responsibility, never has been never will be, they are a supporter of it, they can assemble people or provide job training, but they are not the lead." The benefit of the airport, EDC, Chamber, and CVB working together closely is that businesses in the community know their concerns and requests will be handled by a cohesive and responsible group of organizations in constant communication with one another.
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From page 133... ...
Focus Groups 133 Participants noted that although they were satisfied with the flight options from Fargo, they felt that there was not enough available capacity to satisfy the demand in the market. One participant noted, "Flights have been filling up.
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134 Effects of Airline Industry Changes on Small- and Non-Hub Airports 6.7.1 About AVL Asheville Regional Airport (AVL) in Asheville, North Carolina, is a commercial service non-hub airport that serves an 11-county catchment and has a population of approximately 500,000 residents.
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From page 135... ...
Focus Groups 135 Asheville region has experienced significant population growth since 2001 and has become home to burgeoning art, beer, and culinary industries that have led to increased tourism in the area. The region is home to several tourist attractions including the Biltmore Estate, the Smokey and Blue Ridge Mountains, Chimney Rock State Park, and live music venues.
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136 Effects of Airline Industry Changes on Small- and Non-Hub Airports grew by 22.7% and 27.0%, respectively. Total employment since 2001 has dropped only 0.13% going from 231,618 to 231,325 in 2013.
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From page 137... ...
Focus Groups 137 a few months into the service, the September 11th, 2001, terrorist attacks led to a drastic reduction in service across the airline industry, including in Asheville. Continental decided to reduce the frequency of the Newark to one daily flight following the attacks.
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From page 138... ...
138 Effects of Airline Industry Changes on Small- and Non-Hub Airports Source: GRA Analysis of OAG Data Exhibit 6-26. October flights at AVL (2001–2013)
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Focus Groups 139 (2013) , Punta Gorda (2013)
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From page 140... ...
140 Effects of Airline Industry Changes on Small- and Non-Hub Airports and everything went well, we love flying out here -- the flights, more pleasant, you know, even the security lines." Other participants noted that they enjoyed the unique, small feel of the airport's terminal. Despite the general agreement on the positive experience of flying from AVL, participants noted that flight reliability concerns (delays and cancellations)
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From page 141... ...
Focus Groups 141 community had offered previously might not be effective in today's demand-constrained ASD environment. As one participant noted, "Dollars have been put on the table by both the tourism committee as well as the business community when we have tried to lure flights in the past, with help with the gate and marketing efforts that were attractive at that point to the industry, but as we understand it, those things may not be so influential now." During the conversation, many participants noted that the recent revitalization of the Asheville region has resulted in sufficient demand for additional air service.
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