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A I R P O R T C O O P E R A T I V E R E S E A R C H P R O G R A M ACRP REPORT 142 TRANSPORTAT ION RESEARCH BOARD WASHINGTON, D.C. 2015 www.TRB.org Research sponsored by the Federal Aviation Administration Subscriber Categories Aviation â¢ Economics â¢ Planning and Forecasting Effects of Airline Industry Changes on Small- and Non-Hub Airports William Spitz Mitchell OâConnor GRA, Inc. Jenkintown, PA w i th Russell Mills Michael Carroll BowlInG GReen StAte UnIveRSIty centeR foR ReGIonAl Development Bowling Green, OH and Sonjia Murray StRAteGIc pARtneRS & ASSocIAteS, llc Philadelphia, PA
AIRPORT COOPERATIVE RESEARCH PROGRAM Airports are vital national resources. They serve a key role in trans- portation of people and goods and in regional, national, and interna- tional commerce. They are where the nationâs aviation system connects with other modes of transportation and where federal responsibility for managing and regulating air traffic operations intersects with the role of state and local governments that own and operate most airports. Research is necessary to solve common operating problems, to adapt appropriate new technologies from other industries, and to introduce innovations into the airport industry. The Airport Cooperative Research Program (ACRP) serves as one of the principal means by which the airport industry can develop innovative near-term solutions to meet demands placed on it. The need for ACRP was identified in TRB Special Report 272: Airport Research Needs: Cooperative Solutions in 2003, based on a study spon- sored by the Federal Aviation Administration (FAA). ACRP carries out applied research on problems that are shared by airport operating agen- cies and not being adequately addressed by existing federal research programs. ACRP is modeled after the successful National Cooperative Highway Research Program (NCHRP) and Transit Cooperative Research Program (TCRP). ACRP undertakes research and other technical activi- ties in various airport subject areas, including design, construction, legal, maintenance, operations, safety, policy, planning, human resources, and administration. ACRP provides a forum where airport operators can cooperatively address common operational problems. ACRP was authorized in December 2003 as part of the Vision 100â Century of Aviation Reauthorization Act. The primary participants in the ACRP are (1) an independent governing board, the ACRP Oversight Committee (AOC), appointed by the Secretary of the U.S. Department of Transportation with representation from airport operating agencies, other stakeholders, and relevant industry organizations such as the Airports Council International-North America (ACI-NA), the American Associa- tion of Airport Executives (AAAE), the National Association of State Aviation Officials (NASAO), Airlines for America (A4A), and the Airport Consultants Council (ACC) as vital links to the airport community; (2) TRB as program manager and secretariat for the governing board; and (3) the FAA as program sponsor. In October 2005, the FAA executed a contract with the National Academy of Sciences formally initiating the program. ACRP benefits from the cooperation and participation of airport professionals, air carriers, shippers, state and local government officials, equipment and service suppliers, other airport users, and research organi- zations. Each of these participants has different interests and responsibili- ties, and each is an integral part of this cooperative research effort. Research problem statements for ACRP are solicited periodically but may be submitted to TRB by anyone at any time. It is the responsibility of the AOC to formulate the research program by identifying the highest priority projects and defining funding levels and expected products. Once selected, each ACRP project is assigned to an expert panel appointed by TRB. Panels include experienced practitioners and research specialists; heavy emphasis is placed on including airport professionals, the intended users of the research products. The panels prepare project statements (requests for proposals), select contractors, and provide technical guidance and counsel throughout the life of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing coop- erative research programs since 1962. As in other TRB activities, ACRP project panels serve voluntarily without compensation. Primary emphasis is placed on disseminating ACRP results to the intended users of the research: airport operating agencies, service pro- viders, and academic institutions. ACRP produces a series of research reports for use by airport operators, local agencies, the FAA, and other interested parties; industry associations may arrange for workshops, training aids, field visits, webinars, and other activities to ensure that results are implemented by airport industry practitioners. ACRP REPORT 142 Project 03-29 ISSN 1935-9802 ISBN 978-0-309-30885-4 Library of Congress Control Number 2015945162 Â© 2015 National Academy of Sciences. All rights reserved. COPYRIGHT INFORMATION Authors herein are responsible for the authenticity of their materials and for obtaining written permissions from publishers or persons who own the copyright to any previously published or copyrighted material used herein. Cooperative Research Programs (CRP) grants permission to reproduce material in this publication for classroom and not-for-profit purposes. Permission is given with the understanding that none of the material will be used to imply TRB, AASHTO, FAA, FHWA, FMCSA, FRA, FTA, Office of the Assistant Secretary for Research and Technology, PHMSA, or TDC endorsement of a particular product, method, or practice. It is expected that those reproducing the material in this document for educational and not-for-profit uses will give appropriate acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. NOTICE The report was reviewed by the technical panel and accepted for publication according to procedures established and overseen by the Transportation Research Board and approved by the National Academies of Sciences, Engineering, and Medicine. The opinions and conclusions expressed or implied in this report are those of the researchers who performed the research and are not necessarily those of the Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; or the program sponsors. The Transportation Research Board; the National Academies of Sciences, Engineering, and Medicine; and the sponsors of the Airport Cooperative Research Program do not endorse products or manufacturers. Trade or manufacturersâ names appear herein solely because they are considered essential to the object of the report. Published reports of the AIRPORT COOPERATIVE RESEARCH PROGRAM are available from Transportation Research Board Business Office 500 Fifth Street, NW Washington, DC 20001 and can be ordered through the Internet by going to http://www.national-academies.org and then searching for TRB Printed in the United States of America
The National Academy of Sciences was established in 1863 by an Act of Congress, signed by President Lincoln, as a private, non- governmental institution to advise the nation on issues related to science and technology. Members are elected by their peers for outstanding contributions to research. Dr. Ralph J. Cicerone is president. The National Academy of Engineering was established in 1964 under the charter of the National Academy of Sciences to bring the practices of engineering to advising the nation. Members are elected by their peers for extraordinary contributions to engineering. Dr. C. D. Mote, Jr., is president. The National Academy of Medicine (formerly the Institute of Medicine) was established in 1970 under the charter of the National Academy of Sciences to advise the nation on medical and health issues. Members are elected by their peers for distinguished contributions to medicine and health. Dr. Victor J. Dzau is president. The three Academies work together as the National Academies of Sciences, Engineering, and Medicine to provide independent, objective analysis and advice to the nation and conduct other activities to solve complex problems and inform public policy decisions. The Academies also encourage education and research, recognize outstanding contributions to knowledge, and increase public understanding in matters of science, engineering, and medicine. Learn more about the National Academies of Sciences, Engineering, and Medicine at www.national-academies.org. The Transportation Research Board is one of seven major programs of the National Academies of Sciences, Engineering, and Medicine. The mission of the Transportation Research Board is to increase the benefits that transportation contributes to society by providing leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Boardâs varied activities annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individuals interested in the development of transportation. Learn more about the Transportation Research Board at www.TRB.org.
C O O P E R A T I V E R E S E A R C H P R O G R A M S ACKNOWLEDGMENTS The authors acknowledge with thanks the assistance of Michael Carroll and William Burns (Bowling Green State University, Center for Regional Development). CRP STAFF FOR ACRP REPORT 142 Christopher W. Jenks, Director, Cooperative Research Programs Michael R. Salamone, ACRP Manager Lawrence D. Goldstein, Senior Program Officer Anthony P. Avery, Senior Program Assistant Eileen P. Delaney, Director of Publications Hilary Freer, Senior Editor ACRP PROJECT 03-29 PANEL Field of Policy and Planning John W. Fischer, Annapolis, MD (Chair) Frederick Busch, Denver International Airport (Retired), Denver, CO Alexander Cosmas, Booz Allen Hamilton, Boston, MA Michael A. Covalt, Green Valley, AZ Laurie Garrow, Georgia Institute of Technology, Atlanta, GA Scott D. Hinderman, Fort Wayne, Allen County Airport Authority, Fort Wayne, IN Linda J. Perry, LeighFisher, Burlingame, CA Douglas R. Anderson, FAA Liaison Paul James Eubanks, Airports Council International - North America Liaison David S. Lee, Airlines for America Liaison Melissa Sabatine, American Association of Airport Executives Liaison Christine Gerencher, TRB Liaison
ACRP Report 142: Effects of Airline Industry Changes on Small- and Non-Hub Airports is a guidebook and compendium of resources that describes policy and planning options for small- and non-hub airport operators and managers as they respond to changing con- ditions in the airline industry. Airport marketing and development programs are highly individualized, but common issues exist over which airports exert varying levels of control. With this context in mind, this report describes the forces that affect airline operations and airport planning and development and presents a structured approach to help create effective planning and development strategies. The report reviews airline industry trends, documents patterns of airline industry change, and assesses current programs that airports are using to respond to changes. Based on a review of relevant literature as well as use of focus groups and detailed case studies, the guidebook evaluates options and suggests viable programming strategies. Focus groups were selected from among the case studies to demonstrate noteworthy com- munity involvement or use of innovative incentive programs. The report includes a discus- sion of lessons learned from these case studies and focus groups, presents a series of new measurement tools for assessing change in airport services, and provides an appendix with detailed data on all the airports included in the analysis. The options and strategies that emerged from this analysis were used to create a self-assessment tool to help stakeholders build action plans recognizing unique, individual airport requirements and characteristics. The complete data set from which the appendix is drawn is presented as a web-only Excel file on the TRB website. Under ACRP Project 03-29, the GRA, Inc., team identified effective strategies for respond- ing to the changing airline industry conditions that are affecting small- and non-hub airports. In recent years, air service at small- and non-hub U.S. airports has changed significantly in response to changing economic conditions. The most significant changes fall into several sub- stantive categories. First, service decreases at small- and non-hub airports have been accompa- nied by a shift or decline in overall airline seat capacity. Second, airline consolidation coupled with an increase in disciplined management of seat capacity, particularly for domestic service, has helped to minimize costs while increasing upward pressure on airfares. This emphasis on managing seat capacity has led airlines to re-evaluate individual routes in order to maximize airline profits and eliminate âunprofitable flying.â This re-evaluation has led to increased passenger load factors that now average more than 80% for many airlines. Finally, changing fuel costs, when measured in terms of per-enplaned passenger, have continued to affect air- line profitability, forcing airlines to develop new strategies to increase revenues and reduce costsâstrategies which have, in turn, affected airline service at nearly every U.S. airport. F O R E W O R D By Lawrence D. Goldstein Staff Officer Transportation Research Board
In response to fuel-cost volatility, there has been an increased emphasis on fuel-efficient aircraft, including a shift from short-haul to long-haul capacity to increase overall profit- ability; this shift has led to changes in fleet mix with decreased use of smaller, regional jets in favor of larger, newer aircraftâa change that has affected and will continue to affect the availability of service to small- and non-hub airports. These evolving conditions have raised questions about the potential long-term effects of the changing airline business model on future travel demand, traveler behavior, and levels of ser- vice into primary as well as smaller markets. It is also apparent that airports individually may have limited ability to affect the changes occurring. In particular, this study recognizes that reduction in service at small- and non-hub airports can be especially severe, affecting local economies that rely on access to the air transportation system. These evolving conditions helped drive the need for this study, resulting in a guidebook that provides airport operators and other stakeholders a way to build and implement strategies that can maximize oppor- tunities to market, retain, and expand air service where feasible and justified.
1 Summary 10 Chapter 1 Using the Guidebook 10 1.1 Introduction 11 1.2 Organization of the Guidebook 15 Chapter 2 Literature Review of Airline Industry Trends 15 2.1 Introduction 15 2.2 Risk and Uncertainty 16 2.3 Recent History and Performance of the U.S. Aviation Industry 26 2.4 Effects on Airports Serving Small Communities 32 2.5 Links Between Local Economic Development and Air Service 35 Chapter 3 Data Analysis, Airline Industry Changes, and Case Study Selection 35 3.1 Population 35 3.2 Data Elements 48 3.3 Case Studies 59 Chapter 4 Air Service Development Programs 59 4.1 Introduction 59 4.2 Airline Decision-Making Process 60 4.3 Airport Incentive Review 63 4.4 Community Incentive Review 66 4.5 FAA and DOT Programs for Small Community Air Service 68 4.6 Small- and Non-Hub Airport Air Service Incentive Program Survey 73 Chapter 5 Case Studies 73 5.1 Selection Process 73 5.2 Case Study Airports 74 5.3 Case Study Data Collection Process 77 5.4 Burlington International Airport (BTV) 79 5.5 Akron-Canton Airport (CAK) 82 5.6 Northwest Florida Beaches International Airport (ECP) 84 5.7 Phoenix-Mesa Gateway Airport (AZA) 87 5.8 Bozeman Yellowstone International Airport (BZN) 89 5.9 Augusta Regional Airport (AGS) 92 5.10 Monterey Regional Airport (MRY) 95 5.11 Kansas Affordable Airfares Program (KAAP) 99 Chapter 6 Focus Groups 99 6.1 Selection Process 99 6.2 Focus Group Method 101 6.3 Toledo Express Airport (TOL) C O N T E N T S
110 6.4 Charles M. Schulz-Sonoma County Airport (STS) 119 6.5 Redding Municipal Airport (RDD) 125 6.6 Hector International Airport (FAR) 133 6.7 Asheville Regional Airport (AVL) 142 Chapter 7 Lessons Learned 142 7.1 Introduction 142 7.2 Overarching Lessons Learned 144 7.3 Air Service Development and Local Economic Variables 147 7.4 The Origins of ASD Efforts 147 7.5 Assembling a Community ASD Coalition 148 7.6 Identifying an Air Carrier and New Destinations 150 7.7 Developing an Incentive Program 152 7.8 Meeting with Air Carriers and Community Leaders 153 7.9 Ensuring the Sustainability of ASD Programs and New Service 155 Chapter 8 Assessing Changes in Airport Service 155 8.1 Introduction 155 8.2 Measuring Quality of Service 156 8.3 QSI versus Non-Stop Service Metrics 157 8.4 QSI Changes at the Case Study Airports 160 8.5 QSI Changes by Hub Size 163 Chapter 9 Strategies 163 9.1 Introduction 163 9.2 Addressing Uncertainty and Risk in Air Service Development 165 9.3 ASD Self-Assessment Tool 167 9.4 Recommended Strategies 174 References 177 Appendix A Airports in Data Set