Understanding Airline and Passenger Choice in Multi-Airport Regions (2013)

Below is the uncorrected machine-read text of this chapter, intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text of each book. Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.

7 The United States has an extensive system of commer- cial service airports for communities and regions of various sizes and characteristics. This variety results in very different multi-airport environments, none of which are the same, but which often share similar characteristics. Understand- ing the differences and similarities among these regions con- stitutes the first step in this analysis, and provides the basis for identifying choice factors and selecting regions for instruc- tive case studies. This chapter provides an overview of multi- airport regions, their characteristics, and their relationship to the passenger and airline choices that are the focus of this study. Large markets typically require multiple airports, because it is often not feasible to develop a single airport to an operat- ing capability that will handle all airline traffic for the region. With the exception of Atlanta, all mega-urban areas in the United States are served by multiple airports. In large urban areas, restrictions regarding airport development—such as land availability, airspace restrictions, runway configuration and operational limitations, noise impacts, terminal facil- ity limitation, and surface access congestion—can result in capacity constraints. In those cases, other nearby airports become associated with serving the core urban area. Smaller, less urbanized regions also can be served with multiple airports, where none is an airline hub. If one of those airports tends to be larger, it can affect the level of service at the other airports in the region. Such consolidations are often the result of individual airline decisions to focus services at one location to reduce cost, concentrate traffic, and enhance the sustainability of services. In such cases, the loss of service at the other airports in the region can have the effect of forc- ing travelers to drive longer distances to the airport where service has coalesced. If that option is not acceptable, travel- ers may decide to drive to an airport outside the region’s his- torical catchment area, effectively expanding the catchment area of the alternative airport. Each region is unique, but some regional characteristics are useful for differentiating among regions and creating a useful typology. Size of Market Demand Market size (volume of passenger origination in or desti- nation to) is a primary descriptor of a region, and a driver of airline evaluation of potential air service. In general, greater market demand generates a greater potential for airline rev- enue. For smaller markets, the reverse is typically the case, unless there is a particular demand feature (i.e., destination, business presence, etc.) that drives air service demand to higher levels than would be typical based on regional popula- tion or demographics. Geographic Size of the Catchment Area The geographic size of an airport’s catchment area can vary significantly, depending on its location relative to other air- ports that offer effective competitive flight alternatives. In large mega-urban areas served with multiple airports, one catch- ment area may be relatively small but still contain millions of people. Conversely, in smaller, more rural parts of the coun- try, an airport’s catchment area can easily extend to a radius of 150 miles, but include one-tenth as many people as the catch- ment area of a mega-urban area. The common factor in both cases is the amount of time needed for travelers to access the airport. In large, congested urban areas, travel times over relatively short distances can be both long and unpredictable, whereas travel distances in more rural areas may be many factors longer, but require the same time and have the benefit of being predictable. The long drive time from some parts of the catchment area to an airport is often a disincentive for air travel, prompting air C H A P T E R 2 Multi-Airport Regions in the United States

8travelers to drive to their destination (if feasible) or consider the use of an alternative airport. In more expansive and rural catchment areas, with long distances and few airports, there simply may not be reasonable alternatives. The viability of an air carrier airport in a geographically large catchment area is typically a function of drive time and service quality: is the long drive to the airport and the air ser- vice available there acceptable? If drive time and service qual- ity are not acceptable, it is likely that alternative airports will be considered. Natural Geographic Boundaries The convenience of surface access to airports can be substan- tially impacted by the natural geography. The presence of natu- ral barriers or constraints, such as bodies of water or mountains, increases the drive time and inconvenience for the traveler. Ground access can be improved by transportation infrastruc- ture, such as bridges, tunnels, and new highway routings. The location and quality of such ground access improvements can mitigate access constraints in such situations. Alternatively, geographic barriers that restrict ground access to a region’s pri- mary airport can contribute to the viability of the develop- ment of another airport that can effectively serve the area that otherwise would have difficult access to air services. International Border Boundaries The presence of an international border that travelers must cross to reach an airport on the other side presents a simi- lar impediment. International borders may involve a bridge crossing, which can present congestion that impacts drive time to an airport. Travelers must have appropriate docu- mentation to cross the border, which may reduce the size of the market that can be effectively accessed. However, those travelers seeking to make an airline trip within the country they are driving into can avoid the time and delay often asso- ciated with international airport security or preclearance for an international flight. Nature of Underlying Market Demand in the Catchment Area Markets can be differentiated based on the nature of mar- ket demand using such distinctions as business travel, leisure travel, travel related to family and cultural ties, etc. Balanced markets (i.e., those with a relatively even split between busi- ness and leisure travel) may be provided with various service offerings such as low-cost carrier (LCC) and legacy network airlines with international service. However, there are several notable regions of the country with heavy inbound, leisure- oriented travel, and these areas often are served by not just legacy network airlines, but especially by LCCs that can price travel for discretionary leisure travel. Markets that are inbound leisure destinations will have very different service and pricing patterns for their services. The seasonality of traffic also will be a factor, both for inbound and outbound demand and services. Air service patterns in the primary airports serving such areas—particularly the regions around Orlando, Southern Florida (both Atlantic and Gulf coasts), Phoenix, and Las Vegas—can exert significant effects on the service available at other airports within relatively close proximity. Traffic origi- nating in those locations can thus be notably affected by the gravitational pull of the dominant airport. Presence of Airline Hub Often, due to the nature of the actual demand for air service that originates in major metropolitan areas, airlines establish operational hubs in those locations. Depending on the size of the area, more than one airline may hub in an area (e.g., Chicago). Although not strictly a “hub” in a traditional defini- tion, the study team includes major operational bases of larger LCCs in this category as well. Thus, New York, Dallas, Atlanta, and the Washington/Baltimore area also serve as examples. A variation involves the situation of a large airport in a large urban area that serves as an airline operational hub, with other communities and airports surrounding that larger facility like satellites. Charlotte and Minneapolis/St. Paul are examples. Both cities are ringed by other communities within approxi- mately 100 miles. Nearby Alternate Airports Airport congestion also often results in airline decisions to provide service to one or more alternative airports in a region. If the market size is sufficiently large, an airline may establish an operating station at an alternative airport. The airports in Manchester, New Hampshire, and Providence, Rhode Island are examples. Congestion at Boston Logan effectively pre- cluded Southwest from operating there, so MHT and PVD proved to be workable alternatives. In other cases, an airline’s presence at an alternative airport may be very modest, pro- vided to respond to competitive services at that airport, or to protect an airline’s market position in the region. Airports with Subsidized Service At the opposite end of the spectrum from mega-urban areas served with multiple major airports, small communities may receive subsidized service through the Essential Air Service (EAS) program. The presence of such services can have impacts on air service in the region that are beyond the benefits of the

9 Area Airports Market Size (O&D Traffic) Catchment Area Size (Geography) Catchment Area Type Common Airport Ownership Balanced Market Type Trans- Border Market EAS- Subsidized Service New York City JFK, EWR, LGA L M M Los Angeles Basin LAX, BUR, LGB, ONT, SNA, PSP L L M Washington/ Baltimore DCA, IAD, BWI, HGR, CHO, MDT L M M Boston Area BOS, PVD, MAN L M M Houston IAH, HOU L M M Niagara Frontier BUF, IAG, ROC, YYZ, YHM M L M Central Michigan LAN, FLT, GRR, DTW M L M/R Northwest Florida PNS, VLP, ECP, MOB, GPT M L M/R South Texas MCA, BRN, HAR, MAT, REY M M R Central Texas SAT, AUS M L M/R Coastal Georgia SAV, BQK, JAX, HHH M M M New York North Country MSS, OGB, WAT S L R Southwest Florida TPA, PIE, SQR, PG, SWF M L M Southern Louisiana MSY, BTR M M M Front Range Rockies COS, DEN, CYS S L M/R Greater Chicago Area ORD, MDW, RFD, BMI, SBN, GYY, FWA L L M/R Notes: For Market Size and Catchment Area Size: L=Large, M=Medium, S=Small For Catchment Area Type: M=Metropolitan, R=Rural Exhibit 2-1. Characteristics of selected multi-airport regions. subsidized air service. For example, subsidized service often makes it difficult to attract a second carrier to operate to a sec- ond destination from an airport that already has subsidized service. In addition, if the quality of the subsidized service is poor, passengers may opt to drive to alternative services at other airports. Exhibit 2-1 provides some examples of how multi-airport regions can be classified. Depending on how expansive or restrictive the scope of the region or airports is, such classi- fications can be somewhat arbitrary. In addition, because not all multi-airport regions are affected by the same summary factors, the inclusion or exclusion of factors can significantly affect analysis and evaluation. The high-level summary shown in Exhibit 2-1 cannot capture other considerations that may figure prominently in passenger decisions—traffic congestion or distance, for example. The exhibit also illustrates that in certain cases regions may overlap and airports may be within the general catchment area of other airports.