"Will a new airport attract more fliers into and out of Augusta?"

Sunday, May 26, 2002

Will a new airport attract more fliers into and out of Augusta? 
The Augusta (GA) Chronicle


The master plan assumes that a new airport will bring in more airlines
and more competition, leading to lower ticket prices that will stem the
flow of local passengers streaming to Columbia and Atlanta for better
deals. Below are four major questions regarding the success of that
assumption.

Q: Will efforts by Augusta Regional officials to recruit new airlines be
improved by building a more modern airport?

A: For airlines, which typically operate on the thinnest of profit
margins and are currently losing money, the most important factor is
whether there's a profit to be made in a new city.

"The main thing driving them is going to be whether they're going to get
the enplanements, or the passengers, that they need to turn a profitable
service," said Scott Tarry, an associate professor at the University of
Nebraska at Omaha's Aviation Institute.

"If the numbers aren't there, it doesn't matter how nice your terminal
is or how nice your runway is, the airline's not going to serve it."

As for the modern terminal, that's mostly to please the public and
attract passengers, according to Patrick Graham, the director of
Savannah International Airport, which opened a $68.5 million terminal in
1994.

"(Airlines) are more concerned with your runway length and your
navigational aids," he said. "But they also look at the ease of
operations, and the cost of operations. If you can provide them a new
facility with updated technology and do it at a decent price, that helps
attract."

The biggest impact of Savannah's new terminal, Mr. Graham said, has been
the improvement of the airport's image and, in turn, the image of the
city.

Q: What are Augusta's chances of landing low-cost carrier Southwest
Airlines, which a number of local airport officials say is key to making
Augusta Regional a major player and lowering overall ticket prices?

A: Not too good. While Augusta is in the right position geographically,
it has factors to overcome, such as a smaller population than what is
typically found in other cities the airline already serves.

Southwest, which is based in Dallas, does look for cities with airports
that are underserved with little competition and with overpriced
tickets, elements found in Augusta.

But the airline generally looks to draw from a surrounding population of
about a million people and start with 10-12 flights a day.

The metro-Augusta population is about 477,000.

"They look at (airports) where they can get in and out of real quickly,"
said Jim Parker, an airline analyst for the financial services firm
Raymond James. "Augusta would probably be one, but they would also need
the population base there."

Plus, the competition to recruit Southwest is fierce. More than 100
airports each year approach Southwest to start service to benefit from
the "Southwest Effect," a term the Department of Transportation uses to
describe the increase in passengers the carrier brings to an airport and
the decrease in overall ticket prices.

Christine Turneabe-Connelly, spokeswoman for Southwest, said there is a
long list of factors that must fall into place before the nation's
leading low-cost carrier decides on a new city.

The airports, she said, are typically in secondary cities that are away
from large hubs.

"Everything has to be a positive, because there's always markets out
there that we can choose from," Ms. Turneabe-Connelly said.

In a letter Southwest sent Augusta Regional in 2001, the airline pointed
out the area's smaller-than-desired population base.

"Of course we fly to quite a few places with less than a million folks,
but for the most part we need to serve densely populated areas," the
letter stated. "Augusta most likely will not be on our radar screen for
some time."

The letter went on to say that the airline never completely closes
future expansion possibilities and that officials would continue to
monitor Augusta's development.

Augusta Regional officials have begun looking at ways to cut down on
operating expenses, such as staffing, to make the airport more
attractive to low-cost airlines. This helps support the airline's model
for low overhead requirements, such as cheap landing fees and rents.

Since Southwest has yet to enter a secondary airport around Atlanta,
it's not out of the question that one of the regional airports in
Georgia or South Carolina, maybe even Augusta, could end up being on the
carrier's list, analysts say.

Q: What happens if the airport fails to secure any new carriers?

A: Augusta will have a modern - and empty - new airport.

Without increased revenue it could be more difficult to cover higher
maintenance costs for the new building. Airport officials have not yet
calculated how much the new terminal will cost to maintain.

Melbourne International Airport is a good example of what could happen
at Augusta Regional, says Mike Barker, the associate dean at the Florida
Institute of Technology's School of Aeronautics.

In the past decade, Melbourne International, located about an hour from
Orlando, built a new terminal and upgraded its runways, roadways and
cargo facilities.

Located about two hours from Orlando International, a hub airport with
50 airlines and some of the lowest fares in the country, Melbourne's
airport has a surrounding population that is only about 1,000 fewer than
the number of people living around Augusta Regional.

Before building the $150 million terminal, the airport had six airlines.
Today, it is served by only two: Delta and Continental Express.

"They've got a big terminal. They've got long runways, and they're
grossly under capacity.

"I'm not badmouthing my airport, but it's a classic example of a
regional airport that's out-built itself," Dr. Barker said.

But Melbourne International Marketing Director Larry Wuensch makes no
apologies for the airport's decision to build.

"Our facility is under-utilized," he said, "but on the other hand, in
order to compete effectively, you have to have modern facilities that
can accommodate growth."

Mr. Wuensch said the airport expects the airlines to return. Two of them
left right after Sept. 11, and Mr. Wuensch says he believes they will
come back once the market is more stable. Meanwhile, significant
economic growth at the airport since the new terminal opened has
softened the decline in airline revenue.

The airport's 109,000-square-foot cargo facility is full, and a number
of nonaviation-related business have located in the airport's industrial
park.

Augusta Regional officials have said they want to raise the airport's
commercial development along with increasing air service to provide more
than one revenue stream.

Q: How will the effects of Sept. 11 influence the airport's ability to
attract new air service?

A: The economic slump the aviation industry experienced after the Sept.
11 terrorist attacks is expected to linger a while longer. But aviation
experts say they believe the recession will soon pass and airlines will
again look for new, profitable markets.

Even before Sept. 11, major airlines were facing threats to their bottom
lines as it became apparent that business travel was dropping off.

Now, passenger levels are rebounding, said Kenneth Button, public policy
professor at George Mason University. But, he said, airlines are still
not making money.

"The so-called yield - the amount each passenger pays on average - is
still lagging behind," Dr. Button said. "So airlines are carrying more
people, (but) they're having to give quite considerable discounts to get
them."

Days before Sept. 11, Continental Express was said to be preparing to
announce new service between Augusta and Newark, N.J. That quickly
changed, and even Comair, which had not restarted service at Augusta
after a three-month pilot strike between the end of March and June,
announced that it would not be returning.

Airport Director Ken Kraemer said there has been no official word on
whether Continental will reconsider expanding to Augusta Regional.
Airline representatives were in town during Masters Week in April to
meet with Augusta Regional officials, and Mr. Kraemer said a decision
could come in the fall.

Click here to view the Airport's Master Plan graphic:

 http://augustachronicle.com/images/headlines/052602/airport_plan/


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