"Kansas City, Mo., Airport Suffers Costly Decrease in Passengers"

Thursday, February 13, 2003

Kansas City, Mo., Airport Suffers Costly Decrease in Passengers
The Kansas City (MO) Star


KANSAS CITY, Mo.--Stung by a slumping economy and the collapse of Vanguard
Airlines, Kansas City International Airport suffered a significant drop --
almost 15 percent -- in total passenger numbers in 2002. 

The decrease -- one of the most severe among major commercial airports in
the country -- is KCI's worst passenger number setback since the demise of
Eastern and Braniff airlines more than a decade ago. 

About 9.8 million passengers either departed or arrived at KCI in 2002, a
14.8 percent drop from 2001, according to recently released passenger data
from the Kansas City Aviation Department. 

The number of boardings -- another significant measurement because they
generate user fee revenue for the airport -- was close to 5.2 million, an
11.4 percent decrease from 2001. 

In a year in which the aviation industry was battered by airline
bankruptcies and the aftermath of the terrorist attacks, most airports
across the country suffered declines in passenger traffic. 

But in most cases, those percentage drops were in the single digits. 

KCI officials acknowledge the passenger decline is troublesome, especially
with a looming threat of war with Iraq that could further hurt the aviation
industry. But the airport remains financially stable, they say. 

The passenger numbers will not cause any significant airport service cuts,
officials say. Nor will any of the ongoing capital projects, such as the
terminal renovation project and long-term parking lot construction, be
negatively affected. 

The July 30 bankruptcy and shutdown of Kansas City-based Vanguard Airlines
is the biggest reason the numbers are down so much, airport officials and
industry analysts said. 

With 35 daily flights, Vanguard was the airport's second-busiest carrier. 

"We were not alone," said Tom McKenna, the Kansas City Aviation Department's
marketing director. "But our hit was more severe because of the bankruptcy
of a hometown carrier."

Terry Trippler, a Minneapolis-based airline industry consultant, agreed. 

"Kansas City is not a dying city, so the economy cannot account entirely for
the drop," he said. "The major reason has to be Vanguard. They had low
fares, and they encouraged people to fly. It's a shame that they are gone."

Vanguard, which had always struggled for financial viability, filed for
bankruptcy after the federal government rejected loan applications for the
airline. 

Vanguard is seeking to avoid liquidation. An unidentified investor has
expressed interest in acquiring the company. 

KCI spokesman Joe McBride said the downsizing of several major local
corporations, including Sprint and Aquila, also might have contributed to
the low passenger numbers. 

"Those companies did a lot of business travel," he said. "If they are laying
off employees, that means less travel for these companies."

At Indianapolis International Airport, which has a market size similar to
KCI's, 2002 passenger traffic numbers through November were down 6 percent
from the same period in 2001, said Dennis Rosebrough, spokesman for that
airport. 

"The economic recovery has not progressed as rapidly as
predicted,"Rosebrough said. "The leisure market has rebounded, but business
travel has decreased."

Unlike KCI, monthly passenger numbers at Indianapolis International Airport
were up in September, October and November compared with 2001, when those
monthly totals bottomed out because of the terrorist attacks. Similar
increases occurred at other airports. 

December was the 16th consecutive month that monthly passenger numbers at
KCI were below that of the previous year, a drop that coincided with the
terrorist attacks. 

Airports compare passenger traffic numbers to the same period of the
previous year because of the seasonal differences in airfares and travel. So
month-to-month comparisons are less useful in gauging passenger traffic. 

The annual passenger numbers at KCI had soared over 10 million every year
since 1996. In 2001, the airport was on pace to have its record high
passenger total, but then terrorists attacked the United States on Sept. 11,
2001. 

Airport officials said that as long as KCI had 8 million passengers or more
during the fiscal year, the airport would break even financially. The
airport was at 6.9 million travelers in the first eight months of the fiscal
year, which begins May 1. 

"We will be above 8 million," McKenna said. 

McBride said the airport had received positive bond ratings, which means
bonding companies think KCI can repay millions of dollars in bonds that have
been issued for capital projects. 

Those bond ratings, McBride said, are based on sound management of the
airport and its strong financial condition. A recent bond rating report
indicated that the airport had $100 million in cash reserves. 

McKenna also said there was hope that other airlines would fill the Vanguard
void. AirTran Airways, Delta Connection and Skywest Airlines recently
entered the KCI market and added a total of nine daily flights. Midwest
Express also added more flights to and from KCI. 

Councilwoman Teresa Loar, chairwoman of the City Council's Aviation
Committee, said the looming threat of war with Iraq probably would mean
airports are not out of the woods. But she predicted an eventual recovery
for KCI and the rest of the aviation industry. 

"It will be up to the airport's marketing department to make up this
difference," she said. "Until Vanguard returns, it will have to do some
aggressive marketing to get those numbers back up."


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