"Charleston airport sees hope in travel rebound"

Sunday, June 15, 2003

Charleston airport sees hope in travel rebound
BY JOHN P. MCDERMOTT
The Charleston (SC) Post and Courier


When the board of Charleston International meets this week, it likely will
give architects final clearance to wrap up the design of a $25 million
parking garage at the airport. The project has been stuck in limbo since the
terrorist attacks sent the airline industry into a tailspin 21 months ago.

On the surface, it's a routine planning matter. Yet it symbolizes one of the
strongest shows of confidence that the airport has made about the battered
airline business since the Sept. 11 hijackings.

"At last, the industry looks stable enough that we can start planning again,
including planning for expansion," said Sam Hoerter, airports director for
the Charleston County Aviation Authority.

The brighter outlook stands in sharp contrast to the gloom and doom of
mid-2002.

"A year ago, the airlines were in panic mode," Hoerter said. Now they "are
starting to stabilize and plan for the future."

Last week, for instance, New York-based discount carrier JetBlue announced
it had placed a $3 billion order for 100 new midsize jets, a move the
company said would allow it to expand into smaller markets such as
Charleston.

Still, pulling out of the sharp downturn has been slow and painful for most
of the nation's airlines. The travel slump that brought the industry to its
knees was kicked off by the recession in early 2001 and made worse by the
events of 9-11. The fallout was severe: Several carriers were pushed into
bankruptcy, and most airlines were forced to slash their costs, mainly by
laying off workers, renegotiating labor contracts and throttling back flight
schedules.

Charleston International, which enjoyed robust growth during the late 1990s,
lost about 20 percent of its flights and seating capacity almost overnight.
Three airlines pulled out of the market completely.

SWITCHING PLANES

As the state's busiest airport approaches the halfway point of 2003, Hoerter
said he is "pleasantly surprised" by the level of business.

Passenger counts through May were about 4 percent ahead of the first five
months of 2002, mainly because the region's economy has continued to grow
and diversify by attracting new residents, visitors and businesses, he said.

"Those are the issues that drive air service," Hoerter said.

In addition, most of the five surviving carriers have beefed up their flight
schedules at Charleston International over the past year.

"We're back up to the point where we have just one less departure a day than
we did on Sept. 11, 2001," Hoerter said.

Yet the airlines are not mindlessly expanding. While the number of flights
is back near its peak, total passenger capacity at Charleston International
has not kept pace. Hoerter said the airport's "seat lift" is down 8 percent.

The shortfall reflects the replacement of larger aircraft with 50-seat jets.
The industrywide trend, which appeared in the late 1990s, has accelerated
over the last two years as carriers have scrambled to keep their cabins as
full as possible. At Charleston International, 50-seat jets accounted for 46
percent of the scheduled flights in May 2001. As of this month, that figure
is 65 percent.

Delta Air Lines, the airport's dominant carrier, has been especially
aggressive in swapping out its wide bodies for slimmed-down models. It now
operates small jets on 16 of its 22 daily departures, double the number from
May 2001.

"The airlines are trying to 'rightsize' their planes to the market," Hoerter
said. "They just don't want any empty seats."

FARE GROUNDS

In another telling sign of the rapidly changing industry, the prospects for
landing a discount airline at Charleston International are brighter than
ever, Hoerter said.

The lure: the airport's nearly equal mix of business travelers and
vacationers, which allows carriers to spread risk and charge a wider range
of fares.

"One of the things we really have going for us is that our economy is
becoming increasingly balanced," Hoerter said.

Historically, local business

travelers have shunned leisure-oriented, no-frills airlines namely because
the service was unreliable and the flights were limited. In addition, the
major competing carriers held onto most of their most profitable customers
by matching the rock-bottom fares route for route. As a result, Charleston
has driven off three discount airlines over the last seven years.

"Here's the good news," Hoerter said. "The discounters of the future are
trying to build a product for the business traveler."

JetBlue and AirTran Airways are part of the new breed.

"We're a very promising market for them," Hoerter said. "Once we attract
one, it will affect fares here in a very positive way."

Taking a page from the Southwest Airlines playbook, the new discounters are
out to win the loyalty of corporate travelers by offering reasonable prices,
frequent flights and reliable new planes.

"People are starting to realize that's the trick," Hoerter said.

JetBlue is a profitable startup that has won rave reviews. The carrier said
its decision to add 100-seat jets to its fleet of larger planes will allow
it to enter hundreds of new markets with low fares starting in 2005.

"I just think the possibilities are endless," David Neeleman, the company's
chief executive, told analysts in a conference call last week.

In 1999, JetBlue included Charleston on the list of cities it would consider
serving in the future. While the airline has not yet said where it will
deploy the new jets, the fleet expansion "gives us the flexibility to be
able to serve cities such as Charleston and other cities of similar size on
a frequent basis, and that's the important thing," spokeswoman Fiona
Morrison said.

AirTran has a similar game plan. The former no-frills ValuJet has adopted
assigned seating and carved out a business class in its planes.

The Charleston Metro Chamber of Commerce is taking no chances. It is leading
an effort to bring AirTran to Charleston by trying to secure $2 million in
corporate commitments. The idea is to get major employers to steer a portion
of their travel budgets toward the carrier, providing it a guaranteed
revenue stream for two years. The aim is to force the other airlines at the
airport to lower their fares.

Even without the incentive, Hoerter expects AirTran to inaugurate service to
Charleston within a year, which is one reason he'll recommend that the
airport wrap up the design of the parking garage. Construction could start
by January.

"I think we'll need the deck," Hoerter said.

Attached Photo:

Charleston International Airport is the state's busiest airport and is
expected to get even busier if it can persuade smaller, regional carriers to
begin service here.

charleston.jpg