"Bucking U.S. Trend, California Airport Sees Record Number of Summer Travelers"

Friday, September 12, 2003

Bucking U.S. Trend, California Airport Sees Record Number of Summer
Travelers
The Orange County (CA) Register


Karen Stevenson dutifully gets to John Wayne Airport two hours before her
scheduled flight, zips through security and then has tons of time to kill.

So she shops.

"There's a lot of time now, so I look for things to buy," says Stevenson,
owner of a window-covering business in Gilbert, Ariz., and a frequent
traveler to California. "It's stuff for the kids, like T-shirts," she said,
pointing to a display stacked with them.

Thanks to frequent and early bird travelers such as Stevenson, passenger
traffic and concession sales hit record highs this summer at John Wayne,
which has escaped the national industry slump in the wake of 9-11, the SARS
outbreak and international conflicts.

In August -- typically the heaviest traffic month for John Wayne -- a record
845,548 travelers passed through its terminals, up 8 percent from a year
ago.

The most recent data available on concession sales show receipts at a record
$2 million in July, up 13.6 percent from last year.

Nationally, passenger traffic on major commercial airlines is down 2.4
percent this year, according to the Air Transport Association, a trade group
for carriers.

One of the reasons that John Wayne has fared better: It isn't a hub for
international flights or domestic connections. Instead, it's a destination
spot for tourists and business travelers, who take advantage of low-cost
carriers, which have lured customers with discounted fares.

"John Wayne Airport has the kind of short and mid-haul flights that have
come back more quickly," said Justin McCusker, airport spokesman. "Other
airports are still struggling with low demand for international flights."

Southwest Airlines averages 27 flights daily from John Wayne, the most of
any carrier. In the wake of 9-11, it was one of the few major carriers not
cutting back on capacity.

After the Sept. 11, 2001, terror attacks, John Wayne saw passenger traffic
drop off 33 percent that month compared to the previous year. Sales at the
airport's shops and eateries fell 21 percent.

Isabelle Villasenor, who owns the two McDonald's at opposite ends of John
Wayne, saw sales drop 60 percent in the first few days after 9-11.

But because of the county's strong economy, business travelers, who make up
half of John Wayne's passenger base, continued to fly, and the airport
reaped the benefits, McCusker said.

By April 2002, the airport began posting monthly passenger levels that
exceeded their numbers before 9-11. But sales at concessions recovered more
quickly because passengers who arrived early and got though security had
more time to eat and shop.

One month after the 9-11, October sales receipts totaled $1.5 million,
slightly ahead of the $1.4 million from October 2002.

Smaller airports such as John Wayne also have recovered more quickly because
travelers, on average, have a better "customer experience," said Derek
Gerow, an airline industry expert at Bain & Co., a consulting firm in
Dallas.

Gerow says a large airport has to handle more people and overcome bigger
structural obstacles to make security checkpoints more efficient. Many small
airports like John Wayne, which handled just under 8 million passengers last
year, don't face that obstacle.

At John Wayne, the major shops and restaurants are located inside the
secured zone, which according to David Milobsky, spokesman for HMSHost
Corp., a leading provider of airport concessions, provides a captive
audience.

"A lot of passengers go by concessions that are outside of security because
they are so focused on getting through first," Milobsky says. Once they're
beyond the checkpoint, then they relax and look for something to eat and
begin browsing retail shops.

Villasenor, the McDonald's owner, agrees. Right after 9-11, she tried to
sell McDonald's fare outside the pre-screening area. Passengers told her no
because they wanted to get through security.

Taking coffee or a sandwich through security was seen as an added hassle.

Passengers appear to become more relaxed once they've passed security.

HMSHost, which operates the Orange Grill Restaurant, Sports Page Pub, Gibson
Guitar Lounge and a few other concessions at John Wayne, said people seem to
be moving toward casual dining meals. That doesn't mean a huge run-up in
sales, but it has helped HMS reach single-digit growth over last year.

However, that extra "dwell" time has meant double-digit increases for other
retailers.

Gregg Paradies, chief operating officer of Paradies Shops, an Atlanta-based
retailer that sells everything from snacks to magazines and luggage at its
300 shops in 59 airports, says its two stores at John Wayne are its top
performers. Those shops boasted an 18 percent increase in sales for the
fiscal year ended June 30, 2003.

"The traveler is getting to the airport earlier. They have more time in the
terminal and more time to shop," Paradies said.


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