"DIA, United's futures linked"

Thursday, October 14, 2004
  
Editorial
DIA, United's futures linked
The Denver (CO) Post
 
 
There may be a glint of opportunity for Denver International Airport in
United Airlines' decision to rely more heavily on regional jets. 

The biggest risk to DIA right now is that United might not survive its
bankruptcy. United has the lion's share of flights at DIA and employs 6,000
people in metro Denver, 3,500 in airport operations. If the regional jet
plan helps United's finances, that should be good for DIA. (There are,
however, still big obstacles in the way of United's recovery, such as the
feud between the company and its unions over pension plans.)

To slash costs, United wants to cut 12 percent of its domestic capacity and
shift many domestic flights from full-sized jets to regional jets, which
seat about 70 passengers. Passengers won't be happy giving up the modest
legroom and elbow room found on bigger jets for the even more cramped
quarters of regional jets, but they'll be hard put to avoid it - many
airlines want to make the switch. The airlines believe they can charge the
same for tickets but cut costs because regional jets aren't as expensive to
fly.

Denver is a place where United logically could increase regional jet
service. Under the bankruptcy court's steely eye, United and DIA are
proceeding with plans to build a regional jet facility. The threat of flight
cutbacks could be offset at DIA if regional jets help United survive and DIA
continues to grow. Indeed, without a major disruption, some analysts say
DIA's traffic could grow 18 percent by 2010, to more than 22.7 million
passengers a year.

DIA also could take advantage of United's plan to add international flights,
which tend to be more profitable. Denver last year opened its long-delayed
sixth runway, enabling the airfield to handle direct flights from Asia.

Denver shouldn't be complacent, however.

For one thing, DIA can't be sure new competition won't eventually emerge
from the south. Colorado Springs wants to land Southwest Airlines, which
today doesn't fly in Colorado. But so far, the economics of the airline
business have slowed airport growth in Colorado Springs. The city enjoyed a
surge in the 1990s when Western Pacific used its airport as a hub. Yet
Western Pacific couldn't make a go of it, finding that the market wasn't big
enough. That could change in the future, given the continued population
growth in the south metro area and around Colorado Springs.

While DIA's future is linked to United's, the interests of the two aren't
exactly the same. DIA ought to get its costs down and keep wooing other
airlines - including Southwest. And Denver must be flexible enough to handle
another blow if the airline industry hits more turbulence.


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