"Index proves that passengers pay more for fares in Colorado Springs, Colo."

Sunday, February 6, 2005

Index proves that passengers pay more for fares in Colorado Springs, Colo.
By Wayne Heilman 
The Colorado Springs (CO) Gazette


The cost of flying out of the Colorado Springs Airport has risen faster in
the past nine years than all but 11 of the nation's 85 largest airline
markets. 

During the same time, the cost of flying out of Denver International Airport
has declined more than all but seven of the markets. 

The numbers cover the time between the third quarter of 1995 and the third
quarter of 2004. 

Springs residents long have thought airfares were high at the Springs
airport -- now there is evidence to support it. 

The Air Travel Price Index, developed by the U.S. Bureau of Transportation
Statistics, is a quarterly measure of airfares. It calculates indexes for
each of the 85 markets using 100 as a base for fare levels in the first
quarter of 1995. The index compares an airport with itself during time, not
with other airports. 

The travel price index is based on data the bureau collects on fares paid
for an entire trip on a U.S. airline. The bureau unveiled the index in
March, with data going back to 1995. 

Denver fares are dropping while Springs fares are not, said Steve Anderson,
member of a three-person team that prepares the index, because six low-fare
airlines serve DIA, while only one -- America West Airlines -- serves
Colorado Springs. And that service is limited. 

"Fares in the Springs stay high because the airlines can keep them there"
with little low-fare competition to force them lower, Anderson said. "The
low-fare carriers will continue to exert downward pressure on fares in
Denver" as they continue to expand, he said. 

The index for the Springs in July through September rose slightly from the
previous quarter but was down from a year earlier. 

Compared with the same period nine years ago, the local index is up 16.9
percent, earning it the 12th highest ranking among the 85 markets. 

"It backs up what we have been saying," said Mark Earle, aviation director
of the Springs airport. "That is why we are focusing on pricing. We are
focusing on creating low-fare competition either through our existing
carriers or by attracting a low-fare airline." That has not happened so far.


Meanwhile, the index for DIA was down in the July-through-September quarter
compared with the previous quarter and with a year earlier. The Denver index
was down 7.7 percent from the third quarter of 1995, ranking 8th lowest in
fare increases among the 85 markets. 

Chuck Cannon, a DIA spokesman, said carriers might not be able to sustain
fare levels because most airlines are hemorrhaging red ink. 

"They are cutting fares at the same time they are losing money, yet the
planes are full. That says that fares probably are too low," Cannon said. 

Nationally, the average for all 85 markets fell sharply during the
July-through-September quarter from the previous quarter and was down 2.9
percent from a year earlier. Compared with the same quarter nine years ago,
the national index is up 2.1 percent. 

The index can't be used to make direct comparisons between cities because it
uses the same base (100 in 1995) for all cities, even though fares were at
different levels. 

Such city-to-city comparisons can be made from a different quarterly report
on domestic fares from the U.S. Transportation Department. That report
doesn't always include the Springs because it measures fares between the
nation's top 1,000 destinations. 

The most recent report by the transportation department that included both
cities was for mid-2003. In that report, the average fare at DIA of $180 was
$5 less than the Springs. Denver fares had not been lower in any of the
previous 14 reports since 1995 that listed both cities. 

That is a similar conclusion to a study of air fares in the Springs and
Denver paid for last year by the Springs airport and done by Campbell-Hill
Aviation Group, an Alexandria, Va.-based consulting firm. That study found
Denver fares dropped below local fares in mid-2002. 

The air travel price index for the Springs, DIA and all 85 markets peaked in
the first quarter of 2001, just as the recession was beginning. 

The U.S. index is down 12.4 percent since then, with a similar drop in the
Springs index and a 23.9 percent drop for the DIA index. 

After the 2001 terrorist attacks, airlines began cutting fares and service
to lure passengers back onto planes and reduce losses. Some airlines did
that by flying smaller aircraft more frequently to some cities, including
Colorado Springs. 

That switch, to regional jets that carry 50-70 passengers from mid-sized
planes that carry 124-150 passengers, gave airlines fewer seats to sell and
less incentive to discount fares, said Alan Sbarra of Unisys R2A
Transportation Management Consultants. 

"They really can't afford to offer low fares on regional jets because they
are more expensive to operate" than larger jets, Sbarra said. "They are
really designed for business travelers, who want nonstop service and are
willing to pay more for it." 

And don't expect to see a low-fare carrier in the Springs anytime soon,
Sbarra said. 

The Colorado Springs market is too small and too close to Denver to attract
low-fare carriers that would bring down local fares, he said. 

"Colorado Springs is just close enough to Denver that it is not worth it for
the airline to serve both cities because passengers will drive that
distance," Sbarra said. 

The only major, low-fare carrier that doesn't serve either Colorado Springs
or Denver, Dallas-based Southwest Airlines, is unlikely to expand in the
state soon, said Brian Streeval of Boyd Group, an Evergreen-based consulting
firm. 

Southwest has been focusing on lucrative markets in the eastern United
States. And Southwest officials have said the Springs is not "high on the
list" of cities it's studying. 

"This (fare) data tell you why the airlines are losing money, and thus are
reluctant to expand," Earle said. "Fares haven't gone up much at all in nine
years, because of competition, while costs have significantly increased
during that same time."

On the Web:

Bureau of Transportation Statistics - Air Travel Price Index
http://www.bts.gov/xml/atpi/src/index.xml


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