"Indiana airport fights trends"

Sunday, June 22, 2008

Airport fights trends
Traffic up locally; time to tell effects of airline capacity cuts
By Kimberly Peterson
The Fort Wayne (IN) Journal Gazette


Despite the airline industry's financial woes, business is booming Fort
Wayne International Airport.

Between January and May, the number of passengers boarding at the local
airport was up about 11 percent compared with the same period in 2007.
Passenger boarding has increased compared with a year earlier for 15
consecutive months, airport spokeswoman Kristina Holmes said.

But the sharp rise in airline fuel costs could change that picture this
fall. American Airlines last month announced plans to reduce its domestic
flight capacity by 11 percent to 12 percent in the fourth quarter, after the
peak summer season is over. United Airlines announced June 4 that it will
take 70 more jets out of service and cut domestic capacity by 17 percent to
18 percent in 2008-09. The day after that, Continental Airlines said it will
shed 3,000 jobs and reduce capacity by 11 percent this fall. And Northwest
Airlines said Tuesday it will reduce capacity by 8.5 percent to 9.5 percent
during the fourth quarter. All of the airlines operate at Fort Wayne
International Airport using regional carriers.

Holmes said the airport has no indication that any of the announced service
cuts will affect flights locally.

But Dave Young, vice president of air services for the Greater Fort Wayne
Chamber of Commerce, said service is likely to change as capacity cuts are
implemented.

There have been several changes to flights at the airport within the past
several months. Allegiant Air, a Las Vegas-based low-fare airline, came to
the airport with great fanfare in February 2007. But after announcing that
service to Phoenix-Mesa, Ariz., would not resume as scheduled July 1,
Allegiant Air now flies to just two destinations from Fort Wayne, down from
a peak of five.

Sara Lyon, 25, flew out of Fort Wayne on Wednesday morning on her way to
Calgary, Alberta. The Fort Wayne resident said flying out of the local
airport - instead of driving to Indianapolis or Chicago - saved her money on
gasoline and parking costs. And by buying her ticket online, Lyon said she
was confident she'd gotten the lowest price available.

Passengers like Lyon have led to a steady increase in airport traffic for
almost a year and half.

In addition to the 11 percent increase for the first five months of 2008,
Young said passenger traffic increased 8.6 percent in 2007 compared with
2006.

"Things have continued on a positive trend," Young said. "How long the
increase will continue will be hard to tell, but it will slow down."

Such growth has not been the industry standard, said Eileen Denne
spokeswoman for the Airports Council International-North America trade
group. Nationally, passenger traffic increased 3.5 percent in 2007 compared
with 2006. The group does not have national data yet for the first five
months of this year.

At the South Bend Regional Airport, passenger traffic was down 2 percent
between January and May compared with the same period in 2007, said Michael
Guljas, director of administration and finance.

One tool Fort Wayne International has used to increase business is the
Traffic and Revenue Improvement Plan, also called the TRIP initiative, which
began in July 2006.

The TRIP initiative differs from incentives offered in the past because
airlines must first show service increases, Holmes said.

"It's more of a rebate program," she said.

Airlines have three ways to qualify for TRIP incentives.

A new carrier coming to Fort Wayne is eligible to have its rent, security
charges and airport landing fees waived during its first two years of
service. Another way an airline can qualify for incentives is to add a
non-stop flight to a new destination, which waives an airline's landing fees
for the new route for one year. The third incentive offers a rebate to
carriers that increase the number of passengers they serve compared with the
year before. Airlines that increase the number of passengers flying out of
Fort Wayne by 5 percent or more in a quarter will receive a rebate of $2 per
additional passenger plus a percentage of the airline's rent and security
costs refunded.

During the first two years of the TRIP initiative, four of the six airlines
serving the airport qualified for one of the incentives.

Both Holmes and Young said the first two years of the TRIP initiative were a
success. Holmes said the Airport Authority expects to renew the program with
only minor changes before the original TRIP initiative expires at the end of
the month.


"Enplanements are up, and we've had very positive feedback from the
airlines," Holmes said. "Air service development is something that requires
a multipronged approach, and (the TRIP initiative) is one of the tools in
the tool bag."

Small regional airports need all the tools they can get to retain air
service, said Jim Sirhall, president of Airport Development Group Inc., a
Denver-based airport consulting company.

One problem for the regional airports is that regional jets were not
designed with fuel efficiency in mind.

"The airlines are having trouble justifying the cost of service to the
small, regional airports," Sirhall said.

To maintain service as the airlines downsize, Sirhall said airports must get
creative and offer incentive programs or increase advertising - any steps
that can increase passenger traffic for the airlines.

"Those that don't do anything could lose their service. Those who are more
aggressive will hopefully keep their service," Sirhall said.

Holmes said the Fort Wayne airport is using various strategies to maintain
air service. In addition to the TRIP initiative, Holmes said airport
personnel maintain regular communication with the airlines so that they are
aware of any difficulties. This week, Holmes said, airport officials will
attend a JumpStart conference in Pittsburgh, where they will meet with
airline officials about service to Fort Wayne.

"We're doing everything we can," Holmes said.

But some of the burden of maintaining air service rests with the community
continuing to use the airport.

"The use-it-or-lose-it principle of air service is in play more than ever as
airlines evaluate which markets to serve," Holmes said. "The community will
have to support local air service to maintain it."

Sirhall said load factors, or how full airplanes are, will be a key factor
airlines will take into account when deciding where to cut service. Airlines
will also want markets where they can raise fares without losing customers.

Those two factors bode well for Fort Wayne International, Young said.

"We've been fortunate that the passenger traffic and fares at the Fort Wayne
airport are in line with what the airlines expect," Young said. "We've been
trying to keep the Fort Wayne story in front of the airlines so they
understand what the opportunities are."

 Do you have an opinion about this story?
Share it with other readers in our CAA Discussion Forums

http://www.californiaaviation.org/dcfp/dcboard.php


*****************************************