"Michigan travelers lose options as regional airport carriers reduce flights, raise fares"

Thursday, June 26, 2008

Michigan travelers lose options as regional airport carriers reduce flights,
raise fares
By Nathan Hurst
The Detroit (MI) News


As the nation's air carriers slash flights and remove planes from service to
reduce their sky-high jet fuel bills, travelers using the state's regional
airports are getting hit hard with service cuts and airfare increases. 

A number of small airports -- Toledo, Lansing, Flint and Grand Rapids among
them -- are seeing double-digit reductions in seat capacity, with airlines
such as Northwest either cutting flights, switching to smaller aircraft or
both. 

For the thousands of Metro area travelers who use regional airports, the
service cuts mean fewer flight choices, often smaller, more-crowded planes
and higher fares. 

The number of seats available flying out of Toledo is down 59 percent from
last year, for example, and in Lansing it's a 50 percent decline. Meanwhile,
fares are up 15 percent to 30 percent over last summer. 

The airlines' goal is simple: Reduce seat capacity and increase demand, so
it's easier to raise fares and still fill planes. 

With fuel bills more than doubling in the past year, the financially
struggling airline industry can no longer keep fares below cost, industry
experts said. 

The smaller regional jets and turboprop aircraft used to service smaller
airports are particularly difficult to operate at a profit, said Bill
Swelbar, an industry analyst and research engineer for the International
Center for Air Transportation at the Massachusetts Institute of Technology
in Cambridge, Mass. 

"These smaller planes are there to feed into hubs like Detroit," Swelbar
said. "And many times, there'll be lots of competition for customers from
small airports that keep fares from rising as fast as oil costs." 

At big-city hubs, in contrast, airlines can typically raise prices faster
when market conditions change. 

Travelers attracted to regional airports because of their shorter lines,
fewer security hassles and low parking rates are noticing the cutbacks. 

"You don't see anyone scrambling to get big jets out here anymore," said
Rich Patton, a sales executive from Fowlerville, who uses Lansing's Capital
City Airport a few times a month for business travel. "I'm willing to pay
more to avoid hassles in Detroit, but I'm worried about what service is
going to be left when the cuts are done." 

Regional airports have been forced to step up their marketing efforts to
keep business. Toledo's Express Airport is offering customers from Michigan
half-off parking, spokesman Kris Nichter said. 

"We want travelers to understand that we've got a great value down here for
Metro Detroit travelers," Nichter said. 

Charlotte Grindeland of Ann Arbor frequents Toledo's airport because she can
often find lower fares leaving there than from Detroit. But recent service
cuts -- including the departure of Continental and Sun Country airlines --
have her worried. 

"There's just less to choose from," she said. "It makes getting out on a
convenient flight more difficult to do." 

Fuel costs to blame

The popularity of small airports surged in recent decades as consumers
sought easy-to-use alternatives to crowded, big-city hubs. 

Now, record high fuel prices -- Northwest Airline Corp.'s bill this year is
expected to hit over $5 billion, up $1 billion -- are putting airlines in a
tough spot. 

They need to maintain service to small communities to feed passengers to
their mainline flights leaving hubs like Detroit Metropolitan Airport. 

But they also need to cut their fuel bills by reducing flights and plane
size, and set fares high enough to cover surging fuel costs without pricing
too many travelers out of the market. 

The airlines say as long as fuel prices stay high, fares will continue to
increase, which will lead to fewer fliers and even more capacity cuts. 

"Airfares, by necessity, must increase," Northwest CEO Doug Steenland said
this month. 

They need to rise another 15 percent to 20 percent just for airlines to
break even, Delta CEO Richard Anderson said. 

Seating capacity down

By October, seating capacity at the Lansing and Toledo airports will be down
both from eliminating flights and switching larger planes to smaller ones.
Smaller planes often mean smaller overhead bins and, in many cases, no
first-class service. 

Data provided by the Official Airline Guide, a company that tracks changes
in flight schedules for business travel planners and agents, compares the
number of available seats in October 2007 to those expected to be available
this October. 

Delta Air Lines Inc., poised to merge with Northwest later this year,
already cut one daily flight to its hub in Cincinnati from Lansing, while
United is downsizing aircraft flying between there and its hub at Chicago's
O'Hare International. 

At Toledo's Express Airport, Continental Airlines ended service connecting
to its Cleveland hub, along with Sun Country Airlines, which last week asked
the Minnesota government for $50 million in state aid to help it better
weather the unprecedented rise in fuel costs. 

Northwest will add capacity at both Lansing and Toledo, but the additions
won't make up for other carriers leaving. 

"In most instances, these small airports aren't going to wake up and see
themselves whited off the map," Swelbar said. 

"But passengers in secondary markets are having to realize that the comforts
of big jets is worth less than having service, period." 

NWA negotiates subsidy

Northwest is trying to negotiate a new Essential Air Service subsidy
contract with the federal government to increase the amount of money the
company receives to fly to the Upper Peninsula cities of Escanaba and Iron
Mountain to help cover fuel costs. 

Without an increase in the subsidy, which is given to carriers who service
low-volume rural airfields, Northwest would lose money each time a flight
took off, though the company said it's committed to serving the small towns.


There likely will be more cuts in regional airport service, as long as the
price of oil keeps rising, experts say. 

Passengers in small markets are frequently paying fares far below what it
costs for the service, noted Terry Trippler, a Minneapolis-based travel
expert and founder of TripplerTravel.com. 

"With a strong wind, you can practically spit from Lansing to Metro Airport,
and flying that route isn't necessarily a profitable venture," Trippler
said. 

"Until people start paying the true cost of flying, these cuts will
continue."

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