"Economic impact study tells more about Tucson airport travelers"

Friday, May 25, 2012

Economic impact study tells more about airport travelers
By David Hatfield
Inside Tucson (AZ) Business


Some more details are coming out about research for the economic impact
study done this spring on Tucson International Airport:

. Passenger traffic is equally balanced between visitors and residents.

. Among visitors coming to Tucson, 60 percent are leisure and 40 percent are
business travelers.

. Leisure travelers account for 53 percent of revenues in the region coming
in through airport visitors. They stay an average 5.6 days, spending $69.11
per day, totalling more than $214,000 annually.

. Business travelers account for 47 percent of revenues, staying an average
3.6 days, spending $144.84 per day, which totals more than $192,000 per
year.

As reported last month, the study found the airport has a total economic
impact on the region of $3.25 billion. By way of a comparison, a study using
the same methodology completed in February this year found the airport in
Reno, Nev., has a total economic impact of $2 billion on that region. A
report issued in January found that the Ted Stevens Anchorage International
Airport has a total economic impact of $1 billion on that region.

The University of Arizona MBA students and their instructors who did the
study said the impact of Tucson's airport is bolstered by a large number of
airport tenants who contribute jobs and money to the local economy.

The graduating MBAs who did the economic impact study for the Tucson Airport
Authority were Allen Sipe, who earned his degree in accounting; Catherin
Weigand, who earned her degree in corporate finance; Christopher Northey,
who earned his degree in marketing, and Greg Keller, who earned his degree
in entrepreneurship.

Frontier returns

As it said it would, Frontier Airlines has put out a schedule reinstating
flights between Tucson and Denver as of Nov. 15. In February, Frontier said
it would switch Tucson to a "seasonal destination" and as of May 17 service
was discontinued. The airline has published its schedule through Jan. 6.

When it returns in November, Southern Arizonans might be looking at a
different Frontier than they had known the past 11 years the airline served
Tucson International. Faced with operating losses, Republic Airways Holdings
said it is spinning off Frontier as a separate unit with an eye to possibly
selling it.

Among changes, Frontier has drastically cut service in other cities,
including Milwaukee where it had been the No. 2 busiest carrier.

Further, new management says they're interested in emulating an "ultra
low-fare" airline model that in the U.S. has been used successfully by
Allegiant and Spirit, both of which fly to Mesa Gateway Airport. Typically,
the ultra low-fare airlines sell seats at a very low price but tack on
charges for buying online, checking in, seat selection and baggage. Spirit
made news this month when it said that in November it will begin charging
$100 at the gate for carry-on bags. The move is being made to encourage
passengers to pay the $45 carry-on fee before they get to the gate.

One other thing of note about Frontier's return in November, the airline
will be using 99-passenger Embraer 190 jets instead of 138-seat Airbus A319s
it had been using. The larger planes have DirecTV, the smaller planes don't.

Airport traffic is up

April passenger traffic at Tucson International Airport was up by less than
600 in April, that's 0.2 percent, but it kept a three-month string going of
year-over-year increases in passengers at the airport. Through the first
four of 2012, that airport has served near 1.28 million passengers, a 2
percent increase from 2011.

Up the road at Phoenix Sky Harbor, which so far has reported passenger
statistics for the first three months of the year, March traffic was up 1.7
percent from a year ago more than 3.8 million. Year-to-day, passenger totals
are up 1.3 percent to 10.1 million.

American Airlines update

On May 11 American Airlines officials relented and said the airline would
consider merger scenarios as a way to exit Chapter 11 bankruptcy. Last
month, Tempe-based US Airways said it had tentative agreements for a merger
with American's three largest unions but so far there's been no official
offer.

This week it was reported unsecured creditors and other debt holders formed
ad hoc groups to evaluate potential merger scenarios.

Meanwhile testimony wraps up this week on American's request to get rid of
its labor agreements. U.S. Bankruptcy Judge Sean Lane has said he will rule
on the request by June 22.

American is Tucson International Airport's second busiest airline, last
month accounting for 23 percent of passenger traffic.

Fares are up

Airlines' strategy of cutting back capacity to drive up fares seems to be
working. Ticket prices for travel from June through August are 4.3 percent
from what they were last year, according data compiled for Bloomberg by
Airlines Reporting Corp. Year-to-date, airfares are up 3.1 percent.

With pent-up demand to travel, the report bodes well for the potential of
profitability among airlines.

The report was based on data from airlines, noting that neither United
Continental Holdings nor American Airlines has released data yet.

Lesson learned

If you haven't checked lately you might be surprised to learn that it's no
longer always necessary to pay for a round-trip airline ticket to get the
lowest fare. Remember, the old Saturday night stay requirement? If you
haven't purchased your summertime leisure travel tickets and find yourself
having trouble getting flights that fit your needs, try searching for
one-way tickets.

A search this week for tickets from Tucson to Milwaukee, Wis., on specific
days in January found that every airline flying between the two cities had
one-way tickets for sale at exactly half the price of a round-trip.
Considering two different airlines offered offered flights that met time
constraints, two one-way tickets served their purpose.

And don't even get me started on why a ticket from Milwaukee to Tucson is
cheaper than from Chicago to Tucson, even though the flight from Milwaukee
connects in Chicago with the very same flight that is coming to Tucson.

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