Thursday, November 10, 2011

Airline analyst: Hampton Roads airports strong players in weakened industry

NORFOLK — Airline passengers — already stung by drastic changes in the industry — should expect more of the same (or worse) in coming years.

That was the not-so-happy picture painted Thursday morning by Michael Boyd, a long-time airline industry consultant and commentator who spoke to about 50 people gathered at the Norfolk Airport Hilton for a seminar sponsored by the Hampton Roads Norfolk Airport Task Force.

But Boyd's statements weren't all doom and gloom. He had high remarks regarding the Newport News-Williamsburg and Norfolk international airports as well.

Boyd indicated the airline industry has already reached a plateau and is expected to further decline in coming years as carrier consolidation into a handful of global conglomerates continues and fuel costs continue to pose a persistent challenge. Passengers can expect fewer available flights, less competition and higher fares going forward. At one point, Boyd even compared the industry to the ill-fated Titanic.

"The physical realities have changed," Boyd said, while standing in front of a PowerPoint slide depicting the sinking ship. "No amount of voodoo can change that."

Of the customer experience, Boyd predicted, in three years, it will be "your worst nightmare — just like it is today.

"Going through an airport is like a minimum security prison — you better not make a mistake or you will be punished," he continued.

Even with fewer flights on the horizon, Boyd said passengers shouldn't expect reliability to increase due to an antiquated air traffic control system. On average, only about 60 percent of flights currently arrive on time at their destinations, he said.

But in regards to Norfolk International, Boyd said there is "an enormous amount of quality service here" and he projected the south side airport could pick up as many as 50,000 passengers when AirTran ceases its Newport News operation as part of a merger with Southwest Airlines.

"Newport News still has good service to New York — it's called Norfolk," he said. "Norfolk will be the dominant carrier in the region, the airlines have made the decision."

Despite that, Boyd also suggested Newport News "is not going away" and Allegiant Air's decision to start Peninsula service was indicative of "a white glove financial audit of the airport."

"If you have Allegiant, it means you have one of the most efficient airports in America," he said.

Another problem for Newport News may be the sale of Frontier Airlines that currently operates popular non-stop, seasonal flights to Denver. Boyd didn't offer specifics, but he suggested purchase proposals currently being floated are less than realistic.

"I've seen plans that contained some fruitcake stuff," he said. "But they're coming out of the woodwork here."

After the meeting, Ken Spirito, executive director of the Newport News-Williamsburg International Airport, said much of Boyd's presentation was not a surprise and the Peninsula Airport Commission understands the need to find a new carrier to serve the New York and Boston markets.

"We're certainly going to be a lot better off moving forward with airlines like Allegiant, and Frontier, and Delta/US Air in our market when AirTran leaves in March," Spirito said. "We know New York and Boston are top markets in both the Newport News area and the south side and having the potential loss of those markets when AirTran leaves certainly is a priority of the Peninsula Airport Commission to find an airline that will effectively replace that service. Connectivity through the hubs — Atlanta, Charlotte, Philadelphia, Denver — will continue to grow as there are fewer options to connect."

Wayne Shank, executive director of Norfolk International Airport, said most of what is going on in the airline industry is out of the control of airport operators who have no say regarding carrier consolidations, departure volume, seating capacity, ticket prices or air traffic control policies.

"Airport operators in this environment have their hands full," Shank said. Those who complain, "need to be realistic in their expectations.

"We (Norfolk's airport) competes with Newport News, but the region in general has benefited from having two airports in the area… because when you compete, the end product is great for everybody."

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