These are the worst of times for the airline industry - with so few good times in recent years that airlines and airports feel fortunate to be holding the line, industry officials say.
In this market, airlines and airports must be creative, they say.
High fuel prices, a weak economy and a sluggish travel market have reduced the industry to a shadow of what it was a dozen years ago, executives said.
To survive, airlines have cut flights, parked their least fuel-efficient aircraft and exited markets that weren't profitable.
Some smaller airports have been left holding the proverbial bag, without any commercial airline service, industry analysts say.
Among the hardest-hit medium-sized markets is Tulsa International Airport, which had 92 flights and 9,428 seats a day in 2001.
In 2012, Tulsa International has 64 flights a day, down 30 percent from 2001, and 5,914 seats a day, a 37 percent decrease.
"Airlines were operating with overcapacity before 9/11," said Alexis
Higgins, Tulsa deputy airports director of marketing. "And the industry
as a whole has been operating in the red for a long time. Airline profit
margins are 2 percent. They are operating on a shoestring."
Higgins said the recession pressured airlines to examine their flight schedules and determine which flights are most profitable.
"If they're not selling tickets at a high enough fare to make a profit,
they will take that plane and put it in another market," she said.
.
Downsizing trend
.
During the past decade, Tulsa had nonstop service to Albuquerque,
Austin, Kansas City, Oklahoma City, Ontario (Calif.), San Antonio and
San Diego - but no longer.
Airports across the country have experienced similar losses of service,
sometimes due to insufficient traffic, others because appropriately
sized aircraft for the market weren't available, industry executives
said.
Tulsa now offers nonstop flights to 16 cities - Atlanta, Chicago
(O'Hare only), Dallas (Love Field and DFW International), Denver,
Detroit, Houston (Hobby and Intercontinental), Los Angeles, Las Vegas,
Memphis, Miami, Minneapolis, Newark (N.J.), Phoenix, Salt Lake City, St.
Louis and Washington, D.C.
"We only have so many aircraft, and we're not growing this year or
probably next year," said Chris Mainz, spokesman for Southwest Airlines.
"We're looking for markets that are under-served and over-priced.
You're also looking at leisure and business demand, competition, how
many seats are in the market and how close it is to another Southwest
market."
Reduced airport service levels and shrinking airline fleets have
intensified competition between airports to keep or grow airline
service, airport executives said.
That has led to a proliferation of incentive plans offered to airlines
by some airports for new or expanded service, officials said.
"We're waiving fees - landing fees, terminal rents - for new
carriers to new markets," said Tulsa Airports Director Jeff Mulder.
Mulder said airport executives also speak regularly with their airline counterparts about service.
"It probably takes more than that, but it doesn't hurt," Mulder said.
"It took a couple of years talking to United (Airlines) to get them to
start the Tulsa-to-Washington Dulles (International Airport) service
last April."
.
Attracting airlines
.
A few years ago, airport staff and the Tulsa Airport Authority decided
they needed to be proactive about attracting airline service.
With its "Air Service Incentive Program," TAA announced it is willing to
sweeten the pot for airlines beginning new service in Tulsa.
"Tulsa International Airport seeks to increase competition, expand our
current service and diversify our carrier base by offering an incentive
program targeted at carriers that currently do not serve the Tulsa
market and incumbents looking to grow," TAA says in its introduction to
the program. "Our program is designed to offset the initial investment
required to enter into or expand a market by offering incentives and
marketing support for new routes and route expansion."
TAA's top five targeted nonstop markets are Kansas City, Seattle, San
Francisco, New York LaGuardia and JFK airports and Orlando, Fla.
Airlines not serving Tulsa that begin service with at least 11 weekly
departures can receive a range of incentive credits, depending on
frequencies:
- From 50 percent to 100 percent credit on all landing fees (now $2.91 per thousand pounds of gross landed weight).
- From 75 percent to 100 percent credit for per-use charges associated with the use of airport jet bridges and baggage claim areas.
- From 25 percent to 50 percent credit on terminal rental fees associated with ticket counters, office space, gate hold rooms and crew rooms.
Credits are accumulated for 12 months and applied after the first year of operation, TAA executives said.
In addition, airlines beginning new service are eligible for marketing incentives:
- $75,000 to the first carrier to initiate nonstop service to an East or West Coast hub airport;
- $10,000 to the first carrier to initiate nonstop service to an airport that is not an East or West Coast hub.
- $5,000 to an airline that adds frequency to a nonstop market already served from Tulsa.
"Adding new air service is always a challenge. It's like an extra-long
marathon," Higgins said. "We can only present the best possible business
case for our city so that when airlines are ready to expand their
network, they will think of Tulsa."
.
Keeping clients
.
In.some cases, it's easier to retain or attract airline service.
An airport's location, business or leisure traffic sometimes are sufficient to attract and retain airline service.
"In our market, we've been very fortunate in terms of service,
destinations and frequencies," said Scott Van Laningham, spokesman for
the Northwest Arkansas Regional Airport. "It's clearly driven by the
business market."
At the Northwest Arkansas airport in Bentonville - where Wal-Mart
Stores Inc. is based, suppliers Proctor & Gamble, Sara Lee and
Rubbermaid are nearby and corporate offices of J.B. Hunt Transport
Services Inc. and Tyson Foods Inc. are down the road - 64 percent of
the passenger traffic is business travelers, surveys have shown.
While the Northwest Arkansas market has a third less population than
Tulsa County's 603,403, its regional airport's 50 flights a day rival
Tulsa International's 64. Its five airlines providing service are one
more than Tulsa's four - American, Delta, Southwest and United.
Thanks to the state capital, Tinker Air Force Base, Boeing Co. and other
aerospace and energy companies, Oklahoma City also provides a robust
business passenger market at Will Rogers World Airport, said Marketing
Manager Karen Carney.
"We have been pretty fortunate the last couple of years to not only
garner air service but to see frequencies increase," Carney said. "A lot
of what's happening in Oklahoma City is due to the business climate."
Will Rogers has 69 flights a day, five more than Tulsa International, and 6,655 seats a day, 12.5 percent above Tulsa's 5,914.
Carney said since the fuel and economic crises of 2008, it is harder to keep and attract air service.
"Obviously, all the airlines have tightened their belts, and they are
limited in the aircraft they have," she said. "We have talked to
airlines who said, yes, this is a good market, but we are out of planes.
Airlines are controlling capacity more than they were prior to 2008."
By the numbers
Tulsa International Airport
- Daily flights: 64
- Daily seats: 5,914
Will Rogers World Airport, Oklahoma City
- Daily flights: 69
- Daily seats: 6,655
Northwest Arkansas Regional Airport, Bentonville
- Daily flights: 50
- Daily seats: 2,120
Airports, airlines can get connected, but make it quick
Airlines and airports are controlling expenses, so Airports Council
International, a professional services and development organization for
airport managers, sponsors JumpStart Air Service Development Program
each year at rotating sites.
The process is sort of like speed dating for airport and airline
executives, said Alexis Higgins, Tulsa deputy airports director of
marketing. The program pairs airport and airline executives in
one-on-one meetings for 20 minutes before airport executives move to
another meeting with a representative of another airline the airport
hopes to attract.
JumpStart will be held June 6-7 in Sacramento, Calif., as part of ACI's Marketing and Communications Conference.
"Typically, in a conference, you would meet with six or seven airlines
over two days," Higgins said. "Airlines on our wish list this year are
US Airways, Alaska Airlines, Vision Airlines, Spirit Airlines, United
Airlines, Delta Air Lines, American Airlines, Southwest Airlines and Sun
Country Airlines."
United, Delta, American and Southwest already serve Tulsa, but Higgins
said she wants to update their representatives on the progress of the
concourse renovation projects as well as make a pitch for expanded
service.
"It's very competitive," Higgins said. "We're competing with airports
across the nation that are similar in size to Tulsa. We're going to make
the best possible case we can."
Original Print Headline: Altitude adjustment
Source: http://www.tulsaworld.com
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