Discount airlines shy away from Minneapolis-St Paul International/Wold-Chamberlain Airport (KMSP), Minneapolis, Minnesota

Article by: WENDY LEE,  Star Tribune 

The Metropolitan Airport Commission's ongoing quest to get more airlines into MSP is running into a tough reality: Smaller airlines aren't eager for a fight with dominant carrier Delta Air Lines.

Every month or two, commission staffer Brian Peters makes his pitch to JetBlue Airways. The quest has been underway for five years, without success, even as JetBlue's network grew to more than 70 cities from Boston to Bogota.

Getting JetBlue, or fellow discount carrier Virgin America, into the Minneapolis-St. Paul International Airport could give travelers more options with lower fares. But Delta transports nearly 80 percent of passengers at the airport and could easily drop its own prices to make things tough for a newcomer.

Virgin and JetBlue "are not hankering to have an all-out fight with a legacy airline that is likely to protect its hub city like a bear with its cubs, especially their most lucrative business travelers," said Rick Seaney, CEO of travel website FareCompare.com.

Courting discounters is an important mission as airlines consolidate, reduce flights and hike fares to offset rising fuel costs. Average roundtrip airfares at MSP are $425, among the highest in the nation.

The airport scored a victory recently by luring ultra discounter Spirit Airlines to the Twin Cities. The Miramar, Fla.-based carrier will kick off service at the end of the month, offering three flights a day to Chicago's O'Hare Airport and a daily nonstop to Las Vegas.

But for prices to drop significantly, the airport needs to also land service from JetBlue and Virgin or get Southwest to add thousands of flights a year, analysts said. That's a tall order, especially considering Delta's colossal footprint at MSP.

"Delta is the 800-pound gorilla," said Vaughn Cordle, chief analyst for investment research firm AirlineForecasts. "Delta has the ability to kill any competitor because of their size and market share."

Delta says it is prepared for new rivals at MSP, its second-largest hub, and that its customers are willing to pay the higher prices that come with nonstop flights. Delta said it successfully competes with discount carriers elsewhere and that customers stick with Delta for its global network and amenities.

"In a hub city like Minneapolis ... when you've got a nonstop route, people are willing to pay for the convenience that comes with it," said spokesman Trebor Banstetter.

While Delta says it offers customers nonstops to many destinations and premium services like in-flight Wi-Fi, some fliers say they'd rather save money.

Anoka nurse Amanda Kelly said prices are so high that she's weighing whether she'll drive more than seven hours to board a flight out of Chicago because the airport there offers cheaper routes to Mexico.

"It's outrageous," Kelly said of MSP's steep fares. "It makes it too expensive to hardly go anywhere."

Seeking business input

 Greater MSP, the area's economic development authority, is surveying businesses on their air service needs.

That input is crucial because business travelers spend more on airfare because they often book last-minute. If they shift their dollars to a discount carrier, that will likely affect overall fares.

"The consumer has it within his or her power to control fares [more] than they ever realized. It's simply by the choices that they make," said Terry Trippler, owner of airline rules website ThePlaneRules.com.

St. Paul-based Ecolab, one of the world's largest manufacturers of cleaning agents, advises its employees to go for the lowest fares. The firm spent $18 million for flights in North America last year, up 7 percent from 2010.

"We do know where there is competition, the airfares are more favorable," said CEO Douglas Baker, who is also chairman of Greater MSP.

But with soaring fuel costs, airlines are weighing whether they can afford new routes. It can cost millions to add flights because it requires more planes and employees. Plus, airlines at MSP have to factor in Delta's ability to undercut their prices.

"Our formula is profitability first, growth second," said Stan Gadek, CEO of hometown discount air carrier Sun Country Airlines. "We would rather grow slowly and profitably, than grow for the sake of growth."

Sun Country, with just 14 planes, took a risk last year when it added flights to Costa Rica. It added two aircraft to its fleet, which required adding 12 pilots and 24 flight attendants for each plane. But just a week before Sun Country launched its flights, Delta started service to Costa Rica.

"It's frustrating, but we just have to factor that into our equation," Gadek said.

JetBlue has not ruled out launching service at MSP. It has already entered markets with a dominant carrier, including Dallas/Fort Worth and Newark Liberty. However, the only Delta hubs it serves are Salt Lake City and New York City. JetBlue exited Delta's largest hub in Atlanta in 2003 because it was uprofitable.

"We like MSP because it is the fourth-largest destination from Boston that we don't yet serve," a JetBlue spokesman said in an e-mail.

Virgin America said it does not have "immediate plans" to launch service here.

But there are signs of more competition from Southwest, which has been gradually adding flights since it arrived at MSP. But analysts say it will take years before it has a meaningful impact. Southwest flies nonstop to just four cities from Minneapolis: Chicago, Denver, Phoenix and St. Louis.

Meanwhile, Peters continues his quest. It took more than 20 years of effort for MSP to land Southwest, which launched service in 2009.

"The airlines hold all the cards," Peters said. "The airlines ultimately decide when the time is right for them to enter this market."

Source:   http://www.startribune.com