Saturday, November 01, 2014

Southwest says so long, Denver • City researches ways to replace lost flights

Amarillo passengers booking nonstop flights to Denver now have only one airline choice instead of two.

Southwest Airlines ran its last direct flight to Denver on Saturday, narrowing options for travelers even as the city of Amarillo looks for ways to increase air service and air carriers grow more focused on the bottom line.

“Airlines nowadays are not looking to be the biggest market share at an airport but really (at) what routes make the most money,” Amarillo Aviation Director Sara Freese said.

Record airfares, packed planes and lower fuel costs helped American Airlines earn a record $942 million in the June-through-September third quarter, with Southwest posting a 27 percent increase in net income to $329 million in the same period, according to an Oct. 23 Associated Press report.

“From an airport’s perspective, we need to fine-tune how we do business and really look at becoming lean with the services we offer, in terms of efficiency,” Freese said.

“When our costs go down, that goes into the rate base for the airlines, so their costs go down.”

Amarillo allocated about $30,000 for an air service development study by Trillion Aviation, an Austin aviation consulting firm, Freese said.

Half the cost will be paid from airport revenues and the other half will be paid by Amarillo Economic Development Corp.

“It’s important we make the best business case (to airlines) showing a demand for their routes,” she said.

More than 279,743 passengers departed on flights from Rick Husband Amarillo International Airport through September, down 2 percent year over year, according to airport data.

Southwest boardings, through September, dropped nearly 7 percent, to almost 150,640.

But, in that time, American Eagle boardings picked up 3 percent to nearly 80,050, and United Airlines boardings rose 4 percent to about 46,170.

The October expiration of the Wright Amendment freed Southwest to fly nonstop anywhere in the United States, ending its need to stop in Amarillo en route to Denver and leading the airline to whack those flights on Saturday.

Golden, Colo., businessman Fritz Krembs booked a United flight from Denver for an upcoming trip to Amarillo, a trip he had made a few times a year for seven years on Southwest.

“I’ll be heading down there on somebody else and we’ll see how it goes,” said Krembs, an engineer/geologist for Trihydro Corp. “It looks like most people (in Colorado) will be either continuing to use Southwest and routing through Dallas or going another way. But we’ll still be heading down there, one way or the other.”

Krembs estimated three hours of travel time, including parking and security, for a direct flight from Denver, as opposed to seven hours for a flight through Dallas.

The elimination of two Southwest direct hops to Denver, plus one flight to Dallas cut in June, meant a loss of almost 400 daily outgoing Southwest seats, Freese said.

Yet the loss was partially offset by about 100 daily Amarillo-to-Dallas seats, when American Eagle began using larger jets in June, Freese said.

Airlines’ fleet upsizing can have both positive and negative consequences for smaller airports, said Dan Benzon, president of the city’s consultant, Trillion Aviation.

“There is a threat, if you will, to smaller markets, and that is that some of these 50-seat-type regional jets are going away,” Benzon said. “But what you’ll see in airports such as Amarillo is you may lose some of the 50-seat jets, but they replace those, in most cases, with 76-seaters.

“So, in some cases you might have less frequency (of flights) but bigger planes.”

Trillion’s study, which should be completed this month, digs into Department of Transportation data to see how many passengers are on each Amarillo flight and “how much the payments were for those flights,” Benzon said.

“We’re taking a look basically at the health of each one of those flights — which ones are strong and which ones are marginal, from an airline perspective,” he said.

Trillion gathered input from Amarillo company leaders and Amarillo Economic Development Corp., about business growth and needs, Benzon said.

“We’ve seen some smaller communities get stronger with air service, based on what the needs are,” he said, using North Dakota’s experience with increased oil and gas activity as an example.

AEDC helped fund the study because of the airport’s importance to the city and area economy, AEDC President and CEO Buzz David said. Rick Husband airport generates an estimated $333 million in regional economic activity, according to a 2011 Texas
Department of Transportation report, the most recent available.

“There won’t be a (Southwest) flight to Denver. It looks like there’s going to be one flight a day to Las Vegas, at least for now, but who knows how long that will last?” David said. “It’s important to the traveling business community to have an understanding of what our market looks like.

“The biggest thing that concerns us is, if we don’t fill the seats, then we’re going to lose more flights.”

The study also will look at “leakage,” passengers Amarillo’s airport loses to Lubbock, Albuquerque or Oklahoma City, Benzon said.

Trillion will use credit card and other data to pinpoint tickets purchased by ZIP code and passenger destinations.

That information could be helpful in making a case that demand exists for other routes, he said.

Few flights departing Amarillo land anywhere but Dallas, although United still ferries passengers direct to Houston and Denver, and Southwest has kept a daily nonstop to Las Vegas on its schedule.

United will reduce from three to two its number of flights to Houston on Wednesday and Thursday in January.

But the airline is making such reductions networkwide in January because travel dips seasonally, Freese said, adding that she expects the flights to return when travel traditionally picks up.

The research also will discuss incentives that could help attract airlines to Amarillo.

The airport itself could waive landing fees for as long as two years for a particular route, a type of incentive the Federal Aviation Administration allows airports to offer, Benzon said.

The FAA bars airports from offering subsidies to airlines, but a community can do so, generally through its economic development entity, Benzon said.

“You’re actually paying that airline to make sure they have a certain amount of profitability, in other words, buying a certain amount of seats on that plane,” he said. “That is becoming much more common, but we (Trillion) are not big advocates of it because in most cases ... as soon as the money runs out the service goes away.”

AEDC spent about $3.5 million in subsidy payments to keep American jet service in Amarillo over a four-year period in the 1990s, but local officials opted to let the controversial subsidies lapse.

“I think we’re done with that strategy,” David said.

“I think the smart way to look at providing any type of support for air service, whether it’s at the community level or the airport level, is to look for ways to provide solutions for the airlines that are long-term for their operating costs.”


- Source:  http://amarillo.com

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