Flight Blog

 

Several things to mention today...they've been piling up all week! Our passenger growth streak continues:  September total passenger numbers were up 13%, compared to the same month last year. Up 5% year to year, and up 19 percent since December 31. Our air service consultant summed it up best: "Your numbers are running completely counter to the national trend."

 

Around the office we're getting a little edgy about over analyzing our good fortunes this year—don't want to jinx it or anything. So if you'd like to know some of the reasons why our passenger numbers are growing, please read a blog entry from a couple of months ago: Passenger Numbers Continue to Skyrocket.

 

Edgy or not, I do want to mention one thing about September's numbers: United’s numbers look better. The airline's numbers took a nose dive starting in June:

 

  • June -8%
  • July -15%
  • August -16%
  • September -8%

Yes, United is still down, but not in double digits.  United's health is a nagging concern. To get a feel for where the nag comes from, read this recent story from USA Today.

 

Heard the good news about Allegiant Air? The airline ended the third quarter, "with a $13.8 million profit that represented a nearly threefold gain over the $4.9 million surplus reported in the year-ago period." It's always nice to have good news to report about one of your airlines! BTW, Allegiant's passenger numbers in Springfield were up 140% in September. Yes, you read right: one-hundred and forty percent.

 

Got some not-so-good news to report for airline customers: fares continue to edge up. We've mentioned it several times on these pages, but it's worth repeating: fares have no where to go but up. For the past few months most of the airlines have sold seats below cost. As the economy starts to improve, and more people start flying, the airlines will have the traction they need to raise fares. The traction is made possible by the huge cuts airlines have made in the number of seats in the air.  Read more about it from Reuters.

 


FOLLOW-UP October 27, 2009 Several have asked about the total number of airport passengers in September...what was the actual number? Here it is: 65,342.


 

"Poorly."

 

How's that for a loaded word? Guess what? A "journalist" is flinging it as us.

 

According to Wednesday's Wall Street Journal, "The FAA this year has directed about $272 million in stimulus funds -- or roughly 25% of the $1.1 billion provided to the agency for airport work -- to projects that scored poorly on the agency's national priority rating system, which the FAA uses to grade potential projects." The paper attributes this information to a so-called "government watchdog group," called Subsidyscope.

 

As you've guessed by now, our airport has one of these allegedly poor projects—it's our new taxiway project.  Earlier this year the FAA gave us $14.8 million of federal stimulus money to build taxiway "whiskey."

 

The paper's story has a sidebar list and we're at the very top of it. The heading says:

 

Justified? Although projects with national priority ratings below 62 may have questionable economic merit, many airports are receiving federal stimulus funds for them.

 

Right below that text it shows shows our airport. Our priority rating is listed as 49 and it shows we received "$14.9 million."

 

What the paper fails to report is that while our project allegedly scored "poorly" on the FAA's  national priority rating system for stimilus projects, it did meet safety requirements. In other words, the safety concerns addressed by the project gave the project the boost it needed to garner federal stimulus money. Read more about the taxiway project here.


Oct 06 2009 The Truth is a Blunt Instrument BY sgf-adminTAGS Allegiant

 

For the past three days I’ve attended the annual Aviation Forecast Summit. It’s a good place to get a reality check. Fortunately, cruel reality is tempered by the lush, rolling hills of the Kentucky countryside––this year’s summit is in Lexington.

 

The summit is a meeting of minds from airlines, airports and airplane makers. And, oh yes, an aviation analyst or two. Here are some of the thoughts, observations and predictions I've heard at the summit that you might find interesting (in no particular order):

 

  • The business slide, experienced by most airlines, is starting to slow, if not reverse itself. This is good news for the airlines, bad news for you. Why? Because fares have no where to go but up. That’s because the recession forced airlines to cut back on the number of seats in the air. As the recession improves, and more people start to fly, the supply of seats will be small. That will give airlines “the traction” they need to raise fares.
  • What is an “environmentally sustainable alternative?”
  • 25% of all domestic U.S. flights “are driven directly, or indirectly, by international travel.”
  • In the near future you may not book fare on a particular airline––you’ll book fare with an “alliance”. See: oneworld, SkyTeam, and the Star Alliance. These alliances are groups of airlines that share resources (to you and me this means "code share"). The thinking goes like this: the individual airlines will become anonymous, “virtual airlines.” Only the alliances will matter. Airlines that are not part of an alliance will suffer.
  • Most airlines are currently selling seats below cost.
  • Kevin Knight, senior vice president of planning, with United Airlines, says when the airline started charging for checked bags, it experienced little customer pushback. Bottom line message: bags fees are here to stay.

Oct 01 2009 "Airline Recovery?" BY sgf-adminTAGS Airlines

 

The business press is abuzz the past couple of weeks with glowing predections that the airline slump is ending. Our advice: don't pay a lot of attention to it. The biz press (and its associated analyst) have a notoriously poor understanding of the aviation industry. But I digress...

 

Yesterday American Express Business Travel made this prediction:  "...pent up trip demand coupled with supply base changes are likely to cause rates to slightly increase in most travel categories by the end of 2010. Business class airfares in particular are expected to increase in line with reduced capacity and on-going business demand for international travel."

 

Translation: fares will go up next year.  That's a safe bet.  From the airline perspective, fares have been too low this year; their bleeding red ink.  We've seen several reports the past couple of weeks about the airlines raising their liquidity. They need the cash because they're bleeding it so fast. So, bottom line, fares really have no where to go but up.


 

Jason says:

 

"With all the cuts American Airlines have made over the years in STL, I would like to know what you think the issue(s) is. And what the airport could do to improve and possibly attract another airline to have a large presence located there?"

 

The most recent American cuts in St. Louis are due to the the recession and the resulting decline in airline revenue. But to really understand what's going on we need some historical perspective...

 

Remember the airline TWA? Before the American buy out of TWA, in April 2001, St. Louis was a major hub airport. It was one of three TWA hubs: Atlanta, New York Kennedy and St. Louis.

 

When American bought TWA St. Louis lost it’s major hub status. From our point-of-view, at least, that status transferred to Dallas/Ft. Worth International (DFW). Before 2001, TWA flew hundreds of Springfield customers every day to St. Louis to make connections. Now those Springfield customers fly American to DFW to make connections. Bottom line: American uses DFW as a major hub rather than St. Louis. That's a simple way of putting it, but from our point-of-view it's accurate. The buy out of TWA brought on a long and slow decline of air service in St. Louis that continues to this day.

 

You ask what this airport can do to regain St. Louis service? Very little. The connections most Springfield customers need to make are no longer available in St. Louis. They're to be found at DFW or elsewhere. In the final analysis, there simply isn't enough customer demand for an airline to currently justify a Springfield to St. Louis flight.

 

If you'd like to really dive into a business anaylis of what's going with American and St. Louis, check this out.