Flight Blog

Sep 11 2009 Delta Shopping? BY adminTAGS Delta


News this morning that Delta Airlines "is in talks to invest in struggling Japan Airlines Corp and become its top shareholder..." Read the rest of the story from Reuters.

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No items in seat back pocket? Say what? Yes, it's true. New York Times columinst Joe Sharkey provides an entertaining read on his encounter with a Skywest flight attendant:


...when I flew Skywest Airlines from Denver to Tucson, a grouchy flight attendant announced before takeoff that “according to F.A.A. safety regulations” passengers could place nothing at all in the seat-back pockets. Not a newspaper, a book or a pair of reading glasses.


First we've heard of this. And since Skywest flies for United here in Springfield, we thought we'd better pass it on.

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Aaron has a question about our surging passenger numbers:


“As we all know everyone loves cheap fares, but it seems like this can be said even more so for Springfield, MO. Like you said, cheap fares are not just found in Southwest Missouri, but across the country. My question is since everyone else is getting these cheap fares why aren’t other airports seeing their passenger numbers soar like ours? Also, why doesn’t an airline like Southwest, AirTran, etc… take notice of the Springfield Branson National Airports surging passenger numbers during these cheap fare sales and try out the market? It only makes sense seeing our numbers. I’m sure we wouldn’t lose any more business to STL, KC, and Tulsa if that were to happen making our passenger numbers REALLY soar.”


These are really good questions. We’ve thought a lot about the first one: “why aren’t other airports seeing their passenger numbers soar like ours?”


Let’s begin with a caveat: trying to compare one air market to another is like comparing apples to oranges. Example: people chew on us about the fact that Fayetteville, AR has (or did have until the recession) daily non-stop service to Miami and Los Angeles. People say, “Fayetteville is smaller than we are and they have direct service, therefore the Springfield airport is screwing up…”


This point-of-view is understandable, but detached from reality. First of all, the population of the Fayetteville metro area is bigger than Springfield’s. That means more people to feed the airlines. Secondly, the Fayetteville metro is home to several huge corporate headquarters: Wal-Mart, Tyson and JB Hunt. These companies, and Wal-Mart in particular, generate thousands of business trips every year. If Wal-Mart went away tomorrow, Fayetteville’s daily non-stop service to the coast would disappear in a heart beat.


Ok. I tell you all that to make the point that comparing one market to another is pretty tricky. Every market is different. That being said, here are some thoughts about why our passenger numbers are soaring, while other airports aren’t.   ; )


  • The presence of Allegiant Air in the market has made a difference. It added service to Los Angeles in early May. It’s total May passenger numbers were up 56 percent in Springfield compared to the same month last year. Its low fares attract customers that normally wouldn’t consider flying.
  • The generally lower fares offered by all the airlines has made a difference, but here’s a key point: the lower fares probably have a bigger impact in smaller air markets (like ours). Customers who live in small markets are used to dealing with higher fares. So when fares go down they jump. Customers who live in big markets (like Kansas City) are probably not as price sensitive. Bottom line: lower fares have a bigger customer impact in small markets like Springfield.
  • Compared to other regional economies, our economy is in pretty good shape. That’s not to say that the recession hasn’t hurt us, but we are better off than many other areas.

Let’s move on to the second question:


"Why doesn’t an Airline like Southwest, AirTran, etc… take notice of the Springfield Branson National Airport’s surging passenger numbers during these cheap fare sales and try out the market? It only makes sense seeing our numbers.”


It makes sense to you Aaron, but it doesn’t make business sense to Southwest or AirTran. Why? This market doesn’t have a big enough population. Or, to put it another way, we don’t have enough people to fill the number of seats those airlines would want to sell.


Let’s begin with AirTran. That airline won’t fly into a market this small unless it’s paid to do so. That’s what’s happening at the airport in Branson—the airport is paying the airline to provide the service. AirTran has a similar arrangement in Wichita. As for Southwest, it’s a similar story, but with some key differences:


  • Airports can’t buy Southwest service. The airline doesn’t run its business that way.
  • The Southwest business model generally dictates that the airline won’t enter a market that has less than a million people living in the metropolitan area. That’s the customer base Southwest needs to do business. The Springfield metro population is approximately 420,000. We’re more than half-a-million people short!

Finally, whenever someone brings up the subject of Southwest I feel obliged to provide them with a couple of reality checks. Here they are, sorry!


Assuming that Southwest did decide to fly here, what market do you suppose it would fly to? It would almost certainly be its home base, Dallas Love Field. Have you ever tried to make a connection out of Love Field? It wouldn’t be the panacea that many people imagine.


And finally, Southwest isn’t as cheap as everyone thinks. According to well known aviation analyst Darryl Jenkins, of Embry Riddle University, Southwest is the lowest fare carrier in less than one-third of its markets. He says, “The illusion of low fare is better than a low fare and Southwest has the highest percentage of high fares of any airline.” If you’re skeptical about this, do a market by market comparison of fares and you’ll discover what those of us in the aviation industry already know: the mystique of Southwest has more to do with perception than low fares.

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Aug 24 2009 The Fire Wall BY adminTAGS How the Airport Works


Over the weekend the Springfield paper printed a letter written by a citizen who is concerned about the airport’s new fire station. Rather than responding in the paper (and in the process helping to fan the flames and stir its pot further), let us offer a cool, objective response. Civil discourse, if you will.


The writer objects to the fact that the airport just built a new fire station at a cost of $4.5 million. He thinks the “pension commission should take note that there might be extra funds at the airport available for the pension.” Before addressing his concerns, let’s provide some sorely needed perspective and background.


The City of Springfield runs a retirement fund for Springfield firefighters and police officers. The fund is under funded. As a result, the city is scrambling to bring funding up to snuff. As part of the process to identify a solution, a “pension commission” was formed. Its mission: identify possible solutions to pension funding. Numerous remedies have been discussed, including cuts in city services, and the addition of new taxes. The entire issue has a lot of people on edge. Understandably so—especially with talk of new taxes during an economic downturn.


It’s against this background that the letter writer brings up the new airport fire station. His point simply put: should the fire house construction money have been used to fund the retirement pension? There’s a problem with this idea: it’s illegal, under federal law, for the city to dip into airport funds.


Here’s how it works—think of it as a financial fire wall between city finances and airport finances. It prevents the city from using airport funds. Why would the feds want a fire wall? Because it views airports as national resources whose financial interest must be protected. Or, to put it bluntly, the feds don’t want cities raiding airport coffers. Airports generate revenue (a tempting target). They are also very expensive to keep up and their infrastructure is worth millions of dollars. They have to maintain large reserve funds to deal with unexpected emergencies. In short, if a city raids airport funding, it could jeopardize the airport and the national air system. That’s why the fire wall is there.


The fire wall is one reason why the city can’t use airport funds, but there’s a second reason: the airport does not receive money from the city. The airport has to pay for itself. Here’s how it works…


The airport (meaning the land and facilities) is owned by the City of Springfield. The airport is managed by an independent 11-member administrative board. When I say “independent,” here’s what I mean: acting as an independent body, the board plans, develops, operates and maintains existing and future airport properties, and the overall management of employees. Airport Board members are appointed by the city manager, with confirmation made by the city council. The board operates the airport as a self-supporting enterprise function.


Enterprise funds are used widely across the country—here’s how the Minnesota Department of Administration defines it: A type of proprietary fund that is established to account for operations financed and operated in a manner similar to private business enterprises (i.e. water, gas, and electric utilities; parking garages; transit systems; or airports). For enterprise funds, the governing body intends that the costs of providing goods and services (i.e. operating expenses, including depreciation), to the general public on a continuing basis should be financed or recovered primarily through user charges.


Here’s how it works at our airport: daily operations are funded by money generated from leases and contracts with the airlines and other businesses using airport facilities. Money from the Federal Aviation Administration (FAA) is received on a matching basis for the funding of qualifying improvement projects. Federal funding is mainly generated by federal taxes on airline tickets, aviation fuel and cargo shipments.


Here’s the bottom line: no money comes to the airport from the City of Springfield. In fact, the airport pays the city for the following services: human resources, purchasing, finance and law. With the exception of these city services, which the airport pays for, all money generated by the airport must stay at the airport. It would be illegal, under federal law, to send the money elsewhere. Hope that all makes sense. We understand some people may not like it—we’re just trying to explain how it works. Questions? Please ask!


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There’s more great new to report about the airport’s passenger numbers: they’re up, again. We finished the month of July with 84,079 total passengers. That’s up 13 percent from the same month last year.


In June our numbers were up ten percent. In May they were up 17 percent.


This growth may not seem significant, but it is. Why? Before May we had 15 consecutive months of negative or flat numbers. It’s even more significant because we’re currently the only airport in the region experiencing growth. Example: the Tulsa airport’s July numbers were down 11 percent. Recession or no, for some reason our numbers are up and everyone else’s are down.


Why are we growing? This is starting to sound like a broken record, but here are some of the reasons:


  • The fare sales the airlines have had since the early spring. More people are flying from Springfield because the airlines have generally lowered fares in an attempt to keep the planes full. Here’s a key point: the lower fare phenomena is happening nation wide—it’s not limited to just our air market. If you think about this moment, it’s easy to conclude that passenger numbers should be up at our competing airports. But they’re not. Why? Well, read on…
  • Between January and May 6 the Springfield media market was saturated with advertising and news stories about the new terminal. This raised awareness of the airport and caused some people to check out the cost of fares.
  • American Airlines decided to compete with the Sun Country Airlines service between the new Branson airport and Dallas. That’s resulted in American fare between Springfield and Dallas for less than $200. In case you're wondering, Delta, which provides our service to Atlanta, has chosen to ignore the AirTran service between Branson and Atlanta.
  • Allegiant Air. In July Allegiant flew more than 20,000 people in and out of Springfield. That’s up 50 percent over last year. Allegiant has become the second largest airline in Springfield. American is number one, then Allegiant, followed by Delta and United.
  • The relative strength of the Southwest Missouri economy. Our economy is doing better than most of the country.

Those are some of the reasons why our airport is doing well. We can’t point to any reason and say “that’s it!”


So, the news is good: fares are relatively low and the airport is booming. But, beware—things could get bad just as quickly as they got good. The warning signs are out there:


  • Industry analysts expect the airlines to continue cutting the number of seats in the air. By the end of this year airline capacity is expected to be down ten percent year to year.
  • Our aviation consultant says “the effects of the latest job cuts have not reached the ticket counter, yet.” In other words, our demand could go down as jobs continue to be cut.

To sum it all up: the economy is the great wild card…






Steve shares compliments and a question:


"Great news. Since you're able to find out the passengers numbers of other airports. . . Could you please tell us how the Branson airport is doing? I wonder how many passengers are flying in there?"


We're able to tell you how other airports are doing because, like us, they're publicly owned. As such, their passenger numbers are public record. Now the Branson airport, that's another matter. It's privately owned so it says it doesn't have to release its numbers. Sounds good, but there's a little more to it...


The City of Branson has agreed to give the airport $8.24 for each passenger that gets off the plane, with a cap of $2 million a year. That's public money. That means it's a public record. The agreement allows the airport to collect every three months. The airport opened on May 11, so expect it to submit passenger numbers to the city soon.  By the way, if the airport maximizes its public funding from the city, it will need to unload roughly 242,000 passengers a year.


Besides the anticipated money from the City of Branson, the airport also gets state aviation jet fuel tax money and is attempting to get more. As time goes on, the blur between "private" and "public" becomes increasingly blurry. Bottom line: at some point the Branson airport will have to release its passenger numbers because it's receiving tax money.

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