Flight Blog

 

The great air fare sale, that's been going on across the country for the past few months, may be ending soon. I hate saying it, but the airline bosses are sending up warning flares...

 

"I think the industry is leaving money on the table." That's according to Scott Kirby, the president of U.S. Airways.

 

Or how about this one from the CEO of Southwest Airlines: "It's still a very low-fare environment...We're continuing to run fare sales. Even if we don't want to run a fare sale, our competitors have a plethora of low fares out in virtually all of our markets."

 

But wait, there's more. Read all about in this story from the Dallas Morning News.

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Jun 12 2009 Gloomy Industry News BY adminTAGS Fares

 

Wow...what a mixed bag of news. While things are looking up at our airport (witness our May passenger numbers), the outlook for the airline industry is decidedly gloomy. Cases in point:

 

  • American Airlines is cutting 1,600 jobs. Bloomberg reports, "American’s reductions equal about 2.4 percent of the workforce...The cutbacks in flights and jobs announced yesterday may herald similar steps by other U.S. airlines. Revenue is vanishing as they trim fares to lure customers who are flying less because of the recession, especially in premium-class cabins on overseas routes."
  • Oil prices are going up in a big way and that's got the airlines sweating bullets. The Chicago Tribune reports, "The run-up in fuel costs was a hot topic at United Airlines' annual shareholder meeting Thursday as Glenn Tilton, United's chairman and CEO, called on President Barack Obama and Congress to clamp down on "excessive speculation in the commodity markets." Tilton also was grilled by a shareholder over his airline's effort to hedge against wild swings in oil prices last year."
  • And there's this bit of news this afternoon from Reuters: "Plans by major U.S. airlines to slash the number of seats they sell may bolster fares this fall, further stabilizing prices that tumbled this year as economic weakness drained travel demand."

So you see, what's good news for us (low fares and rising passenger numbers) is bad news for the airlines. Air fare will almost certainly start going back up. As the saying goes, buy now or pay later.

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Steve blogs with these thoughts on our airport's fantastic passenger numbers in May:

 

..."do you seriously believe that your new terminal, advertising campaign and lower fares by the airlines to fill seats, maybe this one a little, had anything to do with your increase. You know exactly what did it. Competition from the Branson Airport and their low fares are driving down your prices in the region. Why don’t you just admit that? The opening of the Branson Airport is now helping you so why don’t you embrace it."

 

I understand your point-of-view Steve, but that's not the way we see it. If fares were cheaper only in Springfield, then we would think the Branson airport had something to do with it. But that's not what's happening. The airlines have generally cut fares across the country in reaction to reduced advance sales caused by the recession. We don't expect to see the Springfield airlines react to what's going on in Branson unless they think the Branson airlines are affecting their advance sales. It will take at least two or three financial quarters for the Springfield airlines to get a handle on that. Here's how that process will work...

 

Branson passenger numbers will be tracked by the federal government.  As those numbers come out the Springfield airlines will look at them and try to figure out if the numbers are big enough to have any meaningful impact on their passenger numbers in Springfield.

 

As for the insinuation that the Springfield-Branson National Airport is afraid to admit that the Branson airport is forcing competition, nothing is further from the truth. In public meetings, and in print, we have repeatedly said that competition is the best thing that could happen. If the Branson airport brings down ticket prices in Springfield that's a good thing. But as it stands right now, it's too early to tell if that's happening.

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The number of people using our airport leaped 17 percent in May, compared to the same month last year. The increase comes after 15 consecutive months of numbers that were negative or flat. It was the tenth busiest month in the airport’s history. To do that, in the middle of a recession, is amazing.

 

In May of last year 69,368 people used the airport. The May 2009 number: 81,496. Passenger numbers were up despite the fact that the airlines have cut the number of flights in Springfield by eight percent. Springfield’s growth bucks the current national trend, with many airports reporting negative May numbers. There are several things going on here. The number one factor has to be low fares. For the past several months the airlines have been trying to fill the planes by cutting prices. We’ve talked to numerous people who are flying from Springfield to Europe for less that $500 roundtrip. Others have found roundtrip fare to New York City for less than $250…and roundtrip to Seattle for $210.

 

Other factors that play into the increase likely include the opening of the airport’s new terminal on May 6, along with the airport advertising campaign that led up to the terminal’s grand opening. In April and early May the Springfield media market was saturated with airport advertising and airport media coverage. It's likely that a lot of people decided to check us out and they discovered that they could afford to fly from Springfield.

 

The economic strength of the Springfield metro area also plays a role. The U.S. Bureau of Labor Statistics says the Springfield metro unemployment rate dropped 1.4 percent in April, to stand at 7 percent. That compares to a national unemployment rate of 8.6 percent. In short, the Springfield area economy is better off than many regional economies—customers are still spending. The question now:  will our numbers continue to trend up? It might because this up-tick began in March—that’s when we went from double digit negative numbers to down just one percent. Then in April our numbers were flat. Now we’re up 17 percent. That’s three months of upward movement.

 

Hope and pray that the price of oil starts to go back down...that's a worry right now. If oil prices get much higher, the low fares could go away in a heartbeat...

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Jun 11 2009 Delta Poised to Make More Flight Cuts BY adminTAGS Misc.

 

Delta Air Line says it expects to cut capacity (meaning seats in the air) more than it had planned.  The Atlanta Journal-Constitution reports the airline will cut 2009 capacity by ten percent compared to last year. Delta had said it expected to cut capacity six to eight percent.

 

Delta cuts have already impacted our airport:  in the past year the airline has discontinued our service to both Detroit and Cincinnati. Read more about the cuts here.

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