Flight Blog

Dec 11 2008 More Branson Comments BY sgf-adminTAGS Branson airport

 

We've received comments from Marc:

 

"I have a friend flying to my home in Wichita from Phoenix for Christmas. We are going to Branson after Christmas to spend time in my second home there. She is flying home and leaving from Springfield. The ticket costs $170.00 one way from Phoenix to Wichita and $765.00 one way to return from Springfield to Phoenix. I have read that Springfield is planning to build a 150 million terminal and Branson has built an entire airport for 150 million...."

 

Marc, your friend could fly from Phoenix to Springfield for a base fare of $129. I just looked it up on the Allegiant Air web site. That's leaving on the 24th from Phoenix-Mesa Gateway Airport and departing Springfield on the 31st.

 

As for the cost of the terminal, the total of cost of our new terminal project is $117 million — not $150 million. While I understand your logic in attempting to tie the cost of the project to the price of tickets, it is based on faulty assumptions. The existence of $129 roundtrip fare from Springfield to Phoenix proves my point.


Dec 11 2008 Branson Comments BY sgf-adminTAGS Airports

 

Carl writes in with this:

 

"This is nothing but spin tactics by SGF–Just last week, you were saying this was never possible. You even brought in your big Shot from Boyd Aviation to tell us, “Write this down” “No” Branson is not going to get a mainine low cost carrier. SGF is still a joke and always will be. You should close shop and send all of your flights to BBG."

 

That's not right Carl. We never said it wasn't possible. In fact, if you go back through this blog's postings, you'll find that we mentioned the possibility of subsidized service several times.

 

As for aviation analyst Michael Boyd, who visited Springfield on November 19, here's what he said about AirTran: "...unless someone is going to pay them a lot of money, it's just not going to happen." Click the link and listen for yourself—Boyd pegged it.


Dec 11 2008 Branson Airport News BY sgf-adminTAGS Branson airport

 

Tonight USA Today and KYTV are reporting what we confirmed earlier: AirTran will provide the new Branson Airport with one-flight-a-day, daily service between Atlanta and Branson beginning in May. We congratulate Branson airport investors and management.

 

No doubt many of you are wondering how Branson did it—or more to the point—how come AirTran is flying to Branson rather than Springfield? The answer lies in the business details. But since both the airport and AirTran are private companies, details probably won't be forthcoming.

 

The answer is almost certainly money. In short, AirTran is being subsidized to fly to Branson. We’d hazard a guess that the amount is in the neighborhood of $2 million a year.

 

We base that guess on the fact that AirTran is currently given $6.5 million a year to provide service in Wichita. That’s for three flights a day, Sunday through Friday, with two flights on Saturday. So, one flight a day in Branson might reasonably be expected to cost about $2 million a year.

 

Why doesn't Springfield subsidize airlines? There are two main reasons: 1) the airport is publicly owned. As such, it can't subsidize one airline without subsidizing all of them. That doesn't work from a business point of view because the airport has to generate revenue in order to stay up to date, open and operating. 2) Subsidizing air service was faddish several years ago, but is rarely done now because it generally does not work. Once the money goes away, the service goes away. It tends to be a bad investment.

 

How does this impact our airport? Not much––we already provide service to Atlanta: four flights a day on Delta. In the long run the new Branson service may have a positive impact for SW Missouri customers because competition between AirTran and Delta may drive down fares at both airports.

 

The task facing the Branson airport now is to establish and grow the new service and to make it viable over the long term––without the benefit of subsidies. That will be a huge challenge in the current economic environment and we wish both AirTran and the Branson airport the best of luck.


Nov 22 2008 Air Service Seminar BY sgf-adminTAGS How the Airport Works

 

How much air service will our airport lose in 2009? Aviation consultant Michael Boyd says we're "really not going to be hit too hard." He thinks air service cuts have leveled off. That was just one of many issues addressed earlier this week when Boyd spoke at the Springfield Area Chamber of Commerce. More than 100 people showed up for the air service seminar last Wednesday.

 

As co-founder of The Boyd Group, an aviation research and analysis firm, Boyd is one of the best known and most sought-after aviation speakers in the country. He’s also a frequent commentator for the major networks, CNN, CNBC, FOX, MSNBC, as well as newspapers and industry publications.

 

Rather than provide a text transcript of his remarks, we thought Boyd could speak for himself. Please click on the links below to hear the seminar. Each link will open in a new window.

 

 

 

– State of the Aviation Industry

 

– It's a Whole New World!

 

– What's Going to Happen In Aviation Next Year?

 

– What Will Happen to Air Service in Springfield Next Year?

 

– Question from the audience: will airlines drop the hub system?

 

– Question from the audience: do you know much about the airport in Branson?

 

– Question from the audience: if the Branson Airport gets a low cost airline, would it impact Allegiant Air in Springfield?

 

– Hear the entire presentation unedited.

 


Nov 18 2008 Economic Downturn Good for Airlines? BY sgf-adminTAGS Airlines

 

"A severe downturn could be just the opportunity the airline sector needs to clean up its act once and for all, said Robert Crandall, the former chief executive of AMR Corp.'s American Airlines and a veteran of the industry, on Tuesday."

 

That's the lede in a story from MarketWatch.

 

Crandall is quoted, "The events allowed for a needed capacity reductions that wouldn't have happened otherwise." The key word in all this is "opportunity." Now that the airlines have been forced to reduce capacity (number of available seats), will they resist the temptation to add more once economic recovery begins? This, you see, is the heart of the matter. Until very recently there was a huge supply of seats. This resulted in cheap fares—so cheap that the airlines really weren't making enough money to stay healthy.

 

Now that they've cut supply, they should be able to keep fares high. But if history is any guide, some airline will start doing so well that it will think, "Hey, if we add more seats we can make more money." Problem is, other airlines will follow: supply goes up; fares go down; airline bottom line suffers.

 

Read the rest of the MarketWatch story here.