Flight Blog

Apr 04 2008 Three Dominos? BY sgf-adminTAGS Airlines

 

domino.jpgSo far this week two U.S. airlines have filed for bankruptcy: ATA and Aloha. Both are (were) small, low-cost niche carriers. You've probably never heard of them, but their collapse won't go unnoticed in the industry. Consider the fact that ATA was a code-sharing partner with Southwest Airlines. Southwest now has to scramble and deal with the aftermath. But wait, there's another: Champion Air says it's closing shop on May 31. The small charter company is based in Minnesota.

 

For the past several years low-cost carriers have presumably had an advantage over the legacy airlines: low business cost and cheap fares. But the high cost of jet fuel is putting the pressure on ALL the airlines. This week's bad news could foreshadow things to come.

 

Meanwhile, Reuters reports that, "Northwest Airlines Corp will park aircraft and cut domestic capacity by an estimated 5 percent later this year and take other steps to counter sky-rocketing fuel costs..." And late last week Allegiant Air announced service cuts in several of its origination cities.

 

If there's any good news to report (from the customers point-of-view), it's probably a story from Reuters that says, "The rapid pace of air fare hikes this year may be slowing as airlines brace for weaker demand." But wait, there's a flip side: "...their need [the airlines] to pass on fuel costs to travelers through new fees remains greater than ever." This flip side may be in play in the bankruptcies.

 

Against this backdrop Josiah wants to know if I have any thoughts on yesterday's announcement by John Q. Hammons that he plans to build a hotel at the airport being built south of Branson...

 

Well, as I've written several times before, we wish that airport best wishes and good luck. In the current aviation economy it's going to need an abundance of both. Short of subsidizing an airline to fly there, it's hard to imagine how an airline could be persuaded to fly into an unproven market. If subsidies are paid the question them becomes, how long can they be paid? Keep in mind, though, that Mr. Hammons doesn't do anything without a plan, so perhaps some private business plans are in the works that could tip the scales in the airport's and Hammon's favor.

 

Josiah also want to know if there are any plans to build hotels on West Chestnut, near the entrance road to the new terminal? I haven't heard of any, but I'm not a good person to ask about that.


Mar 29 2008 Security Stories BY sgf-adminTAGS TSA

 

A doozy of a news story from Reuters today concerning a security checkpoint experience in Lubbock. I think it's safe to say that TSA horror stories are not as common as they sometimes seem to be. Still, TSA is concerned enough to have recently started a public relations blog to address public concerns and questions.


 

Robert has questions about long lines and responds to the post about the mongrel that doesn't hunt...

 

"I know security lines have been much longer because of the spring break rush, my question is what features will the new airport have in security to minimize this problem. Do we have the capabilities of a second security line in the new terminal if needed? Also...I know thinking out in the future when the new terminal gets to 30-40 gates will security be through one centralized area or where there be 2-3 security section spread through out the airport. Thanks so much. My 2 cents on the above commentary [ that dog don't hunt ] I love Allegiant and find SGF comparable for some routes, however on some routes SGF is almost 3-4 times the price. I always shop all prices and end up driving somewhere now only 1 out of every 3 times vs. 2 out of 3 just 5 yrs ago. I would love to see Allegiant add more destinations and hope this will happen if gas ever gets back under control. Thanks for listening to my banter and once again thanks for making yourself accessible to the public–it shows us how you really care about letting us get insight into the running of the airport."

 

Robert...I'm going to be long winded...forgive me.

 

The length of security lines is dependent upon several factors, including: 1) the layout of the operation; meaning how well does the physical layout of the security operation lend itself to getting people through the line quickly? 2) How big is the crowd of customers? 3) Are there enough security employees on duty to get people through the process in a timely fashion?

 

In our current terminal we're hamstrung by cramped space–there isn't nearly enough space at either of our "security checkpoints" (that's the official lingo for security lines). It's a problem at many airports. Why? Because terminals built before September 2001 didn't anticipate post 9/11 security requirements. The new terminal is designed to accommodate post 9/11 security. That should speed up the screening process.

 

You ask about a second check point in the new terminal...

 

When the new terminal opens it will have ten gates and one check point. The physical layout of the checkpoint is designed to accommodate at least the maximum number of customers that can efficiently use ten gates. In other words, when we out grow ten gates and start adding more, I think it's a good bet we'll add security check points. Make sense?

 

Thanks for the comments about shopping for fares in an educated and open-minded manner. That's really all we're asking people to do. Bottom line: sometimes it only makes sense to fly from other airports. But please don't assume it always makes sense...


Mar 25 2008 That Dog Don't Hunt! BY sgf-adminTAGS How the Airport Works

 

A lot of you reading this blog are business people. You know full well the importance of perception. That is, how people perceive your business. You also know how frustrating it can be. You know how your business works. You know what services you offer—but there’s always that disgruntled customer out there who knows better than you.

 

I got a proverbial earful from an airport critic a couple of months ago via email. And brothers and sisters let me tell you, his perception is reality. Just ask him.

 

“I just saw one of your commercials on TV. Everyone of these folks that you are using to talk up your cause is flying on their company’s dime. I happen to know that everyone of them also uses the airport on their own dime."

 

I didn’t even bother to rebut.

 

“We, the citizens of Springfield, are spending millions of dollars on this new airport of yours when you cannot even fill up the present airport.”

 

I did rebut this one. First of all, we’re not building a new airport; we’re building a new terminal. Secondly, not one cent of Springfield tax money goes to the airport. The airport pays its own way. I could have written several pages about the deficiencies of the current terminal, but figured it wasn’t worth the effort.

 

There was a lengthy paragraph on fares.

 

“I was a salesman for over 20 years…I can count on both hands the number of times that I flew out of Springfield. The cost of flying out of here is unreal….”

 

I attempted to explain that the goal of the commercials was to get more people to use the airport; and the more people use the airport the cheaper fares are. I thought about suggesting that he should base his fare perceptions on current fares, rather than ancient history, but again, it didn’t seem worth the effort. I was right. He came back with this:

 

“I know your passenger volume has more than doubled, but prices are still higher. That dog won’t hunt!”

 

Excuse me?! Has this airport ever said that Springfield fares would become equal to Kansas City or St. Louis? No. We’ve only said that prices would go down as passenger volume goes up. And by the way, that dog does hunt…

 

The proof came the day after the email exchange in the form of the new leakage study. The study concludes that in the past three years we’ve seen an 18 percent improvement in the number of people using the airport—these are people who previously left the market to fly from cheaper airports. This tells me two things: fares are less than they used to be and the vast majority of customers have decided the difference in price isn’t worth the drive to airports in Kansas City, St. Louis or Tulsa.

 

We need your help. The next time you hear someone tearing down our airport challenge them: do they know that Springfield has a low cost airline in the form of Allegiant Air? Do they know that Allegiant roundtrip fares are sometimes less than $200? Do they know that shopping for tickets ahead of time will sometimes narrow the difference in cost between Springfield and other airports to just $30 or $40? Do they know that bad mouthing the airport serves no purpose other than to perpetuate the myth that Springfield is always higher? Please educate them!

 

As columnist George Will once said, "You're entitled to your own opinion, but not your own facts!"


Mar 13 2008 State of the Industry BY sgf-adminTAGS Airlines

 

The last couple of weeks have certainly been interesting in the airline industry; not so much for what has happened, but for what hasn’t happened.

 

A month ago the industry grapevine burned up with rumor after rumor about a possible merger between Delta and Northwest Airlines. Merger talks reportedly were going full steam until it came time to get buy in from the pilots union. That’s when things came to a grinding halt (at least that’s the way it appears to be). Now, it’s dead quite.

 

Meanwhile the price of oil continues climbing. Yesterday it reached $110 a barrel. This week the average price of jet fuel is $3.10 a gallon. That’s up more than 60 percent in the past year.

 

At some point fuel prices will force the airlines to start cutting flights. But when? It’s a tricky question to answer because the flying public continues to fly despite higher fares; the airlines reported robust February passenger numbers. At what point will customers balk at the higher fares? And then there's fuel hedging. The practice gives the airlines some breathing room, but for how long?

 

Here's an interesting story from Reuters about airline fuel hedging. Stay tuned…