Flight Blog

Nov 19 2007 Gale Warning BY sgf-adminTAGS Airlines

 

gale.gif On the coast they fly flags to indicate the weather forecast. Today I'm borrowing the one used for gale warnings...

 

I need to bring you up to speed on the current mood of the airline industry: gloomy.

 

The sudden and dramatic rise in energy prices, combined with a generally poor economic outlook, is forcing some to predict that airlines will begin scrutinizing existing markets for profitability. Revenue quality, not volume, will rule the day. Smaller markets will experience service cuts. In fact, just last week Allegiant Air cut six of its Las Vegas routes. The affected cities: Lansing, Springfield, Illinois, Champaign, Marian, Gulfport and Huntsville. The official reason for the cuts: high fuel prices.

 

What do I mean when I say "revenue quality," not "volume" will rule the day? Here's a simple example: suppose an airline flies to two markets. In one market a 50 seat plane is always 80% full and the fare is $50, In the other market a 50 seat plane is always 50% full and the fare is $150. Do the math. If you were the airline, which flight would you drop?

 

The challenge for airports in the coming year: maintaining the service they have. Airlines will expand only in markets where new service is a sure thing. In reality, that's the environment we've been operating in since the 2nd quarter of 2006. That's when the airlines began cutting back on the supply of seats and holding the line on the prices.

 

Where do we stand? At the end of October our total passenger count was up 2% for the year. We did this despite a zero percent growth in the number of flights. That's good news. It's tells us that the Springfield-Branson air market is strong. The next two or three months will tell the real story, though. That's when we'll know if today's bad economic news is having an impact.


Oct 30 2007 A Piece of History BY sgf-adminTAGS History

 

This wonderful image appeared in the Springfield News & Leader on November 15, 1953. The plane is the venerable DC-3. The colonial style building is the first terminal.

 

The story accompanying the photo is a detailed account of the airport’s first eight years of existence.oldterm_dc3.jpg Here’s how the story described the airport’s financial situation:

 

“…our airport is a pocket sized port compared with the mammoth fields like Chicago’s Midway, or Boston’s Logan or New York’s Idlewild. Yet if our airport must be termed small, it can also be called efficient and distinctive. It’s distinctive because it is in the black, without the backbone of direct tax support. It’s in the black because it is efficient.”

 

In the years since 1953, many things have changed. The first terminal is gone and DC-3s are seen mainly in museums and air shows. One thing hasn't changed—our airport still operates efficiently and in the black, “without the backbone of direct tax support.”

 

By the way, the reporter who wrote the story still works for the paper: Hank Billings.


Oct 23 2007 Questions About Southwest BY sgf-adminTAGS Southwest

 

Curtis leaves comments from a posting in August about Southwest Airlines:

 

"It is not true that Southwest won't fly to an MSA of less than 1,000,000 people. It currently flies to 17 of them, not counting any cities in Hawaii. Five of these (Midland/Odessa, Amarillo, Lubbock, Harlingen/South Padre, and Reno) are smaller than Springfield MSA (according to U.S. Census 2006 estimates). I also don't understand why they would only fly to one destination from SGF. The five smaller cities all have direct flights to at least three destinations each."

 

You're right Curtis, but there's a little more to it...

 

When Southwest began service in 1971, it was a Texas based airline serving only Texas cities (this was long before the company adopted its "million people in the MSA guideline"). The airline continues to service those small, legacy cities because it has a near monopoly on the service. Shawn Schroeder, the assistant director of our airport, used to work at the airport in Harlingen. The Harlingen MSA has about 378,000 people and Southwest service. He tells me that it's very difficult to entice other airlines to provide service there because they don't want to compete with Southwest. Southwest has no reason to leave Harlingen (or the other small Texas markets) because it has a lock on the market and they've always been there—the airline and Harlingen came to the dance together!

 

As for the Reno/Lake Tahoe market—its MSA is about the size of ours, but there's at least one very important difference: the tourism and gaming industry. The Reno airport has eleven airlines and moves approximately five million passengers a year. We have five airlines and less than a million total passengers a year. Given these facts, it's easy to understand why Southwest would serve the market. To compare our market to Reno, is to compare apples to oranges.

 

So, the bottom line is still true: today, in 2007, when people like me call Southwest and inquire about obtaining service, the airline says it generally doesn't consider service to an MSA of less than a million people.


Oct 09 2007 Airport Fees BY sgf-adminTAGS How the Airport Works

 

Jake inquires, "Is the building of the new airport going to raise airport fees for the airlines? If so, this certainly isn't going to make SGF more competitive to lower rates to draw travelers to SGF from TUL, MCI, STL. Any comments on this is appreciated."

 

Fees at our airport go up three percent a year in the current terminal and that will continue in the new terminal. Landing fees are currently at $1.06 per 1,000 pounds. Exclusive use space (offices, ticket counters) have an annual rent of $32 per square foot. Joint use space (ramp, gate, tug areas) is assessed using a formula which results in an average rate of $35.55.

 

These rates are dirt cheap. It's one of the reasons why we have such good service for a small market. In fact, the Federal Aviation Administration has told us that we ought to raise rates. We've respectfully declined!


 

People ask me what we do to attract airlines. I’ve touched on this several times, but have never brought it together in one posting. Here’s what we do:

 

  1. We talk to airlines on a regular basis and provide information. The first and most important thing airlines care about is passenger numbers. How many people use the airport and what do the trends show?
  2. We make airlines aware of our incentive program:  A) marketing incentive: maximum of $50,000 available for additional or new service. B) We routinely waive landing fees, gate fees and common use rental fees for new airlines entering the market. The waiver of fees is temporary, but long enough to let the airline establish service. C) Ground services. We are one of a handful of airports in the country to offer ground services to the airlines and it's at least part of the reason why we have service to five of our 12 destinations: Atlanta, Cincinnati, Orlando, Las Vegas and Tampa/St. Petersburg. More on this in a minute…
  3. Besides courting the airlines, we court people (potential passengers) living within 70 miles of the airport. We try to make them aware of the airport and what it offers. We do this through speaking engagements and advertising. The goal is to get more people to use the airport—remember—airlines care about passenger numbers. The more the better.

Getting back to ground services—the following is adapted from a story published several months ago in the airport newsletter. It should give you a good idea of why our ground service program is so important.

 

An Unremarkable Sight

 

Delta/Comair flight 4303 creeps into Gate 4 at the Springfield-Branson National Airport (SGF). When it stops, several workers begin servicing the plane and unloading luggage. It’s a scene repeated thousands of times every day across the globe. It would be unremarkable except for one thing: these workers don’t work for the airline or a contractor--they work for the airport.

 

The fact that SGF offers the service doesn’t sound like a big deal, but it is. “We were one of the first airports, if not the first to provide it,” says Gary Cyr, SGF director of aviation. “When you think about it, they’re not only servicing the plane, they’re engaged in economic development.” pushback.jpg

 

Airplanes need many things when they land: baggage unloaded and loaded, water tanks filled and lavatories serviced. It’s generically referred to as “ground services.” Airline employees and private contractors perform it in most corners of the aviation world. But at SGF the airlines have the option of using airport employees. From the airline’s point-of-view, it’s a good way to cut cost without affecting customer service. From the airport’s perspective, it’s a lure that can attract new airlines or entice an existing airline to add service.

 

An Accidental Occurrence

 

This story couldn’t be told if TWA was still in business. The bankrupt airline was bought out by American in 2001. Its absence at SGF meant more than a loss in airline service: TWA was the only airline in Springfield willing to provide ground services for large charter airplanes. Those charters were typically full of Branson tourists. Charles Jackson, who was TWA’s manager at SGF when the airline folded, had an idea. “I pitched airport management the idea of forming a department that would service the charters.” A month later SGF was in the ground service business and Jackson worked for the airport.

 

The first challenge: equipment. There’s the cost of the tractors (called tugs) that pull luggage carts; the truck that deices planes in cold, wet weather; the tug that pushes an airplane away from the gate—the list goes on and on. “An airline can easily spend half-a-million dollars to set up shop at a given airport,” says Jackson. He convinced American to sell TWA’s old equipment for less than $10,000.

 

For the first two-and-a-half-years, Jackson and the new department serviced charters. Then, in April 2004, Delta decided to come to town with daily flights and it needed ground services. Jackson’s department bid for the service and won. This was a significant step forward—not only was SGF servicing an airline that had a daily schedule, it was saving the airline a significant amount of money.

 

Rapid Growth G4atsgf.jpg

 

Fast forward to April 2005: Allegiant Airlines, a low cost carrier providing niche service to vacation cities, wanted to start flying between SGF and Las Vegas. The airline had flown charters to Springfield, so it was familiar with the airport’s ground handling. Jackson pitched the airline a bold idea: SGF would provide “below wing” and “above wing.” In industry slang, “below wing” refers to ground services. “Above wing” refers to the staff at the ticket counter and gate. Allegiant jumped.

 

Now SGF provided below wing for the charters, Delta, and Allegiant and above wing for Allegiant. This was unchartered territory--the challenges mounted. Every airline has its own rules and standard operating procedures. The SGF staff had to learn them for each airline. “I had to send people out-of-town to each airline’s training classes,” says Jackson. load.jpg

 

Within a month of beginning service to Las Vegas, Allegiant doubled the number of flights. Then in October it added service to Orlando. As the work load increased, the size of the SGF service staff increased. It currently has 24 members handling at least 43 flights a week. “It’s not a huge revenue stream, but it helps develop airline service,” says Mark Roy, SGF’s business director. The program has done so well that airports across the country are paying attention.

 

For the past year-and-half SGF representatives have been in demand at airport conferences. “There’s extremely high interest from both airports and airlines,” says Jackson. “The airline representatives are saying, ‘yes, this is what we want airports to do!’”

 

Cyr is now asked to speak on the subject on a regular basis. Airport representatives jammed the room at a recent meeting of Airports Council International. Managers from bigger airports, including Orlando and Raleigh-Durham, asked questions and wanted more information. Cyr sums up the conference this way: “airport ground handling was all the buzz.”

 

Follow these links for more information on airport ground handling: Airport or FBO? and Springfield Success.