Why Are Our Passenger Numbers Doing So Well?

 

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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