The nation's airlines begin reporting their first quarter profits today. Good news is not expected. The price of fuel is the killer -- up approximately 30% since this time last year.
While the news looks gloomy for the airlines, things are bright and sunny here in Springfield. Our airport finished the quarter with a 10% increase in total passenger numbers. Here are the numbers for the first three months of the year:
An increase in passengers is always good news for an airport, but it's especially good right now. That's because we finished 2011 down 10%. The decrease was due mainly to the airlines providing 21.5% fewer seats in the market (or, in the jargon of the business, 21.5% less capacity).
The cut in capacity was not limited to Springfield. Small and medium sized airports across the country felt the pinch last year as the airlines shrunk their fleets in response to high fuel prices and the recession.
It would be easy to assume that our first quarter increase in passengers was due to a big capacity increase. That's not the case...capacity rose only 1.7%. So what's going on here?!
As is often the case in the airline/airport business, there are no clear cut answers. But here are some of the factors undoubtedly involved:
- The national economy is improving (albeit slowly).
- The improving economy is more pronounced here in Southwest Missouri. Unemployment is less than 7%. Researchers at 24/7 Wall St. recently named the top five American cities gaining the most jobs from November 2010 – October 2011. Springfield ranked 3rd with a job growth rate of nearly 5 percent, representing more than 3,610 new jobs within the city.
Here's the bottom line when it come to the local economy: employment is a key driver in airport passenger demand. If more people have a job, more people will fly.
While passenger numbers are up, we're not overly exuberant -- just cautiously optimistic. If there's one thing we've learned during this recession, it's that the swings in passenger numbers are wild and crazy. Take a look at the craziness since the first quarter of 2007:
Each dot represents a financial quarter. The numbers on the left represent percentage increase, or decrease, in total passenger numbers.
Talk about a roller coaster. In 2008, during the worst of the recession, our total passenger numbers were down 12%. That was the largest decrease in the airport's history.
But then, in 2009, the numbers leaped up 16%. Then, in 2010, they went down 2%. Along comes 2011: down 8%. And now they seem to be on there way up...again. Whew!
So, the news is good here in Springfield. But be warned: things could change quickly if fuel prices spike this summer (as many expect they will due to tensions in the Middle East). A big price spike would force the airlines to raise fares and cut capacity. That would mean fewer people flying from Springfield.