A Bigger Plane, Fares Down, Passenger Numbers Up ...

 

Lots of good news to share today ... let's begin with the Boeing 717.

Delta Air Lines begins Boeing 717 service here on September 2. The plane will serve the Springfield-Atlanta route. Right now we have five daily Atlanta flights on 50-seat regional jets. In September a 717 will serve one of those flights. That means four Atlanta flights a day on 50-seaters, and one on a 717, which has 110 seats.

This is good news for a couple of reasons: 1) if you hate the cramped confines of 50-seaters you now have a choice, and 2) the addition of this bigger airplane adds more seats per day to Atlanta. This is a big deal because the 50-seaters are frequently sold-out. More seats per day means fewer customers turned away.

The 717 has 110 seats. 12 of those are first class. 15 are what Delta calls Economy Comfort. 83 are economy class. The planes have wi-fi, and 110v AC and USB in-seat power. Check out the floor plan here.

Delta is already selling Springfield-Atlanta 717 flights on its website.

FARES

Yes, you read that headline right. Airlines are charging less at the Springfield airport. We don’t know exactly why and they’re not down a lot, but they are down. It almost looks like a trend — check it out:

  • At the end of the 2nd Quarter, 2013, airline fares were down .09 percent, year over year.
  • At the end of the 3rd Quarter, 2013, airline fares were down 2.5 percent, year over year.
  • At the end of the 4th Quarter, 2013, airline fares were down 3.4 percent, year over year.

Here’s how it looks in dollars and cents. Note the average national fare is going up, while fares here are going down:

 

2012Q4 Average One-Way Net Fare
 
2013Q4 Average One-Way Net Fare
  • Springfield average: $220.72
  • U.S. average: $191.23
  • Springfield average: $213.81
  • U.S. average: $196.31

Net fare excludes taxes and fees; it's the amount the airline actually sees.

 

This decline is likely the result of the improved financial health of the domestic airlines — specifically Delta and American. As we’ve noted here before, American has been 'fare aggressive' since the announcement of its merger with US Airways. And Delta, which is reaping the financial benefits of its merger with Continental, is being aggressive as well.

Bottom line: the dip in fares in likely due to good old fashioned competition. We won’t have fare data for the 1st Quarter of this year until July or August. Here's hoping we've got a trend in the making.

 

PASSENGER NUMBERS UP

Speaking of possible trends …

So far this year total airline passenger numbers are up 10.8 percent in Springfield. It’s only the second time since the turn of the century that Springfield has seen a double digit increase during the first four months of the year (the first time was in 2005 when Allegiant started service here).

Here’s how it breaks down:

 

  • January: + 9.2%
  • February: + 13.1%
  • March: + 9.8%
  • April: + 11.4%
These percentage increases compare this year’s months to last year’s months. Example: this year’s January passenger numbers are up 9.2% compared to the same month last year.

 

There’s little doubt that these growth numbers are directly attributable to two things: 1) the vastly improved health of the airline industry, and 2) the improvements in the local and national economies since the end of the Great Recession.

Four years ago it seemed like most domestic airlines were on life-support. Now they’re making money (with the exception of United). Why? The industry publication Airline Weekly calls it the “Three-C” reforms:

  • Capacity discipline: in 2006 airlines began doing something they’d really never done before: cutting the number of seats they had in the air; this saved money. In 2011 they began cutting like crazy. That year capacity was cut a whopping 22 percent at this airport.
  • Consolidation: Delta merged with Northwest. United merged with Continental. American merged with US Airways … the list goes on. At the turn of the century there were at least a dozen networked airlines with daily schedules. Today there are four: American, Delta, United, and Southwest.
  • Charging for everything: Customers don’t like fees (such as bag fees) but here’s the hard, cold reality: fee revenue is one of the main reasons airlines are making any money at all.

So, the airlines are doing better financially. That’s given them the ability to be more strategic. Here’s what I mean by that ...

Before 2006 (when capacity discipline began) airline business plans called for capacity growth — they grew their networks (the places they flew) for growth’s sake. Never mind that that kind of growth strategy didn’t necessarily make more money.

Today airlines only fly where they'll make money. They will increase capacity in certain markets (where they know they can make more money), but they are not making significant increases to their overall networks. And this leads us to the Southwest Missouri economy …

As a whole, the airlines serving Springfield are growing capacity here (i.e. the addition of 717s) because there's money to be made — they're taking airplanes from other cities and putting them here. That’s one of the main reasons our passenger numbers are up over ten percent for the year. It’s a sign that the local economy is doing much better, and that demand for air travel is high. The proof is in the numbers:

Total Available Seats in Springfield January - April, 2014

  • Allegiant: + 17.6%
  • American: + 7.4%
  • Delta: + 1.9%
  • United: - 2%

If history is a guide the growth in capacity and passengers will moderate in the second half of the year.

As for fares ... let's hope they continue downward. That would be music to everyone's ears.

 

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