Bucking the Air Service Trend

At MKE, carriers focus on capturing the Midwest market with enhanced air service.

Lease structure
The airport/airline lease structure is 100 percent residual; and the term is 25 years, which terminates in 2010 for all carriers regardless of when they entered into it.

“We have a lease agreement which establishes the way the airport is operated, and it establishes the relationship with our airlines,” says Bateman.

“The lease does not permit us to offer cash incentives or abate landing fees or rent agreements.

“I think at this airport at least, all of the airlines appreciate the fact that the airport is giving everybody the same deal; we let them compete on the same playing field, and that rings well with them.”
Bateman says that subsidizing airlines as an incentive to provide air service has really done more harm than good. Many times, he relates, airlines leave once the deal has run its course, setting up an unrealistic model and hurting the community. In terms of luring carriers to provide service to Mitchell, it all goes back to the airport’s marketing efforts.

“The more people we can get to use the airport, the more the airlines are going to respond by putting more seats in the market,” says Bateman. “The carriers are not here to create a market; they are here to exploit it.”

The airport is constantly analyzing its markets, says Rowe. The airlines also keep a very close eye on what’s going on in the region; and several airlines have sales representatives that stay in tune with changes, especially where new business is concerned.

“We want to keep what we have, which is really a function of the economy, and to keep our expenses down so the airlines remain healthy,” says Bateman.

“It’s difficult to keep rates and charges in the airlines’ realm of reasonability; at the same time, traffic has slowed, so we depend more on non-aeronautical revenue.

“Parking, car rental, and concessions are all major contributors to the airport’s base revenue, and all significantly reduce the cost of operating the airport for the airlines.”

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