Chasing Air Service: Innovative programs, charter airlines may supply the answers for small communities

Managing Airports Today

By John F. Infanger, Editorial Director

Chasing Air Service

Innovative programs, charter airlines may supply the answers for small communities

DAYTONA BEACH, FL — As turboprop airliners go away and the major carriers restructure their operations, small communities across the U.S. are grappling with how to maintain current airline service and attract new carriers in a dramatically changing marketplace. A two-year old federal program for small communities is having an impact, but analysts suggest that how well airports and local leaders position themselves is often a deal-maker for carriers, along with having a readily identifiable market.

Such were the messages at the 9th annual National Air Service Confer-ence hosted here in March by the American Association of Airport Executives.

Mike Boggs, manager of Airport Business Services for Mead & Hunt, a consulting firm based in Madison, WI, sees increasing challenges for smaller communities and their airports as the turboprop fleet is abandoned in favor of regional jets. The RJ fleet consists of aircraft that generally have 50 or more seats, effectively taking some communities out of the picture when their previous service had been from smaller turboprops. And the trend for RJ seating capacity is moving upward.

According to Back Aviation Solutions, based in New Haven, CT, the turboprop airline fleet will decline to only one percent of the commercial fleet by 2023, down from some 12 percent today. RJs, meanwhile, will increase from their present 12 percent of the fleet to 27 percent.

Boggs points out that, from the carriers’ perspective, small hub and non-hub airports generate only 11 percent of the passengers in the U.S., and carriers can no longer wait six to 12 months to break even after entering a new market. “Today, they can’t wait that long,” he says.

That means communities must do their homework about their markets while also creating incentives that can work to attract carriers. He says that “revenue guarantees are popular with airlines right now,” and says that travel banks, which Mead & Hunt has successfully orchestrated with several communities, are an option. “Travel banks only work in strong business markets,” he adds.

Boggs says that carriers often want start-up cost reductions while putting the burden of marketing on the airport and community. They also want a clear identification of the opportunity: the marketplace, passenger demographics, and interest level of local businesses and associated groups.
Building on that, Greg Dull, director of marketing for Orlando Sanford International Airport, suggests finding other markets with which there are natural links. That way, both airports/markets can come to a carrier, demonstrating the level of interest from both destinations.

DOT seeks to help
Boggs points out that the two most frequent requests on applications for the DOT’s Small Community Air Service Development Program are for marketing and revenue guarantees to carriers. The SCASDP was created under AIR-21 legislation as a two-year pilot program to, in essence, provide monies to communities that were trying to help themselves in regards to new air service. The program distributed $20 million in both 2002 and 2003.

The Vision 100 legislation, which authorizes aviation funding for 2004-2007, targets $35 million a year for the program; however, for FY04, just over $19 million has been appropriated for distribution by DOT.

Tulinda Larsen, marketing director of strategic consulting for Back Aviation Solutions, says that restructuring by the major carriers is the primary reason non-stop routes served by turboprops have dropped 52 percent in a decade — from 1,400 routes to 680 — and additional airports are at risk. She points out that some 162 U.S. airports have three daily flights or less and that that number is the traditional benchmark minimum for airlines.

Larsen, formerly with DOT and the Alaska Air Carriers Association, explains that there are four programs under DOT/FAA available to aid small communities: