The Air Service Challenge

Air service in the United States has become very interesting in recent years. Delta and Northwest Airlines merged forming a larger carrier in 2008. Following that there was a roller coaster of other mergers occurring throughout the years: Frontier/Midwest, Southwest/AirTran, United/Continental and soon the possibility of the New American. This activity has definitely taken its toll on the U.S. aviation industry and smaller communities in particular.

Newly merged airlines concentrate efforts on cost control and being competitive, and they have a tendency to cut flights in smaller markets. Because smaller aircraft are more costly to operate and oil prices continue to rise, these new airlines are often forced to trim their fleet of smaller aircraft, which are heavily used in smaller markets.

St. Cloud, Minn., is a good example of a community impacted by mergers. This college town of around 60,000 people is a 1 1/2-hour drive from the Twin Cities. For more than 15 years, the St. Cloud Regional Airport was serviced by Northwest Airlines. The carrier averaged five flights a day through St. Cloud, typically on a Saab 340 propeller plane. The aircraft had 34 seats and the flights were connecting through Minneapolis where the airline had its largest hub.

But when Delta Airlines and Northwest merged, it changed everything. Airport Director Bill Towle states, “Following the merger, the new Delta had a different business plan. Air service to smaller communities was no longer part of the plan.” Therefore St. Cloud was cut from the carrier’s route map—leaving the airport without an air carrier.

 

Band Together

With the loss of its main carrier, it was essential that the airport and the city work together to bring service back to the growing community.

The airport performed a passenger-demand analysis study and attended air service conferences to establish relationships with airlines. Through these efforts, the City of St. Cloud and the airport identified a need for flights to Chicago O’Hare International Airport. The airport is currently pursuing a major carrier to provide this air service.

The airport also applied for and received a $750,000 Small Community Air Service Grant in 2011. Plans are to use this grant to offset the loss an airline would incur when starting new airline service in St. Cloud. It is hoped that these funds will help the airport attract airline service by reducing or eliminating an airline’s risk. The funds come with a couple caveats, however. The airport has just three years to use them, and it must be used specifically to obtain air service to O’Hare.

The city and the Greater St. Cloud Development Corporation have also teamed up to start a Travel Bank, designed to get area businesses to pledge to fly out of St. Cloud if an airline offers service to Chicago. To date, this partnership has been a huge success. The Travel Bank hoped to receive $5 million in pledges but it received well over $6 million, according to Towle.

“The collaborative effort between the business community and the region in general shows we want air service. What businesses committed in pledges is a guarantee of only a portion of their travel budgets,” he explains.“With the installation of reliable, cost-effective service, much more could be expected.”

The airport’s terminal also has been remodeled to attract air service. This renovation included expanding the terminal’s gate hold area, so that if two airlines were flying at the same time, there would be enough seating for passengers. Rental car counters and a baggage claim area were also added.

 

Land a Launch

While attaining service to Chicago is a primary need, the airport did not limit its talks to just major carriers. In 2012, the airport successfully landed low-cost carrier Allegiant Airlines, which offers two flights weekly to Phoenix-Mesa Airport. According to Micah Lillard, public relations specialist at Allegiant, “St. Cloud has been a great route for us. We were happy to offer a convenient, low-cost option for residents headed to the Phoenix area.”

Landing Allegiant didn’t happen quickly. According to Towle, “We talked to the airline for several years before St. Cloud became low-hanging fruit.”

Currently Allegiant operates a 156-seat Airbus A319 aircraft for its St. Cloud flights instead. “Throughout our network,” Lillard says, “we aim to fill 90 percent of our seats.”

The airport hopes their work with Allegiant provides flight data that will attract other airlines to the airport. And, they are hopeful that Allegiant will find success with its current routes and add more flights from St. Cloud to other hot spots.

 

Back to the Future

The future growth of air service at St. Cloud Regional Airport depends on many factors. First, airlines have to look at expanding. After all the merger activities begin to wind down, adding flights and expanding into new areas may begin to happen. Then, the airlines will have the ability to evaluate their route maps, where they overlap and what new flights to consider. The price of fuel also plays a significant role in the process. If oil prices rise, airlines may continue to phase out smaller aircraft, in essence hurting the chances of smaller communities in restoring airline service. Lastly, the city and the airport must continue to pursue and gather local support to convince an airline that the community is ready for new air service.

Smaller community airports can learn a lot from St. Cloud’s experiences. For instance:

• Gathering data and going after local businesses proves to airlines that the community is in support of regaining air service and would adequately and consistently use such services if flights returned.

• Towle advises other communities and airport managers to “be persistent.” It takes many talks and much time before doors are opened.

• He also indicates that communities must know their market. “Passenger-demand analysis studies must be thorough and kept current,” he says. The airport must prove that the population can support air service and the service sought must be in line with what the business community and residents will use. Support must come from the business community—not just the airport manager. “It takes a village to bring air service in,” Towle chuckles.

It may take many years before smaller communities can put their cities back on the aviation map. Until then, airports officials and their business communities must continually work to prove to airlines that there is a need and an opportunity in their community.

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