Tennessee Airport Soaring to New Heights

Jan. 29--Passenger traffic at McGhee Tyson Airport last year set a record, with a 15 percent increase over 2004, but high fuel costs and Independence Air's departure have created concern about passenger numbers rising in 2006.

A total of 1.85 million travelers flew to and from Knoxville in 2005, compared to 1.6 million in 2004, according to the Metropolitan Knoxville Airport Authority, the agency that manages McGhee Tyson and Downtown Island Airport.

Dave Conklin, airport authority spokesman, predicts that passenger levels at McGhee Tyson won't surpass 2005 results, citing high fuel costs. Conklin said he expects 1.75 million to 1.8 million travelers this year.

"We don't know what will happen with jet fuels and other intangibles. There are a lot of unknowns, fuel being the big one," Conklin said.

And airport officials are working to recruit more service to Knoxville to alleviate the loss of low-fare carrier Independence, which went out of business earlier this month.

At least one local travel expert questions whether passenger numbers will be as high in 2006 as they were in 2005. Contributing to the concern is the fact that many of the major carriers serving McGhee Tyson and the nation's other airports are having financial problems.

For 2006, McGhee Tyson could add a "point-to-point" airline that serves only specific markets, but airport authority officials declined to identify the airline or provide details about any negotiations.

The airport authority also is encouraging airlines serving Knoxville to keep fares competitive in the wake of Independence's shutdown.

The fare factor Despite the presence of Independence, other airlines eclipsed the low-fare carrier in passenger loads last year.

Delta Connection, with 411,556 passengers in 2005, was the leader among the nine airlines flying out of McGhee Tyson. Delta Connection had 356,005 Knoxville passengers in 2004.

The airline recording the second largest passenger load in 2005 was US Airways Express, with 271,946 travelers, an 11 percent increase from 244,651 in 2004. US Airways Express was followed by Delta, Northwest Airlink, American Eagle, United Express, Continental Express, Independence and Northwest.

Independence, which filed for bankruptcy before going out of business Jan. 5, was ranked eighth -- ahead of only Northwest -- with 138,107 passengers for the 12 months ended Dec. 31. In 2004, Independence flew 67,851 passengers to and from McGhee Tyson after entering the Knoxville market in July.

Independence is credited with lowering the fares that many of the airlines serving McGhee Tyson charge. But fares have been on the rise so far in 2006 and may continue upward.

There was a national fare increase last weekend assessed by all airlines serving Knoxville, Conklin said. A check of fares to the airport's top 10 destinations last week using Orbitz.com showed some fares slightly higher and some less than when Independence was flying here.

An example of a fare checked on Orbitz.com is a trip to Washington, D.C.'s Dulles International Airport. The lowest leisure fare on Jan. 3 before Independence Air's departure was $174 on United Express and US Airways Express. On Wednesday, the cheapest fare was $133 on Northwest.

Leisure fares require advance booking and a weekend stay.

A leisure fare of $253 to another popular destination -- Orlando, Fla. -- on Delta offered Jan. 3 had increased to $328 on US Airways on Wednesday. Both ticket prices were the lowest at the time.

"Fares are a moving target," Conklin said. "Day by day, you never know what you're going to get."

The airport authority and East Tennesseans for Airfare Competition, a local group promoting low-fare air service to Knoxville, have logged many hours recruiting and trying to keep a discount carrier. The airport authority paid Independence $160,000 to help the airline market its services in East Tennessee.

The airport authority has written all airlines serving McGhee Tyson asking that they keep fares competitive, Conklin said. No responses have been received.

"We're in discussion with the airlines to keep fares low," Conklin said. "We've asked all airlines to hold fares at very competitive levels. We want a good, solid program that's fair to our business model here as well as the airlines."

Conklin predicts that fares will increase this year, largely because of higher fuel costs.

"It's going to be a year of transition for the whole industry," he said. "I wouldn't be surprised to see fares go up 15 percent. Airlines realize if they're going to make money, fares will have to go up. It's an inevitable fact of airlines staying in business.

"We don't have any problem with fares going up some as long as it's in all the markets, as long as fares go up across the board," he added.

Ron Phillips, owner of All-Ways Travel, agrees that fuel costs will be an issue for airlines in 2006.

"I think fuel is obviously the big thing," he said. "It's always a major expense and always turned over in the form of a fuel surcharge to the public. They (airlines) never eat any of the costs."

Still, Phillips said he believes fuel costs could stabilize sometime in 2006.

In addition, he said, "I think we'll see more dropping of routes and more going to small and fuel-efficient planes."

Phillips said he does expect modest increases in passenger traffic at McGhee Tyson during 2006.

"It will probably be around 5 percent, rather than the 10 percent to 12 percent it would have been (if Independence Air had remained here)," he said.

Tom Parsons, CEO and founder of Bestfares.com, a discount travel Web site, predicts that business travelers and passengers seeking walk-up fares will get "burned" on higher fares in 2006.

"Overall, I think you will pay more for routes, and the business traveler will end up paying more," Parsons said.

That's partly because travelers may arrange to drive to Nashville or Atlanta to get the lowest fares, he noted.

He said he also expects fuel to be a problem for the airlines this year.

Another low-fare carrier? Even though Independence left this market, Phillips and Parsons said they believe another low-fare carrier might give Knoxville a shot.

JetBlue plans to add 10 cities to its routes this year.

Phillips said JetBlue could add Knoxville to the airports it serves. Airports in Austin, Texas, and Richmond, Va., are among the airports JetBlue is adding.

Other major low-fare carriers Southwest and Air Tran aren't looking at expanding to regional markets like Knoxville right now, Parsons said.

"I think JetBlue is one of the better choices for coming in," Phillips said. "Obviously, we'd like to see Air Tran come in again, but right now, we'll take whatever we can get."

Air Tran served Knoxville from 1998-2000 but pulled out after not getting the passenger support it needed to keep planes flying in this market.

Parsons also said he expects JetBlue to consider serving Knoxville.

"Jet Blue will look at your city," Parsons said. "They have a very aggressive growth plan."

Conklin said the airport has talked to JetBlue, noting that airport officials keep in contact with all airlines whether they serve McGhee Tyson or not. He said no firm plans for Knoxville have been discussed.

There are, however, definite discussions with a "point-to-point" carrier to serve Knoxville. Point-to-point carriers shuttle passengers to one destination and back.

The airport authority is also working with airlines to add flights from McGhee Tyson.

United plans to add nonstop flights from Knoxville to Denver on Feb. 8, a move considered important to opening western states to Knoxville. United will receive $70,000 for marketing.