AirTran: Risks Killed Harrisburg Airport's Deal

Feb. 12--The letter had been typed, inviting community leaders to a "major air service announcement" at 10 a.m. on Jan. 25.

The leaders were to go to Harrisburg International Airport to hear news that would "make travel into and out of central Pennsylvania more affordable and more comfortable for all business and leisure travelers."

But on Jan. 13 AirTran Airways officials called Fred Testa, HIA's executive director, to cancel the air service they were supposed to begin in May. Testa said he had spent more than four years courting officials at the low-cost carrier, making multiple presentations and bringing them here for a visit last July.

"Courting is putting it mildly. Some would call it stalking," said Kevin Healy, vice president of planning at AirTran. "He's very persistent. He is the reason we were looking at Harrisburg."

In the past AirTran has entered smaller markets and done well, but current conditions make it too risky and expensive, Healy said.

When AirTran entered the Flint, Mich., market in 1998, oil cost about $19 a barrel, and refining costs were about $5 a barrel.

Now oil is about $67 a barrel, and refining costs are about $15 a barrel, he said.

"Fuel is a huge, huge factor. With fuel where it's at and the expectation of where it's going to stay, it's difficult to enter any market, particularly one where you're going to have to change traffic patterns," Healy said.

The traffic pattern that needs to change is a steady exodus of air travelers to Baltimore-Washington International Airport 90 minutes away. BWI customers have their choice of three low-cost carriers -- Southwest Airlines, which is the airport's dominant carrier, AirTran and Frontier Airlines, BWI spokesman Jonathan Dean said. About 14 percent of BWI's customers come from Pennsylvania, Dean added.

With so many legacy carriers facing bankruptcy issues these days, Healy said, one of AirTran's chief priorities is to expand its existing network.

Testa confronts a "chicken and egg" dilemma in marketing HIA. Some local air travelers say they won't use the airport because the fares are too high. And low-cost carriers, who could bring lower fares to HIA, look at the traffic numbers and say the market isn't big enough, he said.

Aviation consultant Mike Boyd, of The Boyd Group in Evergreen, Colo., said HIA's chances of getting a low-cost carrier like AirTran anytime soon are "almost nil."

"The economies of the airline industry right now don't support low-fare service in smaller communities. Not anymore," he said.

Southwest Airlines isn't interested in entering markets that can't guarantee it at least 400,000 customers just for itself, Boyd said.

The airline enters one or two new markets each year, noted aviation consultant Doug Abbey. "Southwest can't be compelled to serve every city in the country," said Abbey of The Velocity Group in Washington, D.C.

Air service at any airport is a function of geography. With several low-cost carriers offering service 90 minutes to two hours away in Baltimore or Philadelphia, the likelihood of them expanding to HIA "doesn't seem that promising," Abbey said.

High fares is a common complaint Boyd hears from smaller communities. He has no sympathy.

"If you want [lower fares], move to Baltimore," Boyd said. HIA's air fares are higher "because you don't live in the Washington-Baltimore area. Instead, you live in an area with a higher quality of living, in my opinion," he said.

Boyd said HIA offers sound service, especially for business travelers, with flights that are one connection away from major business destinations, including Beijing (through Chicago).

John Ward, chairman of the Susquehanna Area Regional Airport Authority, said he is "highly disappointed" with AirTran's decision.

"But I'm not going to let that get us down. We're going to win this battle," he said. "I'm optimistic enough to believe the ridership is going to trend up and then it will jump significantly when we get a low-cost carrier."

Testa remains patient, noting that it took him seven years to bring low-cost carrier Southwest Airlines to Manchester Airport in New Hampshire when he was director there.

"Eventually some low-cost carrier is going to see the advantage of flying in here and there's no competition," he predicted.