Concourse Changes At Mitchell Airport A Bump, Not Free Fall, Analysts Say

Oct. 11--If Milwaukee's airline service market were a flight, this might be the point where the captain turns on the fasten seat belt sign.

The continuing consolidation in the U.S. airline industry, along with the dissolving of Milwaukee's rare status as a hub for two airlines, has Mitchell International Airport in change mode yet again.

The latest development involves the possible closing of the airport's Concourse E. But that isn't necessarily a bad thing, experts say.

"People look at that and say 'Oh my God, is the airport dying?' No. It just has some extra facilities," said air travel industry consultant Michael Boyd, who operates Boyd Group Inc., based in Evergreen, Colo.

"Fundamentally, Milwaukee's air service is very strong," he added. "You're just not a connecting hub anymore."

Milwaukee at one time was a hub for Frontier and AirTran. That meant connecting passengers would need to land here, usually switch planes and then take off for their final destination, adding to the airport's robust total passenger numbers.

"The subsequent presence of two low-fare airline hubs in Milwaukee was a freak of nature," said Jay Sorensen, an airline industry consultant who runs IdeaWorksCompany in Shorewood. "It was not something that was sustainable."

Having more gates than are needed today is a consequence, Boyd says.

"You just lost those connecting passengers and you need fewer gates for that," he said. "This is not bad news. It's just news."

Milwaukee is not alone.

At the beginning of this century, 10 airlines accounted for slightly more than 90% of available seat-mile capacity in the United States, according to a report from the U.S. Department of Transportation. By early 2012, those 10 airlines, through mergers, had become five airlines controlling about 85% of the domestic passenger market.

The DOT report also says five airports -- Cincinnati; Cleveland; Memphis, Tenn.; Pittsburgh, and St. Louis -- have experienced partial or complete closure of their major airline's hub operations since 2007. "Combined, these five airports experienced a nearly 40% reduction in departing scheduled passenger flights between June 2007 and June 2012," according to the DOT.

U.S. airlines reduced the number of domestic flights by 13.9% between June 2007 and June 2012. Many of those flights have not been restored.

The number of available seats at Mitchell has stayed flat compared with 2007.

The total number of available seats through August 2007 was 6.7 million, or about 27,500 a day. For 2012, the number was 6.75 million, or about 27,800 a day. In 2010, though, there were 8.5 million seats available, or about 35,000 a day.

Business travel affected

That decline hurts business travelers the most, market experts and a local business group says.

"On a relative basis, we have decent air service," said Tim Sheehy, president of the Metropolitan Milwaukee Association of Commerce. But it's not what it once was.

"The comparison for most travelers is what we had the last five or six years," Sheehy said. "I'm clearly hearing from business leaders that the markets that are served directly have fallen off."

Sheehy said the situation boils down to basic economics.

"It's a very simple business when it comes to air service in a market, and it's called butts in seats," he said. "We've got to have employment growth. We've got to have population growth. We've got to have per capita income rising for our air service to increase and improve.

"If you don't have the butts, you don't get the seats."

For businesses, when a customer calls and needs an engineer or technician to help fix a piece of equipment, for example, spending an entire day reaching the destination isn't an option.

"For a lot of people, the most important thing is getting there on a nonstop flight, and out of Milwaukee that is becoming less possible," Sorensen said.

Sheehy says he is hearing about it from business leaders.

"Any business that requires you to get on a plane and go out and meet customers, this impacts your business," Sheehy said. Airlines across the U.S. have figured out that if they fly fewer flights with planes that are full, they can make more money.

Fewer passengers

Across the U.S., fewer people are flying.

In 2011, there were 730 million passenger boardings, down from a high of 770 million in 2007. That's a drop of about 5%, according to the Transportation Department.

Mitchell has seen its passenger counts drop, too.

The number of passengers boarding planes at Mitchell International dropped 5.2% for the 12 months through February, to 4.53 million from 4.79 million a year earlier, according to the DOT.

Part of that drop is due to a three-way fare war among Frontier, AirTran and Southwest that created demand among people for whom price was the only factor in their decision to buy an airline ticket.

"People who might not fly from Milwaukee were lured to Milwaukee because of the fare battle that was going on here," Sorensen said. "I would say the majority of them were trips that were created purely because it was cheaper to travel."

Frontier significantly cut its service and Southwest purchased AirTran.

Southwest expansion?

Meanwhile, look for Southwest to step in and strengthen its Milwaukee presence in coming years.

When thinking of our area as one big region rather than as individual cities, the strategy would make sense, said Robert Mann of R.W. Mann & Co., an airline consulting and analysis firm based in Port Washington, N.Y.

"I've always referred to Milwaukee as 'Chicago North.' Southwest operates a hub at Chicago South -- sometimes referred to as Midway," Mann says. "They've got O'Hare (airport) bracketed.

"I wouldn't be surprised to see them expand service. I think you'll see more service to more of their larger cities." Sorensen also says he expects Southwest to expand here.

"I imagine at some point they are going to look at this and say, 'You know, there's an opportunity we can tap and we can begin to grow this,' " Sorensen said.

Southwest hasn't stepped up its presence here significantly yet because it is working to weave AirTran into its operations and is also taking its first shot at international service with flights to the Caribbean and Mexico.

"I think Milwaukee is going to more or less remain an ongoing item of intrigue for them," Sorensen said. "Three to four years from now, I would bet that Southwest would have a larger presence here in terms of more flights."

A Southwest spokesman said the airline is likely to increase its service in Milwaukee, but there are no specific plans.

"The thought is we will be able to offer more itineraries," in Milwaukee, said spokesman Brad Hawkins. "Whether that is with connecting service or a one-stop, a two-stop or a nonstop, that's all yet to be determined."

Meanwhile, another airline could come in and set up operations in the Concourse E at Mitchell because of the availability of gates that would be next to each other.

"I'm intrigued by the airport's approach . . . 'We have a concourse for rent,' " Sorensen said. "That's a big 'for rent' sign that the industry is going to notice. . . .

"I just don't think we're going to have that concourse sitting empty three years from now."

Copyright 2012 - Milwaukee Journal Sentinel

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