OPINION: Consultant For Kansas City International Airport Challenges Airlines About New Terminal

In a new report, the consultant -- Frasca & Associates -- says just because the airlines are mostly happy with the current terminals, that doesn't mean the status quo is good for Kansas City's future

Feb. 04--The consultant hired by a citizens group to help it determine how to improve Kansas City International Airport showed recently it's not afraid to challenge how the airlines view the terminals there.

In a new report, the consultant -- Frasca & Associates -- says just because the airlines are mostly happy with the current terminals, that doesn't mean the status quo is good for Kansas City's future.

Put another way: The consultant could be leaning in favor of some major changes at KCI when it comes to parking, security, baggage handling and a host of other factors that go into airline travel.

We'll hear more on Feb. 11, when the consultant makes a full report to the Airport Terminal Advisory Group.

Big changes likely could irritate a lot of Kansas Citians who pretty much want to keep things as they are.

However, this kind of fresh view of KCI would please many business leaders and others who think it's time to make some major alterations at KCI -- up to building a brand new terminal and shutting down the current ones.

The consultant's report makes for some pretty in-depth reading on the situation at KCI. It was prepared for the citizens panel in late January.

That was a few days after representatives for Southwest Airlines and other airlines that use KCI came in and told the citizens group that the current airport pretty much served their needs, and spending a lot of money to improve it might not bring more flights there.

The airlines' testimony was seen as a vote for the status quo.

Here's the full consultant's report, which challenges that viewpoint on several major issues:

To: David Fowler, ATAG Co-Chair

Bob Berkebile, ATAG Co-Chair

ATAG Committee Members

From: Frasca & Associates, LLC

Subject: Discussion of Airline Comments Received at the January 14, 2014 ATAG

Date: January 27, 2014

This memo summarizes the key comments and concerns raised by representatives of Southwest Airlines (Ron Ricks and Bob Montgomery) at the January 14, Advisory Group (ATAG) meeting. Mr. Ricks and Mr. Montgomery were asked to provide their comments and input regarding the future of the terminal facilities on behalf of all of the airlines currently serving the Kansas City International Airport (MCI).

The following points summarize the key points Mr. Ricks and Mr. Montgomery presented at the ATAG meeting and provides further context regarding each of their comments.

-- Airline Bankruptcies and Financial Stress -- As stated by Southwest, the airlines have experienced considerable financial stress as a result of 9/11 and the financial recession that started in 2008. As a result, over the last several years, the airlines have become much more disciplined at managing their seat capacity in order to maintain high load factors. They have also shifted their aircraft assets to serve more profitable routes.

Further Context: The airline industry's seat capacity and profitability discipline is evidenced in the rise of average airfares in the U.S. from 2009 to 2013, when they grew from $174 to $203, (nearly 4 percent per annum). This excludes the new charges many airlines have instituted for checked baggage1, preferred seating, inflight WiFi and entertainment, express security lanes, and inflight food. In fact, the airlines are now experiencing record profits. In the third quarter of 2013, the industry earned roughly $3.2 billion, an increase of $1.4 billion over the third quarter of 2012.

--Terminal Impacts on New Air Service -- Southwest stated that airline route decisions are based solely on: (1) passenger demand; (2) the availability of aircraft gates; and, (3) profitability.

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