An International Appeal For Non-Hub Airports

Dec. 26, 2017
Non-hub airports across the U.S. are gaining international flights thanks to new carriers and overlooked benefits.

Hartsfield-Jackson. Los Angeles International. Chicago O’Hare. JFK International. Washington Dulles International. These and other large airports carry the lion’s share of passengers flying from the United States to international destinations. But an increasing number non-hub U.S. airports are working with their communities to connect with the global air transportation system, including Hartford, Conn., San Diego and Oakland, Calif.

Kevin Schorr is a vice president and partner at Alexandria, Va.-based Campbell-Hill Aviation Group, an air service consultancy. His firm regularly works with airport clients looking to boost domestic and international flights.

“The economic benefit of international flights far surpasses the benefits of domestic services. We see lot of demand from non-hub airports to international destinations that sometimes go overlooked because domestic carriers prefer to operate that traffic over an existing hub because it’s less risky,” said Schorr.

There’s also pressure in local communities from stakeholders and political representatives for their airports to pursue international service whether or not it makes sense,” said Schorr. “This comes as we’re seeing airlines embracing international routes that wouldn’t have normally stood out as new opportunities to a casual observer.”

There are reasons why more airlines are bypassing traditional international hubs, said Schorr. “In some cases, like JFK, airports are full during the times that airlines want to operate. It’s not uncommon for airlines to be turned away because there are no gates or slots,” he explained. “In some cases, bilateral agreement routes are full. A carrier might want to fly between the U.S. and Beijing or Shanghai, but they end up looking at secondary cities like Xian or Chengdu.”

The industry is also seeing newer carriers with significantly low-cost bases that are more willing to take a risk flying out of a non-hub airport, said Schorr.

Growing International Flights

One of those airports is Oakland International, which has service from low-cost Norwegian and Mexico’s Volaris among its international flights. It also has service from Azores Air, British Airways and Southwest Airlines despite being only 30 miles away from San Francisco International Airport.

Keonnis Taylor is the senior marketing and communications representative for the airport. Oakland currently has flights to Puerto Vallarta, Cabo San Lucas, Copenhagen, London Gatwick (served by both British Airways and low-cost carrier Norwegian), Barcelona, Oslo, Stockholm, Guadalajara, Mexico City and Azores Island. Most of the European flights are operated by low-cost carrier Norwegian.

Oakland presented itself as an airport for those looking for entry into the Bay Area, said Taylor. “Given Oakland’s geographical location and operational reliability, it was very palatable for an airline like Norwegian to enter,” she said. “In making the London case to British Airways when Norwegian already had service, we showed that most of that city’s passengers live in the East Bay, which is an attractive geographical location.”

BA already had service out of San Francisco and San Jose, said Taylor. “So the Oakland flight made them a player in the region.”

Kevin Dillon is the CEO and executive director of the Connecticut Airport Authority (CAA), which manages Hartford’s Bradley International Airport. The region is home to Fortune 500 companies including United Technologies, Aetna and Hartford Financial Services Group Inc.

Bradley’s Dublin flight on Aer Lingus started in September 2016 and put the city on the map, said Dillon. “Prior to that, our only other international service was to Canada and some Mexico seasonal flights.”

The greater Hartford region and western Massachusetts has a significant business base, said Dillon. “And the business community in our region was looking for this global connectivity, especially trans-Atlantic travel,” he said. “We spent a lot of time with the business community trying to understand that. We ended up dealing with just 23 companies that we felt were somewhat emblematic of the industries and businesses in our catchment area. We learned that they were spending well over $43 million annually on trans-Atlantic travel.”

But unfortunately, they were required to either make a very long drive down to JFK or up to Boston, said Dillon. “It was a huge inconvenience and a bad use of their employees' time to have to make that trip both ways,” he noted. “So it was a high priority that we had to satisfy a demand of the business community. But we're also very interested in serving the leisure market of the inbound tourism market. Our studies showed that each European visitor coming to this area spends on average, over $1,700 per visit. We felt that was very important for our tourism market to be able to capitalize on that as well.”

San Diego International Airport is two-and-a-half hours south of Los Angeles International Airport. Despite that close proximity to an airport that serves 78 international destinations, San Diego has been able to carve out its own niche.

Hampton Brown is the director of air service development at San Diego International Airport. His city has 15 international flights, some with multiple frequencies from airlines including Air Canada, British Airways, Condor, Edelweiss, Japan Airlines and WestJet.

“For a long time, San Diego was unable to satisfy the region’s demand for international flights. Travelers were making the two-plus hour drive up to Los Angeles to fly out of LAX,” said Brown. “Aircraft also have a limited ability to take off and land at our downtown airport. Our market size wasn’t large enough for the aircraft size that could handle international flights.”

But the game changer for San Diego was the Boeing 787, with its high fuel efficiency and the right number of seats that make it profitable for airlines to operate, said Brown. “It also helped that businesses in San Diego has diversified from defense to other emerging industries like mobile telecommunications, university research, biotechnology and clean technology,” he said. “These are all global businesses. Time is money, and it’s inconvenient for them to drive to LAX.”

Making The Case

In the end, making the case to get international flights comes down to demand and revenue, said Schorr. “There are a lot of non-hub airports, like Portland, Austin, Hartford and San Diego, that have significant international demand and the high fares that go with it,” he said. “For example, you see that demand in Hartford, yet travelers will drive to larger airports like JFK or Boston to fly across the pond. The case is similar in San Diego and Austin.”

Airlines look at reported O&D traffic when making their decisions, said Schorr. “But it’s ours and the community’s job to show them passengers that aren’t showing up in their reported data,” he noted. “If an airport can show they can change travel habits and retain passengers leaking to other airports, you can better make the case or new international flights.”

Schorr cited the example of the Austin-London flight on British Airways. He also pointed out Japan Airlines and BA in San Diego, Aer Lingus in Hartford and London flights out of Oakland and Portland. “These are all cases where there was so much demand and the airports were able to prove their cases,” he said.

John Albrecht is the Chief Marketing Officer at Oakland International and takes the lead in making the case for his airport. “We offer clarification on our market because we note that the usual data sets airlines use to make service decisions don’t represent the true O&D market in Oakland,” he said. “Most of the traffic in our catchment area actually leaks to San Francisco International, so that shows up in San Francisco’s data.”

Oakland also uses data that breaks down the region’s true origin by zip code, Albrecht explained. “For example, it illustrated that our market expands from the East Bay up to Napa Valley wine country. That element helps us correctly size the market. These are data sets that airlines don’t typically see but find very useful.” he said.

The Port of Oakland is a member of the Oakland Chamber of Commerce and [Aviation Director] Bryant [Francis] sits on board of the East Bay Economic Alliance,” said Albrecht.

The airport also participates in the Innovation Tri-Valley Leadership Group, a network of business leaders that work to advance the business climate and quality of life in the state’s Tri-Valley cities of Danville, Dublin, Livermore, Pleasanton and San Ramon.

“The Tri Valley has hundreds of companies and brands like Chevron and Del Monte. This allows us to have discussions with C-suite level representatives on their air service needs,” said Albrecht. “Sometimes that translates into letters of support or comments in airline discussions. It also introduces airlines to sales managers and travel bookers at these companies.”

Oakland has a strong partnership with Pixar Animation Studios, said Albrecht. “They are big fans of our airport because many of their employees use the Southwest Airlines shuttle to LAX, where Disney headquarters are,” he said. “All the music for Pixar movies is recorded in London, so we make it more convenient for them.”

Bradley International Airport does an extensive amount of research, working with the business community to know which particular routes are needed by them, said Dillon. “But we also do a fair amount of zip code data research, so we know where people are flying to and what airport they’re utilizing in our catchment area. So with that data, we're able to make a very strong case to the airlines on particular routes,” he explained. “We said that if you bring service to Bradley, in some cases, you’ll be the only game in town and can really capture a sizeable portion of the market.”

The airport’s research found that when it has non-stop service on a market, it will capture at least 80 percent of all those traveling to that destination in the catchment area, said Dillon. “That's a very compelling argument to make to the airlines looking to start non-stop service to particular locations. International service, in particular trans-Atlantic service, has been our primary focus since we were formed as an aviation authority,” he said.

The critical thing is to truly understand your market’s needs and requirements, said San Diego’s Brown. “It’s not just about talking to airlines and using census data. It’s all about going into your community and becoming a member of the local business travel association and meeting regularly with local businesses on their travel frustrations and what flights they want,” he said.

Airlines have the same data that airports have on passenger numbers and fares, said Brown. “But they don’t have grassroots information on the industries and businesses that use international services in the community,” he said. “We can help them bridge any concerns about their air service decision.”

Show Me The Money

It costs money for airlines to bring in and maintain international flights, and airports have incentive programs to ease this expense. Airports offer a mix of incentives including reduced or waived landing fees, free airport office/gate space and marketing/advertising on new routes.

For years, Oakland has looked at its program to ensure that it is competitive with other airports, said Albrecht. “We are positioning ourselves to offer the best incentives in the region. We offer cooperative marketing to develop leads in our destination markets. “We also have a program to introduce the city of Oakland to new markets, noting we’re the best way to get to the San Francisco Bay Area,” he said.

In the case of Aer Lingus out of Bradley Airport, the state of Connecticut put forward a revenue guarantee, said Dillon. “While airports are not allowed to put forward revenue guarantees, governmental entities can, and in the case of the Aer Lingus service, the state felt, as we did, that it was very important to get that service. So it put forward that revenue guarantee to the airline,” he said.

In addition to the revenue guarantee that the state offered, the airport offer a standard incentive package, said Dillon.

San Diego has a North American program that covers Canada, the U.S., Mexico and the Caribbean, said Brown. “Our overseas program covers year-round service on flights outside of North America.”

Bradley, Oakland and San Diego have amazingly small teams overseeing their international air service efforts. “Because we're a relatively new airport authority, it's really just myself and we use Campbell-Hill as our consultant,” said Bradley’s Dillon. “Hopefully in the near future, we'll be recruiting additional staff to supplement our efforts.”

At Oakland, the air service team is under the marketing and communications department, said Taylor. “There are five full-time staff on the team.” San Diego’s Brown has two staffers who work for him, and has a third position that he can fill.

Big Wins And The Future

Bradley’s goal as a new airport authority was not only to restore trans-Atlantic service, but also restore trans-continental service, said Dillon. “These were both extremely important to our business community. So we were very pleased to be able to get year-round service to Los Angeles and seasonal San Francisco service,” he said.

The airport stressed that Aer Lingus’ Dublin flight provides the business community connectivity to all of Europe, said Dillon. “We also highlight the fact that because those connections are being done through Dublin we have the benefit of Customs preclearance, which is a huge time saver,” he said.

As for the future, the next target is service to Frankfurt, said Dillon. “We have a high concentration of German-based businesses in the area that are looking for connectivity into Germany,” he said. “We also have Paris on our radar because there's a lot of connectivity, particularly for UTC, to Paris. So we're constantly out there turning over every stone to find out what would be successful here in Bradley and what our business community is looking for us to obtain.”

The biggest win for Oakland is getting passengers these international flights out of an airport that’s easy to get to and navigate, said Taylor. “Right now, our top underserved market is Vancouver. Oakland is also the largest market without service to China. And Taipei and Manila are also big targets,” she said.

Japan Airlines’ service to Tokyo was a big win for the San Diego region, said Brown. “Our community had come to the conclusion that international air service wasn’t viable from the region. So we had trouble telling airlines that a flight to London would work, especially since BA had been in our market twice before,” he said.

There were a lot of misperceptions about international air service prospects in San Diego, said Brown. “Airlines didn’t realize how many people were driving to LAX for international flights. So when we got London back, it was profitable from the first month of operation,” he said. “That turned the tide, but when 787 came off the line and we got our service to Tokyo, that showed we had more potential than was previously realized.”

Brown estimates that the Tokyo flight contributes $90 million a year to the local economy. “We’re now looking at getting more service to Latin America because being on the U.S.-Mexico borer is conducive for this service. We’re also looking at China and the Pacific Rim region.”

Once airports get international service, it’s obvious that they need to fill the seats, said Campbell-Hill’s Schorr. “We regularly tell airports getting the service is the easy part. The tough part is fitting the pieces into place and filling seats at fares that airlines need to be profitable,” he said. “Sometimes the flights works from the beginning and sometimes airports and their business partners have to beat the streets to push them. But once a community shows that they will support nonstop international service, it makes it that much easier to show other carriers that they can make this work.”

About the Author

Benét Wilson | Senior Editor

Alejandro A. Alvarez/The Philadelphia Inquirer/TNS