Talking About Airports at the Phoenix Aviation Symposium

Greetings from the Phoenix Aviation Symposium here in, well, Phoenix, of course. The first day was action-packed with plenty of technical talk about the industry, but instead of throwing out a ton of random information, I thought I’d focus on one piece that actually can impact the public. Let’s talk airports.

There was a lively panel yesterday morning that involved leaders from airlines, airports, and the FAA that Taj Mahal Airportwas called, “Airports – Adapting to Change.” Most airports around the US have seen big drops in the number of flights over the last few months. Some, like Ontario or Oakland, have lost much more than others. So in this climate where flights are shrinking across the board, what can be done to stimulate new flights?

This was the question that kept the panel busy for a long time, and ultimately the discussion centered on airport costs. Bob Montgomery, VP of Property and Facilities for Southwest, made it clear that “there is not a direct relationship between the airport cost and our decision on service. For all the emphasis we put on airport costs . . . it’s next to impossible to show that direct relationship [but] airport costs are important, they end up in the equation.”

JetBlue President and COO Russ Chew was more forceful by saying, “discipline around cost control and capital spending are crucial.” Both carriers made it clear that while cost isn’t everything (JetBlue does fly out of JFK, one of the most expensive airports around), it can have a major impact on service levels.

The reality is that airlines will put their planes where they can make the most money (or lose the least during times like these). When an airport increases costs, that rarely ends up increasing revenue by the same rate so it makes the airport less competitive when an airline is looking for places to add (or just not cut) flights. While having a decent, functional facility is important (yes, I’m looking at you LAX), building something that’s overly expensive and ambitious will end up hurting in the long run (still looking at you, LAX).

And for airports that think that PFCs are an easy way to get around this problem, they’re wrong. The latest FAA re-authorization proposal would allow airports to charge up to $7 in Passenger Facility Charges (PFCs), up from $4.50. These fees are implemented by the airport on passenger tickets to pay for airport projects. For most travelers, the PFC just shows up as another tax adding to the total cost of the ticket. By increasing this charge, airports may not increase their costs to the airline but they increase their costs to the end user. And when that goes up, that means the airlines get less money from a $200 ticket than they did before.

Of course, when that happens, that means the flights are less profitable and the threat of fewer flights is real. So, what can customers do about this? Well there are a couple things. Flying more often and paying more money always helps (duh). The more people flying, the lower the costs per enplanement (CPE), since there would be more enplanements. But there’s another solution that doesn’t often get exercised.

Since your airport is most likely publicly run, you can keep an eye on what’s happening to costs at your airport. Nearly everyone’s costs per passenger are going up since there are fewer passengers to bear the costs, but some are worse than others. (Yeah, Indianapolis, that big empty terminal was pretty pricey, huh?).

Unfortunately, I don’t believe there’s an easy way for just anyone to look up your airport’s cost per enplanement, but a Google search can often (but not always) help turn things up for you. You can always contact your airport and ask for more info or talk to your councilperson if the city runs the airport. The point is that these are your tax dollars at work, so you should make sure that your voice is heard.

4 Responses to Talking About Airports at the Phoenix Aviation Symposium

  1. The Traveling Optimist says:

    Cranky – Will you be running a series on some of the other topics discussed at the Symposium?

  2. CF says:

    I won’t have summaries of every panel, but I will have the ones that I found interesting either here or on BNET. I have a piece on International Issues over there today.

  3. Joe says:

    Hi Cranky:

    I live near a small airport (Williamsport, PA) (IPT).. We have only one airline (USAirways Express) which goes to only one destination (PHL) three times a day. Last year they they were going to pull out and requested EAS funds. They lost the EAS bidding but when fuel prices dropped decided to remain with limited service, We lose passengers to Stae College (SCE), Wilkes Barre (AVP) and Harrisburg (MDT). Since you were in the Airline Biz to you have any suggestions for smaller airports like ours to retain or attract new service in times like these?Thanks and keep up the good work!

  4. CF says:

    Joe – It’s a great question but unfortunately it’s not an easy one to answer. You’re in a city that’s less than 100 miles away from other airports with greater service, so it can be hard to attract more service to your airport. But the best way to get more service is to use what you’ve got. If the flights are profitable and successful, then airlines will look at adding more flights and new airlines might look at coming as well. But it’s going to be an uphill battle in a time like this. Supporting your existing service and of course, keeping airport costs low, is the best thing you can do. If there is a unique reason that service to another city from yours will work, then getting the information on why that might work to the airline is important and that’s the job of your airport to make sure that the airlines are adequately informed.

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