ARE YOU INVESTING ENOUGH TO ELEVATE YOUR AIRLINE SERVICE SUPPORT?
YOU SHOULD IF YOU WANT TO AVOID CANCELLATION OF FLIGHTS!
Recent news stories show how timely investment in airport air service is critical for small communities
By Scott Stewart-Community Flights
Story #1 Published April 8, 2014:
United Airlines is shrinking its reach, and suspending a route direct from Monterey to Denver that’s been flying since 2005.
Story #2 Published April 7, 2014:
The announcement by SkyWest\United Airlines that it will cease service to the Crater Lake-Klamath Falls Regional Airport June 5 was a surprise Friday, especially in the light that so many city officials had been working diligently to increase passenger numbers.
Surprise…Surprise! – Should Small Communities be Surprised with Air Service Reductions!
Both of the stories elicited a reaction of surprise in the communities impacted: Klamath Falls and Monterey. The airline industry…always dynamic is even more so with airlines claiming pilot shortages due to recruitment issues based on new FAA pilot rules and regional fleet reductions raising the bar for success and sustainability of small community air service. The barrier for sustaining air service used to be profitability…now the question that needs to be answered in an air service environment of shrinking air service opportunity is…is your air service more profitable than it is, in other small communities!
United reported an 82-percent load on Monterey-Denver flights, compared to an average of 90 percent on other Denver routes.
Monterrey airport General Manager Tom Greer said in a statement. “This cancellation announcement took us by surprise.”
SkyWest currently provides daily air service to and from Portland and San Francisco. They have been providing that service since July 2008.
Praise should go to Airport Manager John Longley, City Manager Nathan Cherpeski and Discover Klamath Director Jim Chadderdon for having the foresight to try to boost passengers in a down market.
Strong Occupancy’s–Not the Key Air Service Success Metric–Timely Support Needed!
In the case of Monterey, you would have thought that 82% occupancy on the flights would have been a formula for profit and success on the flights. 82% load factor is near the 83% air industry average for all airports and above the 76% load factor average for airports that fly aircraft the size that typically fly into Monterey.
The problem is that airlines are evaluating community air service based on comparative profitability and total airline system contribution. While these market and system profitability metrics aren’t noted in the news articles that told the story for Monterey, I can only assume from previous discussions I’ve had with airline planners, Monterey was on the bottom end of markets for degree of profitability and in overall contribution of revenue to United’s system profitability. When United was forced to flight cuts due to the more restricted flight operations they could operate, Monterey-Denver service was likely cut due to its lower profitability level and/or contribution to the overall system when measured against other smaller market service.
In the case of Klamath Falls, they were doing the right thing with putting resources into a focused air service support effort to better position themselves in the airline market evaluation equation. Unfortunately, it looks like they may have gotten started too late and therefore weren’t able to produce results in a timely enough way to save their air service with United to Portland and San Francisco when United looked at where they would make their cuts.
The United Klamath Falls cancellation announcement is a reminder of the changing economic picture in the West. Cities and towns have to find ways to grow from within without hoping there is a silver bullet, or large industrial employer who will come in to bail them out.
I think it is fair to say that based on current air industry conditions with Klamath Falls, (Medford only 80 miles away with a lot more air service options), they may have ended up losing air service even if United had waited until after the summer to evaluate their market performance. I also think it is a fair comment to note that had Klamath Falls been actively building up their local and destination inbound visitor support of their service sooner, say in 2008 when this service started, they would likely have produced stronger flight occupancies and revenue by 2013. This may have also better positioned the Klamath Falls airport to survive the recent United cut of flight markets and operations.
Monterey, might want to consider going forward, a heightened focus on coordinating local efforts and in putting more resources towards building up the profitability and occupancies on their remaining flights even more, or they could look at the possibility of losing more air service. (Airlines will be retiring more and more aircraft currently serving small regional markets; at a pace that exceeds the taking on of replacement aircraft).
How can your Community Take Action to Achieve an Upward Air Service Spiral and Community Prosperity?
Investing in a heightened professional air service support effort that greatly raises the level of community engagement, now rather than later, is critical to helping a community achieve its full air service and economic potential. Klamath Falls shows us that waiting too long to take action can create a missed opportunity as it regards a community’s ability to out-compete another community’s air service profitability performance. Monterey shows it’s not just flight passenger occupancy’s that optimize the profitability of a communities air service and leads to a community sustaining their air service, let alone think of growing air service.
Producing a higher profitability and contributing more to an airlines whole system than other competing communities can serve as the best protection to your sustaining your current air service. Working with air service support and development professionals who speak the airlines language and regularly are staying on top of how your community air service is being viewed by the airlines and can help focus the community on taking the most effective proactive action, can keep your community positioned well in the eyes of the airlines and retain your community air service.
Communities should know that even with heightened air service focus and timely support actions, sustaining air service is not guaranteed. The air industry is not in a growth cycle and other factors are challenging the sustaining of service in many small and medium sized markets. There are also many other factors that go into airline schedule decisions. What is guaranteed is that in today’s airline industry, a community will often be both surprised and sorry if they don’t commit to heightened air service support in a timely manner to do all they can to avoid losing some or all of their air service flights. Once these flights are gone, they are extremely difficult (If not impossible) to get back!
Scott Stewart is the principle of Community Flights an air service support, development and management company that works with communities, organizations or businesses in leveraging the great economic asset that air service is for economic gain. Scott formed Community Flights in January 2013 in order to assist more communities, organizations and businesses, bridge the “air service understanding gap” with the airlines in order to create an airline and community win-win air service support and performance environment. More info about Community Flights can be found at www.communityflights.com. Scott Stewart can be contacted directly at [email protected] .