Category Archives: Air Service Management

Air Service Drives Tourism Revenue

Air Service Drives Tourism Revenue in Many Communities

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Air Service Drives Tourism Revenue
A look at the Community Tourism Economic Benefit Math

Air service drives tourism revenue in many communities. Tourism is a job creating – economy driving business. When tourism organizations fully leverage the air access they offer and focus on maximizing visitation from this air service, air service drives tourism revenue. Well leveraged air service can increase the jobs created and the economic activity in the community. By maximizing the economic activity driven by their efforts, tourism organizations effectively fulfill their mission and prove the community investment in their organization.

  • Air Tourism Guests tend to stay longer than drive guests
  • Air Tourism Guests spend more than drive guests
  • An Air Tourism Guest is worth more than a drive tourism guest

Leisure

Business

Overseas

Air

Drive
Avg Spend

$373

$563

1931*

$1,075

$580
Avg Stay

3.0Nt

2.8Nt

8.8Nt*

6.3Nt

4.3Nt
Party Size

2.1

1.3

1.7

2

2.3
Party Spend

$784

$732

$3,283

$2,150

$1,334

*Avg per destination – Overseas visitors avg 1.7 states & multiple destinations – 18 nights is avg overall stay*

Data is from USTravel.org, AHLA and TNS Travel America Survey or from math computations from this information.

The Air/Drive columns represent a communities information that wishes to remain anonymous. This is a resort  community that overall does see higher air visitor spend then drive visitor and longer stays and overall air party  spend. This is a resort community that overall does see higher spending than the US average but has been selected in order to  illustrate the value of fly vs. drive guests and the overall trend of higher value of fly visitors. This resort community shows how air service drives tourism revenue.

Key Tourism Organization Questions:

  • Are you focused on the higher yielding air guest…particularly the overseas guest?
  • Are you exercising proactive support of air service to increase air seat capacity and increasing air service  guests to drive larger  economic activity via your tourism agency efforts?
  • Is there a high degree of tourism/Air Service integration via coordinated marketing & support efforts with  your airport and/or other community organizations?

Community Flights offers air service management, inter-organization facilitation and support coordination  services. We’ll help you manage your air service to where your air service will drive tourism revenue. We provide proven professional guidance that can help you maximize the effectiveness of your air  support & optimize the benefits & economic activity of your efforts.

Our services can run from entry-level and lower cost basic support programs to more involved and integrated  support and air service development efforts depending on your tourism needs. Because air service drives tourism revenue, tourism agencies should consider heightening their focus on air service support.

Contact scott@communityflights.com for information on how to increase your air effectiveness!

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Effective Air Service Support

Effective Air Service Support Leads to Positive Results

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Effective Air Service Support Leads to Positive Results

EFFECTIVE AIR SERVICE SUPPORT EFFORTS CAN INCREASE FLIGHT REVENUES AND CAN INCREASE FLIGHT PROFITABILITY TO THE AIRLINES AND HELP MAKE YOUR SERVICE MORE SECURE AND SUSTAINABLE!

Below is a data summary showing how effective air service support services can positively impact flight revenues, local and guest flight usage (Pulling back leakage), reducing cost of incentives or revenue guarantees and other community benefits. Investing in airline service support services can really pay off!

What Air Support Services deliver:          
Example:  Montrose–(MTJ)            
Year Capacity LF% Pax Flight Rev
20042005 121749 66.70% 81175 $10,522,778
20052006 114293 74.10% 84741 $11,818,560
Change -7456 +7.40% +3566  +$1,295,782
Air Support-Community Benefits:
   > Pulled back some local origination leakage from other airports
   > Pulled back some Inbound guests from other airports
   > Increased revenue on flights by about $1.3 Million (12.3%)
      (Rev increased despite reduction in capacity)
   > Increased LF% by 7.4%
   > Increased Passengers carried by 3566
   > Estimated increase of $3,423,360 in direct guest spending
   > Estimated increase of $10,270,080 in total economic activity
   > Estimated increase of 37 jobs related to increased visitor use of flights
      (In this community it’s estimated 96 visitors create 1 job)
   > Estimated increase in Sales Tax Collections $154,051 via Direct Guest Spending
   > Est. increase in Lodging/Restaurant Tax Collections $30,810 via Direct Guest Spend
   > 20042005 paid 66.6% of revenue guarantee risk
   > 20052006 paid 28.5% of revenue guarantee risk
   > 307% reduction in revenue guarantee incentive paid
Strategic Air Support Strengthens Flights/Increases Revenues!

Contact scott@communityflights.com for more detail on Air Service Support Services offered by Community Flights!

The above case study shows that effective air service support can drive positive results and community benefits. Effective air service support includes:
1) Community Mobilization
2) Increased community awareness
3) Increased community engagement
4) Focused community actions
5) Community leveraging of funding and other support resources.

Community Flights provides effective air service support services. When you have a successful and growing air service your community will see an increase in tourism and better business access. Active and effective air service support is a good investment that pays off economically, through a better quality of life and in many ways.

 

Losing Air Service

Losing Air Service…It Could Happen to Your Community!

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Losing Air Service…It Could Happen to Your Community!

Losing air service…it could happen to your community. I can’t tell you how many times I hear from communities the statement: “Why did we lose air service with XX Airlines…the Flights were always packed?!” Losing air service is difficult for a community’s economy.

THE HARD TRUTH:
The flights may have been full or close to it when the person flew, but overall the flights were often not full….
or
The flights were pretty full with high load factors in general but the flights didn’t have people paying enough for their tickets and didn’t have enough revenue on them. Airlines can’t go to the bank to pay their bills and hopefully make a profit with people in seats…if these people didn’t pay enough for their ticket.

If you want to get to a situation where you are not losing air service…these people in the seats also need to spend enough dollars with the airlines to cover costs and spend enough so there is an airline profit…butts in seats doesn’t always equate to enough dollars in the airlines bank account! If you need a dollar and you get 90 cents your losing money no matter how many passengers you carry and your increasing your chances of losing air service.

Very recently, Flagstaff Arizona announced that they were losing air service on Horizon Airlines to Los Angeles. Unfortunately a small community losing air service is not usually a big news item in these times of many airlines reducing capacity and service. What makes this incident of note, is that Horizon not a month or so before this discontinuance of service announcement, had advised Flagstaff that the flights were profitable!

You may ask how can a community be losing air service when the service is profitable?! The answer is actually simple and goes to THE BIG TRUTH of Airline Service Development…

“Profit alone doesn’t make community air service secure. Making a bigger profit than if the airline used the plane to fly to another community helps but also important is a profitable service that fits in with the airlines system and business plan!”

THE BIG TRUTH is exactly what Horizon shared with the Flagstaff community. Yes the flight was profitable…unfortunately for Flagstaff they were on the bottom of the profitability list of airports Horizon had service to at a time when Horizon was going to see a reduction in aircraft. Horizon had to cut service. Like a good business will…Horizon kept their most profitable service and cut service from their least profitable service communities when they have to make cuts…including cutting service from Flagstaff. It’s sad but profitability is not a protection against losing air service.

You may ask why doesn’t the airline just get more equipment?
If the service is profitable why not get or keep enough planes to fly all profitable routes? Good Question but with logical answers. In an industry that has reduced capacity and thus flights to get to an overall pricing power position needed to drive their whole systems to profitability…you don’t just casually add or keep planes and flights. Those extra flights could put too many seats in the system driving down system airfares and jeopardizing more of an airlines overall system flight schedules ability to make a profit. Many more communities would experience losing air service if the airlines put in too much capacity.
Additionally an extra aircraft isn’t an inexpensive thing to buy…Aircraft cost tens of millions of dollars and sometimes hundreds of millions of dollars. It is a costly asset and not something purchased like a box of pens. Aircraft of the right size and type are not always available to just buy and put into an airlines fleet. Also…if your lease is up on an aircraft it has to go unless you extend the lease, then you have to look at the costs of doing this. The extra costs of maintaining an extra aircraft type with maintenance, training etc…can move a profitable route to one that is non-profitable.
What is a community to do if even when their commercial air service is profitable they can experience losing air service?

“Airline Revenue Guarantees or other incentives can help especially if the community has a sustained ability to offer risk abatements.”
It turns out that Flagstaff originally offered subsidies and other start-up support to get the Horizon Los Angeles Flight in the first place. High six figure level support. Unfortunately, often, start-up cost abatements are only helpful as long as the communities funds are available. It’s an old story that often, the airlines will leave after these funds have been fully depleted. Revenue guarantees or other risk abatements can stopa community from losing air service.“Having professional airline management of service can give both an early warning system for a flight that is not doing well AND can offer expert guidance for maximizing flight loads and revenue to help strengthen your service to avoid flight cuts.”

Flagstaff’s funds were for start-up support. If they had an ongoing program with consistent funding source availability…Horizon could have gone back to Flagstaff and allowed them the chance to move them up the profitability ladder via extending a revenue guarantee and Horizon could have cancelled another communities service instead of their losing air service.Better still, with professional air service management Flagstaff could have gotten an estimate of how their service performed against other Horizon markets and taken proactive action to elevate their performance so that they were closer to the top in market performance and not the bottom. Knowing Flagstaff’s investment for air service was short-term and not a longer term support that was sustainable… Horizon cancelled the service and didn’t make the call about their planned discontinuance of air service until after executing on the decision.

If a community is generating a profitable service why would they even consider offering a revenue guarantee or other incentives?

In the present environment…there are fewer aircraft available for a growing number of communities who want the air service and the large economic development and activity that the air service can generate.

 

Let me put it this way…
If a flight drives $10 Million Dollars or more in economic activity in a community, investing $200,000 in a revenue guarantee or other incentive to keep the air service could make economic financial sense! The fact that in many instances, a community will add 1 more job for every 100 visitor arrivals by air is another benefit to air service. There are many trickle down benefits for not losing air service. 

In my role as Executive Director of the Telluride Montrose Regional Air Organization (Until Dec 2012) I’ve pursued, obtained and supported commercial air service via revenue guarantees that have delivered a strong return on investment. I’ve created benchmarks so that my community can decide what the ROI of an air service needs to meet to produce a satisfactory or better ROI and what other benchmarks a community should develop to best manage an air service development program that is worthwhile and drives strong community economic activity and impacts. A well run program can grow air service instead of experiencing losing air service.
Community Flights, my air service development consulting company can help communities evaluate air service development issues like revenue guarantees and other incentives…how to structure the incentives, how to acquire the incentives within the community, how much is right for how much air service etc…Small Communities in particular need to compete for the air service they can support and service they deserve…Community Flights can help decide a communities air service focus and develop and execute a strategy to meet the communities air service goals.
For help with your air service development, management or support and/or economic optimization contact scott@communityflights.com
One Air Service Acquisition Requirement

One Air Service Acquisition Requirement You Must Meet

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One Air Service Acquisition Requirement

Your Target Aircraft Type Can Operationally Fly In to Your Airport!

One Air Service Acquisition Requirement is that your target plane type can operationally fly into your airport. That’s right…many an “Air Service Development Plan” falters because the airport to which a community is trying to attract commercial airline service to…has operational characteristics that prevent service by the plane and airline market they are looking to attract. The operational ability of aircraft to fly to your airport is the one air service need that is required.

Airline guarantees, subsidies, marketing or other incentives are inconsequential to your airline service development efforts if the One Air Service Acquisition Requirement is not present. That’s right…many an “Air Service Development Plan” falters when your airport cannot operational accept the airline/aircraft your community is targeting!

When you don’t meet the One Air Service Acquisition Requirement of Airline Operational Conditions, while often difficult to understand, it can make the answer easy to a communities pursuit for airline service when the answer is no. An airlines first priority is to offer SAFE transportation from point A to point B. If the airport has a short runway for its elevation or obstacles that force extreme take-off or landing situations that an aircraft cannot handle then an airline can’t viably serve you. If the airline can make it in and out of an airport but has to restrict airline seats it can sell, then this too can prevent an airline from coming to your community.

Airlines are commercial enterprises and as such need to earn a profit to stay in business. When you don’t meet the one air service acquisition requirement you will either get no air service or this will drive a restriction on how many seats an airline can sell and it can make the service economically untenable if the level of restriction impedes the ability to make a profit.

      Aspen Colorado, (http://www.aspenairport.com/ ) recognized the one air service acquisition requirement in its effort to get a runway extension recently. Aspen noted that the runway extension was not so much about getting new plane types and markets but in being able to fill in more seats on present plane and markets that were flying into the airport. At over 8000 feet elevation and with a 7000 foot runway in the summer particularly and from longer distances (Over 1000 Miles) the CRJ700 aircraft flying into Aspen takes seat restrictions on their flights (Particularly in the heat of summer) that jeopardize  the capabilities of some of their flights to fly profitably. Atlanta in particular, a service they have had, is in jeopardy of not continuing due to the seat restrictions the airport is experiencing. Even if the Aspen community were to consider revenue guarantees to continue this Atlanta service (And they are not…Aspen doesn’t guarantee any service)…the seat restriction issue due to its operational challenges makes Aspen a difficult airport for the service to continue to.
.
Charlottesville Virginia (http://www.gocho.com/ ) is another community that is losing service due to airport operational restrictions (Also short runway length for the elevation level of the airport) and not meeting the one air service acquisition requirement. A direct flight to Detroit recently got cancelled due to a short runway. Often a 50 seat regional jet could only fill 35 seats when it was hot. Even at 640 feet elevation instead of 8000 feet like Aspen, Charlottesville experiences situations where the airport needs either more runway length or needs its plane to have less weight on takeoff. The airport is presently looking at an 800 foot runway extension to take care of this issue so it can try to regain service to Detroit.
So…the first question that a community and airport should ask as it regards your airport and gaining airline service is: “What aircraft can operationally fly into our airport and from the markets that you want air service from?!” Communities and airports should address the issue of the one air service  acquisition requirement upfront.Additionally the community air service development effort should consider…does the airlines we’re  considering approaching about airline service have these aircraft in the markets within a range where they can safely and economically sustainably serve your community?
If the answer is no…then you need to consider other market service options or look at the airport infrastructure (Runway Length, Elevation, Obstacles etc…)  and improve the conditions of the airport to expand the plane types and mileage ranges of these aircraft that can service your community. You need to meet the one air service acquisition requirement.
I know from personal experience that some airline service cannot be obtained due to operation restrictions. In Telluride, Colorado we have the highest commercial airport in the United States at over 9000 feet elevation. Unfortunately, we can’t lower the mountain. We can look at runway length and approaches which we are doing. Additionally we’re clarifying the plane and mileage ranges these plane can fly in from so that we don’t waste our time pursuing aircraft that cannot sustainably fly into Telluride.
Recommendation: Save yourself some trouble…check to insure you can meet the One Air Service Acquisition Requirement…1) know what is possible aircraft and market/distance from airport-wise and 2) Focus on airlines that could offer service from those markets as targets for your air service acquisition efforts.
      For help with your air service development, management or support and/or economic optimization contact scott@communityflights.com