Eppley, other region airports lose flights in airline consolidation

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Posted: Sunday, May 26, 2013 12:00 am

Airline consolidation has brought stability to the industry, but small and midsize airports — such as those in Omaha and the surrounding region — have lost flights and seats.

For passengers, that means fewer choices and possibly more travel to reach other airports.

Rising fuel costs, less competition in the industry and decreased demand because of a tough economy all have forced the airlines to become more disciplined business operations, said Chris Martin, Eppley Airfield's director of operations.

“For the first time in 30-something years, since I can remember, they've been very disciplined,” Martin said.

Although discipline is good for the bottom line, it's not necessarily good for travelers who fly in and out of airports like those available in much of this region, according to a report this month by the Massachusetts Institute of Technology's International Center for Air Transportation.

Its study highlighted that many small and mid-sized airports have seen cuts in the number of flights serving them and the number of seats those flights offer.

Medium hubs such as Omaha's Eppley and Kansas City International Airport saw, on average, a 26 percent decrease in scheduled flights and a 21.5 percent decrease in scheduled passenger seats from 2007 through 2012.

Even the busiest airports lost nearly 9 percent of their flights. On average, the MIT report said, U.S. airlines cut scheduled domestic flights by 14 percent. The number of seats lost is slightly less because airlines in some cases substituted larger planes.

Airlines reconsidered route maps after a string of mergers: Delta and Northwest; United and Continental; and Southwest and AirTran. Some routes to smaller cities have been converted to more profitable ones, such as between cities with larger populations. In addition, fuel costs prompted the phaseout of many 50-passenger jets in favor of larger planes.

Larger planes sometimes mean fewer flights but more seats, which explains why Des Moines has seen a sharp decrease in flights and a smaller decrease in available seats.

Steve Coufal, executive director at Omaha's Eppley, and Martin both said they thought the Omaha airport, compared with airports of similar size, has fared relatively well through the consolidations.

In September 2007, Martin said, Eppley peaked at 102 flights a day. In September 2008 it was down to 88 flights a day. Now it has 75.

Similarly, in 2007 Eppley flew to 21 cities nonstop. By 2008, that had dropped to 16, where it remains today.

Effects of airline consolidation, 2007 through 2012

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Airport % change (available flights) % change (seats offered)
Omaha Eppley Airfield - 18.6% - 14.1%
Kansas City Int'l Airport - 30.2% - 24.6%
Des Moines Int'l Airport - 21.7% - 3.7%
Lincoln Municipal Airport - 24.9% - 30.0%
Sioux (City) Gateway Airport - 63.1% - 57.0%

Source: Massachusetts Institute of Technology International Center for Air Transportation

Still, Martin and Coufal said, Eppley benefits from a healthy economy in Omaha that supports a steady demand for tickets; an Interstate system that feeds into Eppley, allowing it to serve a six-state area; and service by six carriers — American, Delta, Southwest, United, Frontier and US Airways.

Fares, adjusted for inflation, have decreased over time, according to a report from the Bureau of Transportation Statistics. Martin said that's because of competition among carriers on specific routes and because Eppley is served by Southwest and Frontier, both considered low-cost carriers.

Eppley does not offer incentives to lure airlines or encourage the addition of routes, but Martin said the airport's short distance between gates and runways — a fuel saver — attracts airlines. Other enticements: free Wi-Fi, modern updates, cleanliness and an airport that stays open during extreme weather.

Those who recruit businesses to the Omaha area have not found their prospects concerned about the decline in available flights, said Karla Ewert, spokeswoman for the Greater Omaha Chamber of Commerce. However, air service is something businesses often ask about.

“They are especially interested in direct flights to certain areas, especially the West Coast,” Ewert said.

Don Smithey, executive director at Des Moines International, said his airport has mostly been unaffected, despite what the MIT report found: a 21.7 percent decrease in flights but only a 4 percent decrease in available seats. That's probably because of the study's time frame, he said. The airport has seen significant growth recently.

Des Moines offers 16 nonstop flights this year, up from 14 last year. There are plans to add more in coming months.

Smithey noted that in 2012 the airport saw 2 million passengers for the first time in its history. Smithey also served as executive director at Eppley for 25 years.

Last year, Des Moines gained Southwest as a carrier, which is expanding westbound routes in September, Smithey said. Delta also is increasing service to LaGuardia Airport in New York next month.

“We're seeing fewer and fewer regional jets because they just can't make money due to fuel costs. Here the demand is very strong, so we need seats,” Smithey said.

Fares have declined too, he said, due to the “Southwest effect” — an industry phrase for the effect the airline's entry into a market has. Smithey said Southwest's lower fares and its lack of fees for checked luggage or flight changes moderate fares as other airlines compete.

Southwest has no plans to change its fee strategy, spokeswoman Michelle Agnew said.

But Thomas McKenna, director of marketing with the Kansas City Aviation Department, said even Southwest is evolving as it grows, raising fares and now flying into larger hubs such as Denver and Philadelphia rather than focusing on alternate destinations it served in the past. Southwest is Kansas City International's largest carrier.

The MIT report agrees: “While Southwest did not cut flights as severely as the network legacy carriers in smaller markets, the airline's recent attempts at capacity discipline should be worrying to smaller airports — particularly medium-hubs — whose previous growth was fueled largely by new Southwest service.”

McKenna said Kansas City International is in a situation similar to that of other midsize airports. The airport, which once offered as many as 70 nonstop destinations, now has about 45.

“Part of the reason they were lost is because they were served by those small jets,” he said.

Smithey said further consolidations would not be good for anyone: “If you don't have the competition, the fares are going to go up.”

He also said that although he expects airports like those in Omaha, Des Moines and Kansas City to grow, especially as the economy improves, smaller airports such as those in Lincoln and Sioux City may not fare as well.

“I would project for you ... that in the next five years you will see a lot more smaller communities lose air service, particularly if there's good surface transportation to another airport,” he said.

Lincoln Airport Executive Director John Wood said that whether small communities keep air service is a combination of factors such as population and the distance to a larger airport. From 2007 to 2012, Lincoln saw a decrease of about 25 percent in flights and 30 percent in seats offered. That's worse than the 15.4 percent and 10.7 percent declines that were average for non-hubs like Lincoln.

Lincoln is now served by Delta and United, which offer flights to Denver, Minneapolis and Chicago, Wood said. Two or three years ago, the airport had seasonal routes to Atlanta and Salt Lake City through Delta. Airport officials hoped those would become year-round. Instead, they were eliminated.

“Lincoln's gotten big enough that we'll always have some service,” Wood said. “Whether it will be the exact same service, I'm not even going to begin to speculate.”

Curt Miller, director of Sioux Gateway Airport in Sioux City, said he does not foresee air service being eliminated there, despite the loss of Delta when it merged with Northwest Airlines. Delta once offered five daily flights to Minneapolis, then cut the flights to two a day before pulling out entirely.

That forced the airport to rely on the Essential Air Service Program, a federal Transportation Department program that subsidizes carriers serving small communities. Last year, the program agreed to subsidize American Airlines to serve Sioux Gateway for two years.

Miller said the goal is to increase demand for the routes American offers — two daily flights to Chicago — so the airline makes a profit without a subsidy.

Part of the problem for airports in Lincoln and Sioux City is the competition with Omaha, which is a short distance away and has Southwest as a carrier, said Scott Vlasek, director of the University of Nebraska at Omaha's Aviation Institute. The Omaha area is fortunate to have the air service it does, he said, considering its population.

The hardest part for passengers to understand about flight availability, Smithey said, is that it's a business.

“The airport is more like a landlord. ... You either have the numbers to support it or you don't.”

Contact the writer: 402-444-1414, paige.yowell@owh.com

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