Transport Airports

Virginia Airport Shows What Happens When a Low-Cost Carrier Leaves Town

Feb 24, 2014 10:00 am

Skift Take

Hoping that People Express will save it isn’t going to get the airport far. It should look instead to deepening ties with Frontier

— Jason Clampet

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Pieter van Marion  / Flickr

Pieter van Marion / Flickr


Since the departure of AirTran Airways in March 2012, Newport News-Williamsburg International Airport has lost more than 500,000 passengers. The airport also lost direct connections and daily flights to airports in Boston and New York, and a carrier that offered low fares compared to larger airlines.

Airport Executive Director Ken Spirito said the passengers did not migrate to airports in Richmond and Norfolk. The two nearby airports lost a combined total of more than 79,000 passengers during the same period.

“People are just choosing not to go,” Newport News Development Director Florence Kingston said of the passengers who vanished. Those include both leisure travelers and those who fly for business reasons, she added.

Newport News airport officials and business leaders want to lure those missing customers back to the airport, which boasted more than 1.06 million passengers in 2010, breaking a record. Bringing customers back also will boost revenue.

The airport, which is self-supporting, lost more than $1.8 million in revenue and scaled back its budget from $8.96 million in 2012 to $6.8 million in 2013. Most of the reductions were passenger-associated positions, such as parking lot personnel, skycaps and police, Spirito said.

To win back passengers and the revenue they bring, industry analysts and local officials agree the airport needs two key ingredients that AirTran service provided: a low-cost airline and more flights, especially connections to another hub, such as New York.

“That’s a challenge,” said Spirito. “Since AirTran left, we’re looking at it daily.”

Frontier and Allegiant airlines have softened the blow by providing service to Denver and Orlando, but they are not enough to fill the void AirTran created, officials said, and the passenger data support their claim. Neither offers daily flights.

Airport spokeswoman Jessica Wharton said she, Spirito and other airport officials are in constant talks with airlines, from major carriers to those offering regional service, to improve airport business.

Low Fares Are Essential

Steve Cook, vice president of Hampton Roads Economic Development Alliance, said replacing AirTran with another low-cost carrier is essential to the region’s tourism and leisure economy. “That’s extremely important in our area,” he said.

Many airport, local government and economic development officials are pinning hopes on an airline that has yet to launch its first flight.

Start-up airline People Express announced in February 2012 that it would re-establish discount airfares and would use Newport News as its headquarters. Airline founders said they had commitments to fly into Pittsburgh and Providence, R.I., and were pursuing the purchase of airplanes and other equipment.

But the company encountered financial problems and in August 2013 laid off six employees. After founder and then-President Michael Morisi resigned in December, Chairman and CEO Jeffrey Erickson took over as president.

“We’ve been working with People Express,” Spirito said. “I’m optimistic something can happen.”

Spirito said People Express now has commitments to fly to Newark and was in the process of “getting capitalized.” As for any progress toward beginning flights, he said in an email Wednesday that he had “nothing new yet” to share.

Industry analyst John Strong, a professor at the College of William and Mary’s Mason School of Business, said Newport News needs to recapture its low-fare traffic, but “there are only two meaningful operations right now — JetBlue and Spirit.” JetBlue flies out of Richmond; Spirit does not yet serve the region.

“If they get Spirit, they get something that looks like Allegiant and Frontier,” Strong said, adding that such an airline would lure leisure travelers looking for low-cost tickets back to the airport.

“The need for a low-fare carrier is absolutely at its peak now,” said Spirito. “The market is depressed because there is no low-fare carrier in the middle of the region. People are not flying.”

More Flights, More Airlines

While Spirito and others note the need for low fares, Newport News City Manager and Airport Commission member Jim Bourey, who helped bring Southwest Airlines to Greenville, S.C., when he was city manager there, said Newport News needs more flights and more airlines to ensure “reasonable cost service.”

More flights and more carriers would help attract more businesses to the region, and help those near the airport expand, said William and Mary’s Strong.

“For economic development, it is worth a lot when you can say you are within 30 miles of an airport,” he said.

Bourey added, “With direct service to major markets, service we don’t have today, some of our major companies would be more willing to expand some of their business.”

The reverse is also true, Kingston said — AirTran’s exit and the loss of flights have hurt local businesses. “We hear about it probably weekly. Companies talk about the issue of time getting to either Norfolk or Richmond,” she said. “They are saying, ‘I have lost an important transportation resource that costs me time and money.’”

The airport has the capacity to serve more airlines and offer more flights. In 2010 the airport added a new concourse, which serves Frontier. It is upgrading the runways with $11 million from the Federal Aviation Administration, the state and its own coffers. It recently opened a U.S. Customs processing station, which helped attract Apple Vacations, which offers weekly flights to and from Cancun, Mexico, via Frontier Airlines.

Reduced Capacity and Interest

Spirito and others said coaxing airlines to increase service to the airport will take more than officials’ efforts.

“What I would look for is for the business community to express a message of support for taking those flights,” Bourey said.

“We know the ability to support the service is there,” Kingston said. “We’ve demonstrated it in the past.”

Spirito agreed. He said when AirTran began flying out of Newport News, there was no historical data supporting the venture. But now the airport can point to full flights and the number of passengers flying into and out of the airport. Even now, flights generally are at capacity, Wharton said.

Spirito said convincing airlines to add service is difficult in the current market, with three major airlines — United, Delta and American — and another, Southwest, close to their size. Those airlines work with smaller, regional services, and all have reduced capacity in recent years. American and Delta now serve Newport News, as well as Norfolk and Richmond, and Spirito believes they should consider adding service to the airport. “We think there is a need for United to look at the market.”

Kingston and Bourey suggested luring an airline may mean providing revenue guarantees or other incentives. Spirito said he wondered if the communities the airport serves are willing to invest taxpayer dollars to bring a new airline to the airport, or prompt an existing airline to increase service.

Bourey said the airport commission and local officials are not considering asking cities to contribute to the efforts to bring in a new airline at present, but added that it would help the airport and the communities it serves to know whether residents would want to make that investment to increase flights and service.

He said the public provided financial support to bring in Frontier and AirTran. Kingston noted AirTran received grants and revenue guarantees when it first established service, but she said the industry is less interested in the guarantees now.

Strong cautioned that while airport officials pursue expanded service and low-fare carriers, they also must take steps to protect the airport’s current capacity while working to bring in more business and redevelop the New York connection.

“The big story has to be to preserve as much frequency to the hubs as it can,” he said. “And you really want to get one more airline in there.”

Bourey sees the airport’s greatest challenge as making sure both major and regional airlines understand the region and the potential revenue its airport offers.

“I’ve said the airlines don’t fully understand local airports well,” he said. “They don’t fully understand the markets.”

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