Airports brace for fewer carriers, passengers
David Koenig, Associated Press
Sunday, August 17, 2008
(08-17) 04:00 PDT Fort Worth, Texas -- From his office overlooking the runways of one of the nation's busiest airports, Dallas-Fort Worth International Airport CEO Jeffrey Fegan sees the slowdown coming this fall.
Airlines are cutting flights under the pressure of rising fuel costs, and that means fewer passengers and less money from parking and food concessions at DFW. For the first time in its 34-year history, the airport is freezing its budget and rethinking expansion plans.
"We couldn't do that even after 9/11," Fegan says.
After years of growth, airports are delaying capital projects, freezing hiring, and considering increases in everything from landing fees to parking. Concessionaires are hurting, and many expect to close.
The problems are greatest at secondary airports that are losing a bigger share of their flights and lack international service to shore up weak domestic traffic.
Airports in Oakland, Cincinnati, Cleveland, Houston, Honolulu, Las Vegas and Columbus, Ohio, are among those expected to lose more than 10 percent of their scheduled service this year as airlines eliminate flights.
Oakland, which is losing service from American and Continental Airlines, is canceling a terminal project. Columbus also lost service when hometown carrier Skybus Airlines shut down in April after finding it could not keep offering $10 flights when jet fuel was $3 a gallon.
In San Luis Obispo, Delta Air Lines is pulling out after just one year, ending service to Salt Lake City. And American Eagle will depart, dropping its five daily flights to Los Angeles and closing a maintenance base that has been around longer than Eagle.
"American was an absolute shock," said airport Director Klaasje Nairne. "They were always the hometown airline. They were in the downtown parades. They invested in the community."
Eagle's flights out of San Luis Obispo were running nearly 90 percent full. Still, the airline, a unit of AMR Corp. and feeder carrier for American Airlines, told Nairne it was losing money on the service.
The airport planned to spend $60 million on a terminal and parking garage. Now both are in limbo, Nairne said, although she said she expects county supervisors will approve a scaled-down terminal.
"We have a number of businesses that depend on good air service," said David Garth, president of the San Luis Obispo Chamber of Commerce. "It's going to be much harder for us to convince a high-tech company that they should come here. It hurts."
Most U.S. airlines are cutting flights after the heavy summer travel season to reduce costs and drive up fares. They suffered big losses in the first six months of this year, largely because of a huge increase in fuel prices.
Leaders of dozens of airports, many of them smaller ones, were worried enough that they called an emergency strategy meeting last month in Washington. They heard politicians blame the airline industry's problems on inadequate U.S. oil production and oil-price speculators.
There will be about 160,000 fewer passengers a week passing through Los Angeles International Airport, where capacity will fall nearly 11 percent, according to airline industry database Innovata. American, Delta and United Airlines are making big cuts; low-fare Southwest Airlines Co. is standing pat.
To offset fewer flights, LAX is raising landing fees 15 percent, to about $500 for a fully loaded Boeing 737 and more than $2,000 for a full Boeing 747 jumbo jet.
Airlines and airports often have tense relationships - partners in the travel business, but adversaries when it comes to landing fees.
Southwest is the only major U.S. airline not shrinking, so it stands to pay a larger share of landing fees. Last month, CEO Gary Kelly complained that unlike airlines, airports do not control their spending during economic downturns, which runs up the tab on the airlines.
"We have a few airports out there that I think are spending more than they should, quite frankly, and so there are some real total airport cost increases that we are very vocal about," Kelly said.
"The more you raise fees, the more you drive airlines and customers away," said Howard Putnam, a former Southwest Airlines CEO and now an aviation consultant.
Airport executives say they get the message and are keeping landing fees as low as possible.
Deborah McElroy, executive vice president of the Airports Council International, a trade group, said Kelly's comments reflect the short-term view of airlines that must report to shareholders every quarter.
"It's rhetoric I've heard for 41 years, but I understand," McElroy said. "These folks aren't sure if they're going to be in business in six months."
Airports plan for growth years into the future, she said, and they're starting to ask carriers to stand behind long-term projects.
David Koenig, Associated Press
Sunday, August 17, 2008
(08-17) 04:00 PDT Fort Worth, Texas -- From his office overlooking the runways of one of the nation's busiest airports, Dallas-Fort Worth International Airport CEO Jeffrey Fegan sees the slowdown coming this fall.
Airlines are cutting flights under the pressure of rising fuel costs, and that means fewer passengers and less money from parking and food concessions at DFW. For the first time in its 34-year history, the airport is freezing its budget and rethinking expansion plans.
"We couldn't do that even after 9/11," Fegan says.
After years of growth, airports are delaying capital projects, freezing hiring, and considering increases in everything from landing fees to parking. Concessionaires are hurting, and many expect to close.
The problems are greatest at secondary airports that are losing a bigger share of their flights and lack international service to shore up weak domestic traffic.
Airports in Oakland, Cincinnati, Cleveland, Houston, Honolulu, Las Vegas and Columbus, Ohio, are among those expected to lose more than 10 percent of their scheduled service this year as airlines eliminate flights.
Oakland, which is losing service from American and Continental Airlines, is canceling a terminal project. Columbus also lost service when hometown carrier Skybus Airlines shut down in April after finding it could not keep offering $10 flights when jet fuel was $3 a gallon.
In San Luis Obispo, Delta Air Lines is pulling out after just one year, ending service to Salt Lake City. And American Eagle will depart, dropping its five daily flights to Los Angeles and closing a maintenance base that has been around longer than Eagle.
"American was an absolute shock," said airport Director Klaasje Nairne. "They were always the hometown airline. They were in the downtown parades. They invested in the community."
Eagle's flights out of San Luis Obispo were running nearly 90 percent full. Still, the airline, a unit of AMR Corp. and feeder carrier for American Airlines, told Nairne it was losing money on the service.
The airport planned to spend $60 million on a terminal and parking garage. Now both are in limbo, Nairne said, although she said she expects county supervisors will approve a scaled-down terminal.
"We have a number of businesses that depend on good air service," said David Garth, president of the San Luis Obispo Chamber of Commerce. "It's going to be much harder for us to convince a high-tech company that they should come here. It hurts."
Most U.S. airlines are cutting flights after the heavy summer travel season to reduce costs and drive up fares. They suffered big losses in the first six months of this year, largely because of a huge increase in fuel prices.
Leaders of dozens of airports, many of them smaller ones, were worried enough that they called an emergency strategy meeting last month in Washington. They heard politicians blame the airline industry's problems on inadequate U.S. oil production and oil-price speculators.
There will be about 160,000 fewer passengers a week passing through Los Angeles International Airport, where capacity will fall nearly 11 percent, according to airline industry database Innovata. American, Delta and United Airlines are making big cuts; low-fare Southwest Airlines Co. is standing pat.
To offset fewer flights, LAX is raising landing fees 15 percent, to about $500 for a fully loaded Boeing 737 and more than $2,000 for a full Boeing 747 jumbo jet.
Airlines and airports often have tense relationships - partners in the travel business, but adversaries when it comes to landing fees.
Southwest is the only major U.S. airline not shrinking, so it stands to pay a larger share of landing fees. Last month, CEO Gary Kelly complained that unlike airlines, airports do not control their spending during economic downturns, which runs up the tab on the airlines.
"We have a few airports out there that I think are spending more than they should, quite frankly, and so there are some real total airport cost increases that we are very vocal about," Kelly said.
"The more you raise fees, the more you drive airlines and customers away," said Howard Putnam, a former Southwest Airlines CEO and now an aviation consultant.
Airport executives say they get the message and are keeping landing fees as low as possible.
Deborah McElroy, executive vice president of the Airports Council International, a trade group, said Kelly's comments reflect the short-term view of airlines that must report to shareholders every quarter.
"It's rhetoric I've heard for 41 years, but I understand," McElroy said. "These folks aren't sure if they're going to be in business in six months."
Airports plan for growth years into the future, she said, and they're starting to ask carriers to stand behind long-term projects.
