Small Airports Fear Being Left Behind as Costs Squeeze Carriers

Residents of some of America’s smaller cities may face a tough choice in the future: pay increasingly high fares to board a plane close to home or drive farther to a bigger airport with lower ticket prices.  While it is difficult to calculate how much fares are rising at places like Mobile, Ala., versus large cities like Miami — the Department of Transportation’s most recent study of rural airfares was published in 1998 — industry executives and analysts agree that smaller markets are generally experiencing bigger price increases.

“It’s just the economics of the airplane involved and the demand,” said Michael Boyd, an aviation consultant with Boyd Group International. “It’s an issue of volume.”

Since airlines typically fly turboprops and 50-seat jets on the routes that connect outlying communities to big hubs, the higher cost of fuel and other expenses gets split among fewer passengers. Carriers are retiring these planes because they are unprofitable as oil prices climb.

But many small airports do not generate enough traffic to fill larger planes multiple times a day, or attract the low-fare carriers that choose markets with higher volume. And as local residents drive to bigger airports with lower fares, or forgo flying as it gets more expensive, small airports feel the pinch even more.

That means communities are fighting to maintain affordable airline service as carriers cut back on flights to money-losing markets.. With the economy still struggling and airlines tightly managing capacity, some analysts say they believe that the day of reckoning has arrived when the number of commercial airports may shrink.

“There are very few communities that are going to lose access to the rest of the world,” Mr. Boyd said. “It’s just that that access may not be from the local airport.” The country’s network of plentiful regional airports connecting to big hubs was largely built in an era of $30-a-barrel oil. But oil prices are now more than triple that, so maintaining commercial airline service to underperforming airports may be unsustainable.

Still, any discussion of shrinking airline service is a political minefield, as illustrated by the recent furor over proposals to reduce the subsidies for the federal Essential Air Service program, which provides $200 million annually to help pay for flights to 154 rural markets. While it is acknowledged by some government officials and lawmakers that residents of many of those communities could drive to other nearby airports, Congress has been reluctant to overhaul the eligibility rules for the program.

“Given that there are 535 interested parties on Capitol Hill, I don’t see anyone stepping up and wanting to close an airport in some congressman’s district,” said William S. Swelbar, a research engineer with M.I.T.’s International Center for Air Transportation.

He and other analysts said market forces could lead to cuts that politicians and even some airport executives would rather not address.

“We’re just operating too many airports,” Mr. Swelbar said, noting that 200 of the roughly 450 airports in the contiguous United States account for 97 percent of demand. “All airports require tremendous investment. Have we really built a system that makes sense?”

But what makes sense from a national policy perspective, or an airline’s balance sheet, has big ramifications for residents of smaller communities that rely on local airport service. Driving two hours or more to catch a flight, factoring in unpredictable weather, traffic and airline delays, can be a major disincentive to fly. Visits to far-flung family members, vacations and business meetings involve a complicated set of trade-offs, potentially becoming financially or logistically out of reach.

The Traverse City Area Chamber of Commerce, in a mostly resort community in northern Michigan, collected comments from more than 300 members last summer about the impact of rising airfares and declining service at the local Cherry Capital Airport.

According to data compiled by Mr. Boyd, who has been hired as a consultant to the airport, Traverse City has the sixth-highest fares out of the top 175 airports in the United States — tickets cost about 23 cents per mile flown compared with about 16 cents at Newark.

Local residents say they are driving to Detroit, Grand Rapids and Flint for cheaper fares out of those cities, cutting back on school activities that involve flying and skipping nonessential meetings. Businesses and resorts worry about lost revenue from conferences and visitors as tourists opt for more easily accessible destinations.

Airport officials and community leaders have met with Senator Carl Levin of Michigan and airline executives to express their concerns. But they also have realistic expectations about the market forces driving higher fares.

“The airlines have been responsive, particularly Delta,” said Doug Luciani, president and chief executive of the chamber of commerce, adding that colleagues around the country are facing similar challenges. “There’s been a lot of chatter among the chambers asking, ‘What are you doing in your community about high fares?’ I think it’s a national phenomenon.”

Trebor Banstetter, a Delta spokesman, said the airline was addressing some of the issues raised by Traverse City residents, and regularly worked with cities to make sure airline service was not a barrier to attendance at local conventions and events. For example, he said, Delta replaced 50-seat jets with larger aircraft on flights to Lexington, Ky., last fall to support travel to the World Equestrian Games.

At the same time, airports are offering incentives to the airlines to add or maintain service, like reducing landing fees and terminal rents, a longstanding practice that may get more costly in the future as airlines make Darwinian decisions about where they can afford to fly.

“Communities are going to have to be innovative, responsive and flexible in order to maintain the tremendous service they’ve enjoyed,” said Roger Cohen, president of the Regional Airline Association, whose members operate most of the flights to small cities in the United States.

Although he does not expect widespread airport closings, he cited fuel prices and economic headwinds as two factors beyond the control of the airlines — and the communities they serve.

“Whatever happens is going to be market-driven,” Mr. Cohen said.

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Small Airports Fear Being Left Behind as Costs Squeeze Carriers

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