Smaller Airports Take Bigger Hit As Airlines Cut Flights
Filed by KOSU News in US News.
May 8, 2013
If you want to see the Fourth of July parade in your little hometown, you should book your flight now. Otherwise, you may have to drive there, or watch a video of the floats via an old friend’s smartphone.
That’s because air service — especially to smaller markets — is shrinking as airlines merge to boost profits, according to a study released Wednesday.
“The nation’s small- and medium-sized airports have been disproportionally affected by these reductions in service,” the report from MIT’s International Center for Air Transportation concluded.
The study shows that between 2007 through 2012, U.S. carriers cut domestic flights by 14 percent. The number of seats being offered fell too, but less dramatically because airlines also started using bigger planes that could hold more passengers.
For people living in smaller markets, that’s the rub: fewer planes are going to fewer places.
So if you want to get from, say, Atlanta to Dallas, you have lots of opportunities to board big planes. But if you want to fly from, say, Kansas City to Cleveland, your options have been shrinking — a lot.
The study shows that at the nation’s 35 midsized airports, air carriers cut about one out of four scheduled flights in that five-year period.
But remember: The Great Recession ran from late 2007 through 2009. It slammed into the aviation industry and crushed profits, leaving airlines bankrupt or struggling to survive, as passengers stayed home. The MIT study says the small airports lost flights for a compelling reason: the airlines realized there was “simply a lack of local demand to support the service.”
With the economy in recession, airlines had to find ways to squeeze out profits. So they shut down money-losing flights and reduced the use of fuel-guzzling small jets. They also pushed hard to make sure departing planes had passengers in every seat.
The percentage of seats filled hit a record of nearly 83 percent last year, up from less than 80 percent in 2007, the study found.
And as the number of flights has shrunk, average domestic roundtrip fares have risen to $374, up 4 percent from 2007 after adjusting for inflation.
The flight reductions and fare boosts have followed a series of industry mega-mergers, including the combination of Delta with Northwest and United with Continental. But the airlines say the wave of consolidation has helped stabilize their battered bottom lines. After years of bankruptcies, losses, layoffs and uncertainty, the airlines generally are scratching out profits again.
George Hobica, the CEO of airfarewatchdog.com, a low-fare-alert website, said he can understand the airlines’ motivations. “They just have terrible profit margins, even in a good year,” he said. Since they went through the post-recession mergers, “most airlines are making money again, even though their profit margins are still thin.”
Given that economic reality, passengers have to accept that “this is the new normal,” Hobica said. “If you live in Palm Beach, you may have to get used to driving to Miami” to get a greater selection of flights and fares.
But the changes are hard on smaller cities, which can lose business travelers and tourists when air service declines.
For example, the Cincinnati/Northern Kentucky area lost a great deal of air service when Delta cut back operations there after merging with Northwest. In the aftermath, Chiquita Brands International Inc. moved its headquarters from Ohio to Charlotte, where air service has been growing.
The MIT report concludes that smaller markets will benefit in coming years from the growth of “ultra-low-cost carriers” that will offer them some service, though not as much as they used to enjoy.
“At the end of the day, the airlines’ individual route profitability will continue to decide which airports are served and which are not,” the study said. [Copyright 2013 NPR]