Looking Up: Lower fares and increased competition revive Springfield airport activity

Springfield-Branson National Airport officials weren't expecting to set any passenger traffic records in 2009 - a year characterized by rising unemployment and significant cutbacks in business travel.

But after a dismal first quarter, airport passenger numbers stabilized in April -- welcome news after 14 consecutive months of declines. Despite the gains though, passenger numbers were still down 7 percent year-to-date compared to the first four months of 2008.

Signs of a true turnaround surfaced in May - the same month the airport debuted its $119 million terminal. That month, the number of passengers jumped considerably to nearly 81,500, making it the airport's 10th busiest month on record.

The real shocker, though, came in June, when the airport clocked 85,976 passengers - just 2,048 travelers short of its all-time high in June 2005.

"We thought, 'We shouldn't be doing this well,'" said airport spokesman Kent Boyd, who noted that several factors likely enabled the airport to reverse course and notch records in a matter of months.

Major airlines began slashing airfares in March, and the Branson Airport opened in May with competing service to Dallas and Atlanta, Boyd said. Plus, low-cost carrier Allegiant Air posted big numbers during the peak of the summer travel season, accounting for nearly a quarter of passenger activity at the Springfield airport in June and July.

"No. 1 has to be the fact that the airlines, in general, have lowered fares," Boyd said. "And it's not just in this market; it's across the country. Of course, it's much more pronounced in a small market like this where we're used to getting the proverbial shaft."

Waning demand for air travel has left so-called legacy carriers with little choice but to reduce both capacity and fares, said Seth Kaplan, managing partner of trade publication Airline Weekly.

"Airlines don't set airfares; consumers set airfares," he said. "There's no question that it's more of a buyer's market now than it was in the last two years."

Trending downward

Round-trip fares to various Texas cities connecting through Dallas and direct service to Chicago - as well as flights to certain Mexican resort destinations - were among those that dropped noticeably earlier in the year, Boyd said.

A year ago, round-trip fares to Chicago on American Airlines affiliate American Eagle and competitor United Express were running more than $300, but those fares dropped as low as $98 this year, he added.

Even with the summer travel season over, Linda Strait, director of operations at Great Southern Travel, expects the trend to continue, especially for shorter getaways.

"I think probably the increased activity is mostly leisure travelers," she said. "Some of the low fares are for weekend travel. ... There are several destinations that have put in some very affordable fares for that type of travel."

The uptick in passengers flying out of Springfield also may indicate that some area travelers who previously drove to Kansas City, St. Louis, northwest Arkansas or Tulsa, Okla., to save money - known as market leakage - have changed their habits in response to lower fares, Boyd said.

For Ozarkers looking to fly direct to Dallas or Atlanta, though, airlines based at the Branson Airport offered substantially lower last-minute fares than their competitors in Springfield, based on the results of online searches.

A round-trip, nonstop coach ticket to Dallas on Sun Country Airlines leaving Branson on Sept. 26 and returning Sept. 28 was $95, compared to $429 on American Eagle out of Springfield. For the same travel dates, a round-trip, nonstop coach ticket to Atlanta from Branson on AirTran Airways was $355, compared to $479 on Delta Air Lines out of Springfield.

The fares are more competitive when tickets are booked several weeks in advance.

A round-trip, nonstop coach ticket to Dallas on Sun Country leaving Branson on Nov. 16 and returning Nov. 23 was $95, compared to $155 on American Eagle out of Springfield. For the same dates, a round-trip, nonstop coach ticket to Atlanta from Branson on AirTran was $214, compared to $224 on Delta from Springfield.

"Once low-cost carriers show up, they change the whole pricing environment," said Kaplan at Airline Weekly. "Low-cost carriers stimulate traffic, whereas the legacy carriers, by and large, play a game of share shift. ... (Low-cost carriers have) really led a renaissance for a lot of smaller airports around the country."

The privately controlled Branson Airport has declined to release monthly passenger numbers, but spokesman Gene Conrad said AirTran has had more success than Sun Country because it offers connecting flights to more than 50 cities through Atlanta. Conrad said nearly 70 percent of airport activity right now is inbound traffic.

The Allegiant effect

Allegiant Air is the only airline at the Springfield airport that posted year-over-year passenger increases every month this year, and it accounts for 23.6 percent of total airport passengers through August.

The Las Vegas-based discount air carrier, which arrived in Springfield in April 2005, now offers nonstop service from Springfield to Las Vegas; Orlando, Fla.; St. Petersburg, Fla.; Phoenix and Los Angeles, which was added in May. Earlier this summer, Allegiant was flying as many as 17 150-seat regional jets - many of them at full capacity - out of Springfield each week, Boyd said.

"They have changed the complexion of the Springfield air market," he said.

Allegiant has had the same effect in other smaller markets. Robert Ashcroft, the airline's vice president of planning, pointed to Fargo, N.D.; Missoula, Mont.; and Greensville/Spartanburg, S.C., as examples.

Springfield, though, is one of a handful of cities in Allegiant's network that serves five of the airline's six major destinations, Ashcroft said.

"Springfield wouldn't have this distinction unless it was a strong performer," he said.

Kaplan said Allegiant's business model is based on a simple premise: Provide smaller towns in middle America with low-cost, direct flights to the country's largest leisure destinations. He said Allegiant's strategy is the exact opposite of Ireland-based budget airline Ryanair, which flies urbanites from major metropolises to charming small towns and vacation spots throughout Europe.

"They are right now one of the most successful airlines on the planet," Kaplan said of Allegiant. "They're growing rapidly, and they're growing profitably. Their profit margins are not just good for an airline, they're good for any company."

Allegiant (Nasdaq: ALGT) posted second-quarter revenues of $148 million and a $23.9 million profit, up from $2.6 million in second-quarter 2008. A 16 percent quarterly profit margin stands out in recession-riddled corporate America.

Allegiant has even managed to snag a few business travelers flying out of Springfield.

Ashcroft said businesses in some cities Allegiant serves occasionally contact the airline about optimizing flight schedules for their employees.

"Coincidentally, one of these businesses is actually in Springfield: O'Reilly Automotive," he said, noting that Springfield executives' travel west increased following O'Reilly's buyout of Phoenix-based CSK Auto. "We were pleased to adjust our schedule to Phoenix at its request, and we also designed our schedule to Los Angeles with them in mind."[[In-content Ad]]