July 26, 2008

Airport Losing Traffic

By Marv Balousek, The Wisconsin State Journal

Jul. 26--The Dane County Regional Airport will lose 15.2 percent of its available outbound airline seats when new schedules take effect this fall.

By November, the airport will have 80,864 outbound seats available monthly, down from 95,375 last fall, according to the Official Airport Guide.

The Madison airport isn't alone. Airports across the country, including six in Wisconsin, face reductions. Central Wisconsin Airport, serving Wausau and Stevens Point, is the only one in the state where capacity will increase. That's because American Eagle is resuming service there.

As airlines struggle with high fuel costs and financial losses, they're turning to capacity reductions and higher fees.

Northwest Airlines, the dominant carrier at the Madison airport with a 43 percent market share based on the number of seats, paid $3.45 a gallon for jet fuel during the second quarter of 2008, up 69.3 percent from $2.04 a gallon a year ago.

The higher fuel costs were the main reason the airline Wednesday reported a net loss of $377 million for the quarter.

The Madison airport's 15.2 percent loss of seat capacity is much higher than the 9 percent or 2,698-seat loss that occurred from its peak year of 2004 to 2007.

Lost seat capacity doesn't necessarily mean a shortage of seats or fewer passengers because a smaller plane simply might have fewer empty seats, said Ron McNeill, a former airline executive and now an industry consultant with Mead & Hunt of Madison.

The airport's capacity reduction comes from using smaller planes and cutting back the number of daily flights. Changes include:

--Midwest Connect will eliminate its daily flight between Madison and Kansas City and one of five daily flights between Madison and Milwaukee.

--Delta Connection has reduced the number of daily flights from two to one between Madison and Cincinnati and between Madison and Atlanta.

--Northwest is downsizing some of its planes serving Madison, replacing two 148-seat planes with 124-seat aircraft and replacing a DC-9 with a smaller plane on daily flights to Minneapolis.

--United Express and American Eagle each will cut one daily flight between Madison and Chicago. American Eagle also will drop a seasonal flight, bringing the total to six daily Chicago flights except Saturdays, which will have four flights. United Express will have seven daily Chicago flights. Earlier this year, American Eagle dropped service between Madison and Marquette, Mich.

Green Bay, which is losing nearly 25 percent of its available outbound seats, and Milwaukee, which is losing nearly 21 percent, fared worse than Madison.

Chicago's O'Hare International Airport faces an 11.8 percent decrease while Minneapolis will lose 10.1 percent of its seats. Toledo, Ohio, may be the nation's biggest loser with a 57.3 percent decline to 307 daily seats.

A bright spot

Tom Parsons of BestFares.com said the capacity reductions could lead to higher fares in many cities.

"There's some cities out there that are really going to get beaten up," he said. "It's just going to be cost prohibitive to travel."

With a 13.8 percent increase in seats projected this fall, Central Wisconsin Airport is a bright spot in Wisconsin.

Midwest Connect plans to pull out of the market this fall, but American Eagle recently came back into the market with three daily round-trips to Chicago. Northwest plans to use larger planes and boost daily capacity on Detroit flights, said airport manager Tony Yaron.

"I think we've got a competitive airport here," he said, "Business travel is up and there's a certain amount of discretionary travel up as well."

At the Dane County Regional Airport, spokeswoman Sharyn Wisniewski said the capacity reductions likely won't be permanent.

Higher ticket prices

"We've been feeling it's a downturn and we expect it will come back," she said. "A lot of that depends on the price of fuel and what the airlines will do."

McNeill said the Madison airport is attractive to the airlines because a large percentage of business travelers means higher ticket prices. He said he expects that Midwest, for example, could resume service between Madison and Kansas City when conditions are better. The service was often used by American Family Insurance, which is based in Madison.

Wisniewski said decisions by the airlines to restore capacity to Madison could depend on how the airport weathers the reductions.

"When the economy becomes more favorable and oil becomes more reasonable, Madison could be one of the places they'd look to first," she said. "If they see there isn't high demand here, that could slow their response in coming back."


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