• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Backing Airtran ; Low-Fare Carrier Has Just Returned to Ric, but Group Already is Trying to Rally Travelers

Posted on: Tuesday, 20 September 2005, 06:00 CDT

Use it or lose it.

That's the rub of an e-mail about AirTran Airways sent last week to about 1,000 members of the Friends of Richmond International Airport.

Since starting nonstop service here to Atlanta and Philadelphia in late June, the low-fare airline has grabbed more than 8 percent of the local market share and helped drive down fares from competitors such as Delta and US Airways.

Yet questions persist about how full some of AirTran's planes have been -- especially to Philadelphia -- and whether Richmond- based travelers are fully embracing the new kid on the airport block.

To some, it's an eerie repeat of six years ago, when AirTran pulled out after a lukewarm reception.

In his e-mail to the airport Friends, a booster group sponsored by the Greater Richmond Chamber of Commerce, group Chairman E. Bryce Powell made the case for using the only low-fare carrier in town.

Powell said the airline has sparked "highly competitive pricing to more than 40 of our most popular destinations." He provided a chart showing year-to-year price drops that ranged from 13 percent to Fort Lauderdale, Fla., to 66 percent to Atlanta for walk-up fares, which are purchased on short notice.

"The initial reception of AirTran by the Richmond region has been very enthusiastic, but there is room for improvement for RIC flights to meet or surpass the average passengers levels that AirTran enjoys across the nation," wrote Powell, who also is president of Midlothian Enterprises Inc., a real estate development company.

"The importance of AirTran succeeding at RIC cannot be overstated," he continued, citing the chamber's projected economic benefits from fare competition: more than $100 million.

Powell called on members to "consider flying AirTran as a regular part of their travel plans."

He said the e-mail was sent at the request of the airport's marketing department. His fear is that "a lot of people who have frequent-flier programs" with other airlines "won't support the new carrier."

If AirTran left town again -- it did in late 1999 after less than a year here -- "do you think Delta would keep fares where they are if they didn't have competition?" Powell asked.

It's the same question posed by George Hoffer, an economics professor at Virginia Commonwealth University.

Hoffer, who has tracked the airline industry for years, recently made his own calculations of AirTran's probable local "load factor," the industry term for how many seats are being filled on each airplane.

He calculated a load factor of about 51 percent in July -- that is, the airline barely filled half its seats on the Richmond flights. Hoffer conceded that he is not privy to AirTran's internal records -- for example, some flights may have been cancelled. His estimate is based on announced passenger figures and the airline's flight schedule.

A 51 percent load factor is considerably lower than AirTran's system average of nearly 81 percent for July, a busy summer travel month. That number dipped to 76.3 percent in August.

Kevin Healy, vice president of planning at AirTran, said company policy prohibits commenting on how the airline is faring in specific markets. But he downplayed the importance of Richmond's July numbers.

"Really, that's the first full month in the market," he said. AirTran uses a 12- to 24-month horizon for planning purposes.

"We came in with strong support from the community and continue" to have it, the AirTran executive said.

Hoffer conceded that it may be too soon to say AirTran's in trouble here. But he described a "gnawing feeling" that the airport might see a repeat of the 1999 pullout.

Today, AirTran portrays itself as a totally different carrier, with modern aircraft and better business practices.

Yet there are similarities. Then, as now, some key carriers, such as Delta, lowered their fares in competing markets such as Atlanta.

Hoffer wonders if the underlying issue is that Richmond is dominated by business travelers who prefer to use frequent-flier miles they hold on traditional carriers, while still benefiting from the lower fares forced by AirTran's competition.

"We've got a free-rider problem in Richmond," Hoffer said. "Everybody benefits from AirTran's presence without having to support the service."

Hoffer also wonders if the Richmond market differs from other smaller markets served by AirTran, such as Newport News; Flint, Mich.; and Canton/Akron, Ohio.

"These are cities that have a pretty sizable high-end blue- collar work force who have discretionary funds to travel but don't travel frequently," Hoffer said. Thus, AirTran does not face the same competitive hurdles it does in a business-heavy market such as Richmond.

Troy Bell, marketing director for Richmond International, said AirTran is still in the early stages of ramping up service here.

"The fact is that AirTran is the newest arrival, and everyone else has decades of service" at the airport, Bell said. "They've gone from absolutely zero bookings to what they were able to achieve in the initial period."

AirTran's passenger total of 22,376 represented 8.2 percent of the overall share of the Richmond air travel market, Bell noted.

He called the Friends' e-mail an "update" to chamber members "to remind people that AirTran is here" and to get them to use the discount carrier "as a portion of their travel."

The message was sent at the start of the fall travel season, which typically is slower than summer.

Will the reminder work?

AirTran's growth is "in the hands of our travelers," Bell said. "It is something that can take several months."

David Kaechele, a Henrico County supervisor and veteran member of the Capital Region Airport Commission, also called for patience.

"I don't think there's a scramble or scare at this point," he said. "It's pretty early in the game."

The airport pledged $500,000 to AirTran in federal air-service development funds to advertise around Virginia. The chamber also has promised potential support of $1 million if the airline does not meet its financial goals here.

Traditionally, the airport commission has not provided direct subsidies to airlines, such as what Newport News has paid over the years to get new flights from AirTran.

Hoffer, for one, thinks the fare savings realized since AirTran's arrival in Richmond give the commission a good reason to reconsider its no-subsidy policy.

Even with the mixed performance in July, Hoffer said, lower fares -- probably on the order of $100 per passenger -- may have saved the entire passenger base at least $27 million.

"That's just July alone," he said. "I mean, it just totally dwarfs any subsidy you'd give AirTran."

AirTran

Low-fare carrier AirTran Airways started offering service at Richmond International Airport on June 23. Here are some facts:

From Richmond: Six round-trip flights a day -- four to Atlanta, two to Philadelphia.

Florida soon: One nonstop a day from Richmond to Orlando starts Nov. 8. Leaves Richmond at 12:18 p.m., arrives Orlando at 2:18 p.m. Return flight leaves Orlando at 1:27 p.m., arrives Richmond at 3:27 p.m.

Airplanes: Boeing 717 aircraft, with 105 coach seats and 12 business-class seats.

Destinations: 500 flights a day to 40 destinations. Atlanta is the airline's hub.

Source: Richmond Times - Dispatch

More News in this Category