Are passengers returning to Green?

READY TO BOARD: Kelly J. Fredericks, new president and CEO of the R.I. Airport Corporation, is a western Pennsylvania native and airport-management veteran. He thinks T.F. Green can again reach a goal of 5 million passengers. / PBN PHOTO/NATALJA KENT
READY TO BOARD: Kelly J. Fredericks, new president and CEO of the R.I. Airport Corporation, is a western Pennsylvania native and airport-management veteran. He thinks T.F. Green can again reach a goal of 5 million passengers. / PBN PHOTO/NATALJA KENT

New R.I. Airport Corporation President and CEO Kelly Fredericks calls himself a “recovering engineer” who’s embraced the marketing, negotiating and cheerleading duties of a modern airport executive.
As he tries to reverse eight years of passenger declines at T.F. Green Airport in a perilous climate for midsize commercial airports, Fredericks is going to need those people skills.
He arrives in Rhode Island as T.F. Green begins its long-debated $200 million runway expansion and as US Airways-American Airlines accelerates a pattern of airline consolidation that’s reshaping the industry.
Consolidation has already been difficult for airports like Green.
After the proliferation of low-cost carriers swelled smaller airports starting in the 1990s, the recession brought retrenchment and dwindling activity at Manchester-Boston in New Hampshire, Worcester Regional Airport in Massachusetts and Long Island MacArthur Airport in New York.
Armed with a salesman’s optimism and a confidence forged as a Penn State football player, Fredericks thinks T.F. Green is poised for a resurgence.
“We have lost an awful lot of passengers to Boston and we want to put together a strategy that is going to recapture them,” Fredericks said. “I don’t disagree that consolidation will have challenges. But I am going to have a mantra: 5 million passengers is achievable.”
Last year, 3.7 million passengers used T.F. Green, continuing the latest decrease from the airport’s high-water mark of 5.7 million in 2005.
As evidence that traffic has bottomed out, Fredericks pointed to the 4.6 percent increase in passengers using the airport in March compared with March 2012.
The 15,000-passenger March increase came despite a drop in the number of seats airlines flew into and out of the airport, indicating fuller planes. Fredericks said the number of seats was projected to rise again in April. While the runway-expansion project has drawn attention for over a decade, the highest-stakes issue facing Fredericks might be the American merger expected to be finalized in the third quarter of the year.
US Airways is Green’s second-largest carrier and the new American Airlines created by the merger will be the largest airline in the world.
If American retains the 34 daily flights US Air currently makes from Green, the passenger base and network connections of the larger airline will likely drive additional traffic to the airport.
But if American, which has the second-largest airline presence at Logan, decides to cut costs and channel passengers to Boston, Green would shrink further.
American cut its own service to Providence in 2006 – and American Eagle regional flights two years later – but Fredericks said Green and American officials have kept meeting since then about a return and he “couldn’t disagree more” that the merger is a threat to Rhode Island.
To encourage American to grow in Providence, Fredericks said keeping costs low and matching routes to the marketplace would be essential.
“I think it is a positive thing for our market – I look at it as a new entrant,” Fredericks said. “We think the Providence market justifies service somewhere in Texas, like [Dallas-Fort Worth]; I think it is going to be more about blending complementary networks than cutting. We think it’s a win-win.”
But some in the aviation industry are not as optimistic about T.F. Green’s place in the consolidated airline industry.
“Airlines are being brutal about reducing seats and increasing yield,” said Greg Raiff, president of Private Jet Services Group Inc., a charter-plane brokerage in Seabrook, N.H. “Providence and Manchester (N.H.), which are similar as satellites to Boston, are both seeing drop-off in passenger numbers because carriers are decreasing seats. It makes smart economic sense: they can fly fewer seats and those that are there are fuller and paying full price.” For large airlines like American, the move toward large airports plays into their strengths in long international routes, Raiff said.
And for smaller airports, the decline in seats has been self-reinforcing: fewer travel options lead to higher prices and fewer customers.
Congestion in Boston and New York would seem to be the natural check on continued route consolidation, but Raiff said airlines are still flying relatively small planes and could go larger using the same number of gates.
Long-term, Raiff said as long as the economy recovers, he doesn’t see airports like Providence losing commercial passenger service entirely, but that fewer airlines flying fewer planes will soon lead to higher ticket prices and fewer options for travelers.
“Instead of being less expensive, you now pay a premium to fly out of your backyard,” Raiff said. “You either are a growing-in-demand airport at the top of travelers’ minds or you are not. What we are going to end up with in 36 months is wondering what happened to the gem regional airports and it is going to become more expensive to fly.”
Robert W. Mann Jr., an airline analyst with R.W. Mann & Co. Inc. in Port Washington, N.Y., is not as pessimistic as Raiff about regional airports. But he said flight consolidation is likely to continue until the economy picks up enough to encourage new competition or demand at the large airports becomes unmanageable.
“Ultimately, markets get the service they are willing to pay [for] and as consolidation continues, the better opportunities continue to be at the larger airports,” Mann said. “It will continue until a new competitor enters and attempts to serve some of those peripheral markets or until airlines [create] their own congestion at larger airports.” Over the long-term, Mann said the fact that Logan has little space left in East Boston to expand could be a bulwark against total New England market aggregation.
As far as T.F. Green is concerned, Mann said the good news is that the new merged airline will be led by US Airways CEO Doug Parker, who has been successful flying out of Providence.
“[Parker] knows what his network performs like and they were a well-managed firm that made money,” Mann said. “It creates the likelihood that they will do better from each airline feeding each other.”
At T.F. Green, the runway expansion project has been pitched as a way to fix a problem holding the airport back, but airlines have been trending toward smaller planes that don’t need a longer runway.
Fredericks said the longer runway will have a positive impact on cargo shipments, which he is focused on growing as a revenue source.
To improve RIAC’s finances more broadly, Fredericks said he and the board of directors are examining whether the quasi-public agency needs to own all five general-aviation airports in the state, which lose money each year.
A western Pennsylvania native who studied civil engineering while playing football for the late Joe Paterno, Fredericks has managed both airport construction projects and airport operations.
He took the job at RIAC this year after managing the expansion of Fort Lauderdale-Hollywood International Airport in Florida and before that was CEO of Erie International Airport in Pennsylvania.
In Rhode Island, Fredericks said he saw the opportunity to put all his skills to use.
“This is really an airport manager’s dream job,” Fredericks said, “and way more than I thought it was and since I got here: an enormously important expansion program, air-service development, the Warwick Station development and general aviation. I am a kid in a candy store.” •

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