Will Green upgrades pay off?

TAKING OFF? A Southwest Airlines jet taxis in front of the airport’s newly constructed blast wall. / PBN PHOTO/ MICHAEL SALERNO
TAKING OFF? A Southwest Airlines jet taxis in front of the airport’s newly constructed blast wall. / PBN PHOTO/ MICHAEL SALERNO

T.F. Green Airport was supposed to be flying high again.
When passenger traffic rebounded last year from an eight-year plunge, the improving economy and start of a $250 million improvement project pointed to better business prospects for Rhode Island’s primary airport.
This year, however, hasn’t turned out as airport leaders hoped.
Through August, passenger traffic at Green has fallen short of last year’s total in each month so far, putting the airport 161,000 travelers behind its 2013 pace.
Perhaps more concerning, the 2,393,620 passengers who used Green through August are about 86,500 passengers short of the same period in 2012, making it likely that Green will see a new post-recession low point.
The culprit, familiar to smaller- and medium-sized airports across the country, is airline consolidation and corresponding flight concentration in larger airports, according to Green officials.
“We expect it to continue for a couple of months,” said Kelly Fredericks, CEO of the R.I. Airport Corporation, about the declining passenger numbers. “In the airline industry there are a limited number of aircraft, consolidation has never been greater and seat capacity is at an all-time low.”
The post-recession airline landscape has been marked by mergers, and a smaller number of carriers focused on lucrative international flights and yield, the revenue derived from each flight.
At Green, this trend is evident in the decline of regional carriers, the independent airlines, such as Chautauqua, Endeavor Air and Republic, which fly under the flag and ticketing of the major airlines, but without the larger airline’s labor contracts.
As it has nationally, the share of flights on the regional carriers has shrunk at Green as the major airlines move passengers onto a smaller number of their own larger planes.
For example, at Delta Air Lines and United Airlines, two of the three airlines at Green that use regional carriers, total passengers for the main airlines have increased a combined 68,885 passengers so far this year at the same time traffic on their respective regionals declined 116,851 passengers. Generally, the shift from a greater number of smaller planes to fewer larger planes comes with some decline in the total number of seats, which is reflected in declines at Delta and United. The exception is US Airways, the only airline to increase traffic at Green so far this year with 4,804 more passengers through August than last year, and a 32,309 passenger increase on its regionals.
What’s hurt T.F. Green in particular in recent years has been Boston Logan International Airport’s popularity with newer discount airlines.
Southwest Airlines, which represents 46 percent of the airport’s enplaned passengers, according to the U.S. Bureau of Transportation Statistics, used to serve the Boston market through Providence and Manchester, N.H., instead of Logan.
But five years ago Southwest began flying out of Logan and is now firmly entrenched there, while its traffic to Green and Manchester has dipped.
Of the 161,000 passengers Green has lost so far this year, about 107,000 of them can be attributed to declines from Southwest.
And at the same time, JetBlue has expanded rapidly at Logan, becoming the Boston airport’s largest carrier and diverting some low-cost domestic traffic from Green, Fredericks said.
Not all midsize airports in New England have lost passengers to Logan in recent years.
Bradley International Airport in Hartford, Conn., had seen 335,761 more passengers so far in 2014 through July, an 11 percent increase from 2013.
Bradley is seeing those passenger gains under the leadership of former RIAC CEO Kevin A. Dillon, one of the prime movers of the Green runway extension project who left Green for the Connecticut Airport Authority in 2012. Greg Raiff, president of Private Jet Services Group Inc., a charter-plane brokerage in Seabrook, N.H., and industry analyst, said Hartford draws from a population far enough away from Boston to make switching to Logan inconvenient.
Raiff is pessimistic about the near future of midsize, regional airports and doesn’t think the runway extension will be a major difference-maker for Green.
“Airlines are taking delivery of larger, more fuel-efficient airplanes that generate more available seat miles,” Raiff said. “Part of that is replacing two 50-seat departures with one 100-seat departure. For business travelers especially, that means fewer choices.”
Although the traffic at airports always ebbs and flows, the success of Green is particularly important because of the investment the state has made in the facility, which includes not only the new runway-extension project, but the Interlink train station completed a few years ago.
Green signed German airline Condor – which has agreed to make two flights per week between Frankfurt and Rhode Island during the next two summers – in a head-to-head competition with Hartford, Fredericks told the R.I. Commerce Corporation board of directors at the end of September. Letters from Gov. Lincoln D. Chafee and regional tourism chiefs, plus the waiving of virtually all airport fees, closed the deal, he said.
Along with competition from Bradley, Rhode Island officials also had to overcome concerns about the current length of the runway, as the extension will not be complete until 2017.
Condor’s 767-300s can only make the trip from Rhode Island to Frankfurt because of the high-altitude tail wind created by the jet stream, which allows them to fly without loading up with too much fuel to take off on the short runway. The same planes can pack plenty of fuel for the westbound journey, which lasts an additional hour, thanks to Frankfurt’s long runway. Of course, some may question whether, if 767s can make it from Green all the way to Germany on the smaller runway, the extension is really needed considering advances in aircraft fuel efficiency.
Fredericks said RIAC is in talks with airlines over more international routes, though he could not name them, and new domestic routes to the West and Southwest.
“Clearly we are looking at the Dominican Republic, [Cancun, Mexico] and [San Juan, Puerto Rico],” Fredericks told PBN. “They may or may not need the longer runway but for the West Coast we need the longer runway and we think we have a great case for Seattle, and also [Los Angeles] and San Francisco.”
Fredericks told the Commerce Corporation board he has met with the new leaders of JetBlue and American Airlines to increase and restore service from those carriers respectively. And that he is “focused on Texas” and starting nonstop service to either Dallas or Houston.
Although airlines should appreciate the longer runway and numerous safety improvements in the Green improvement project, if they are forced to carry additional costs related to construction it could outweigh the benefits.
Bonds funding the construction project will be paid for through airport revenue, which includes parking, concessions, a uniform national charge on airline tickets and the fees that airlines pay to the airport for using the facility.
Fredericks said based on current traffic, there could be a “slight increase” in fee costs to carriers, but that as more flights start taking advantage of the longer runway, those costs could eventually be lower.
“We think we are well-positioned for 2015 and that we have bottomed out this year,” Fredericks said. “As new aircraft come online with new seats and the East Coast becomes more congested, we think we can take advantage.” •

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2 COMMENTS

  1. The only valid way to determine an airline’s traffic volume is to add the mainline and regional numbers as the proportions change from month to month and season to season.
    It is unfortunate, but characteristically Rhode Island that as other airports the size of Green were upgrading their runways to handle heavier aircraft to more distant destinations in all kinds of weather years ago, we stayed with the 1960s configuration that is a turn off to airline service today. Hopefully when this disadvantage is removed and air carriers are not constrained to segregate their fleet or leave freight mail and passengers behind, business will return. The runway may be ready just as Boston Logan reaches total saturation and that would be a great help for T. F. Green’s operation.

  2. The cause is quite obvious. Southwest is no longer a cheaper alternative. No more non-stops west and fare much higher than other carriers. SWA is the largest carrier at PVD thus the declining numbers as their passenger count declines. Thus the uptick for Delta and United. The first commenter may well be correct about saturation at Logan.