Blue Grass Airport 'more fortunate' than others in a changing airline climate

jhewlett@herald-leader.comMay 19, 2012 

Most of the commercial flights leaving Lexington's Blue Grass Airport are full these days, which makes airport officials happy.

Still, those officials are keeping a watchful eye on airline industry trends, particularly airline mergers and bankruptcies, in an effort to keep passenger counts and numbers of flights, destinations and available seats from sliding.

"Mergers often have a disproportionate negative impact on small and mid-size communities," said Eric Frankl, Blue Grass Airport's executive director.

Well aware of that potential, Blue Grass Airport spokeswoman Amy Caudill said, "We have been more fortunate than airports of similar size and similar populations."

After Delta Air Lines acquired Northwest Airlines in 2008, hubs in Memphis and Cincinnati shrank. That acquisition also affected Lexington's airport, which lost service to both of those cities, Frankl said.

In August, AirTran Airways, which was acquired by Southwest Airlines last year, will stop operating in Lexington. AirTran, which has had a brief tenure in Lexington, currently offers a daily flight to Orlando International Airport. Travelers will be able to fly from Lexington to the Orlando area on Allegiant Air after Aug. 12, when AirTran stops operating here. But Allegiant's flights go to Orlando Sanford International Airport.

So far, the recent merger of Continental Airlines and United Airlines has had no effect at the Lexington airport, according to airport officials.

"The merged airline continues to fly to both Houston and Chicago," Caudill said.

It's "way too early" to speculate about what might happen at Blue Grass Airport should American Airlines and US Airways merge, Frankl said.

American filed for bankruptcy protection in November, and since then, there's been talk that it might merge with US Airways. Those airlines or their affiliates offer flights from Blue Grass Airport to Charlotte, N.C., Chicago and Dallas.

"I'm not sure that I'm worried; we certainly pay attention to the impact it might have on Lexington. We're just trying to stay informed. ... If this merger does happen, we are hopeful it won't impact Lexington, but we will certainly be watching these developments closely," Frankl said.

Changing times

Blue Grass Airport has an average of 32 or 33 non-stop flights a day. On "peak departure" days, the number of flights is about 36, Caudill said. Just a few years ago, the number of daily flights was in the 40s.

Currently, six airlines offer flights to 14 destinations. In August, there will be five airlines and 13 destinations, with the departure of AirTran and its seven weekly flights.

In 2010, there were 554,285 commercial flight passenger boardings at Blue Grass Airport, according to the airport's Web site. In 2011, that figure decreased to 547,115. Through March this year, there have been 131,526 boardings.

Cincinnati/Northern Kentucky International Airport, which has suffered major cuts in flights in recent years, particularly in Delta flights, is relying on a newly renovated concourse to remain competitive and draw more business.

"This capital-improvement project is a first large step in ensuring that CVG will remain cost-competitive and attractive to our existing airline partners and potential future entrants," airport spokeswoman Molly Flanagan said of the $36.5 million renovation. "When the economy rebounds and airlines are looking to expand, we are making a point to ensure that CVG will be the optimal airport of choice for our carriers."

Cincinnati/Northern Kentucky airport had 3,987,938 boardings in 2010, 3,525,486 in 2011, and 969,298 through April 2012, according to the airport's Web site.

Flights to several popular vacation destinations, including Montego Bay, Jamaica; Cancun, Mexico; Punta Cana, Dominican Republic; and Myrtle Beach, S.C., begin this month at the Cincinnati/Northern Kentucky airport, and airport officials said they are thrilled about that.

Louisville International Airport had 1,677,461 boardings in 2010; 1,700,248 in 2011; and 371,123 this year through March, airport spokeswoman Trish Burke said.

In fiscal year 2010 (July 1, 2009 through June 30, 2010), the Louisville airport offered 25 non-stop destinations. In fiscal year 2011, there were 28 destinations. There are 26 now, Burke said.

"We live in changing times, and they're very dynamic, which forces all of us as airport operators to be fast, fluid and flexible," said Skip Miller, executive director of the Louisville airport. Airport operators have to anticipate change as much as possible, have contingency plans ready for when changes occur, and have good relationships with airlines and the preparedness to show them where opportunities exist, he said.

After Delta and Northwest merged, the Louisville airport lost flights to Cincinnati and Memphis, but it gained flights to New York airports. Delta flights to John F. Kennedy International Airport are to begin in July, he said. The gains have far offset the losses, he said.

As for the United-Continental merger, the Louisville airport has been able to retain all of the services the two airlines provided as separate entities — including a relatively new service to Denver, offered by United — and it has gained service to Dulles International Airport in Washington, D.C., Miller said.

The Louisville airport lost Milwaukee as a destination in the merger of Frontier Airlines with Midwest Airlines.

The airport soon will gain three daily low-cost flights to Atlanta from Southwest.

"We anticipated that opportunity a year ago when the AirTran merger was announced," Miller said. It took a lot of convincing and good relationships to show Southwest the pent-up demand, he said.

Fueling airfares

Jenny Sutton-Amr, who lives three miles from Blue Grass Airport, said that every Thanksgiving, her family gathers in Lexington to celebrate, but those coming from afar fly into the Louisville airport, rather than Lexington's, "because it is so much cheaper."

"Three weeks ago, a friend came to visit from Atlanta. The round-trip flight into Lexington non-stop from Atlanta was nearly $700 booked over a month in advance. The round-trip non-stop on the same day into Cincinnati was under $300," she said via email. "Again, I drove over an hour to pick someone up in another city because the flights into Lexington are so expensive."

Frankl said Blue Grass airport officials "certainly know that sometimes we don't have as low fares (as the Louisville and Cincinnati-Northern Kentucky airports)." But, he said, although some people in this area might go to the Louisville or Cincinnati-Northern Kentucky airports for cheaper airfares, people from Louisville and Cincinnati often drive to the Lexington airport to take flights to Florida on low-cost airline Allegiant.

Airline mergers might affect the number of destinations and passenger seats available at airports, but Frankl said he thinks jet fuel costs have a greater impact on plane ticket prices — the subject of complaints about the local airport from many area travelers — than airline mergers or other factors.

Fuel prices are a "big piece" of the cost of tickets, Miller said. He said trade associations estimate that for the first quarter of this year, fuel represented 311/2 percent of airlines' cost structures. If jet fuel reaches $3 a gallon, fuel will represent 34 percent, he said.

"The rising cost of jet fuel is making 50-seat aircraft less efficient than in the past," said Tom Tyra, the Louisville airport's director of marketing and air service development. "Airlines have become very adept at matching customer demand with available seats. Today, you probably won't find many empty middle seats on flights."

Blue Grass Airport's Caudill said that the majority of commercial jets coming into Lexington are 50-seat regional jets, but there has been an increase in larger planes. Delta, Allegiant and AirTran have planes with 117 to 150 seats flying into the local airport each week.

Robert Quick, president and chief executive of Commerce Lexington, said he thinks Blue Grass Airport officials are doing a good job with passenger seat, flight and destination numbers.

"Eric and his crew are out there selling, selling, selling, working the markets, working the airlines," he said.

"In the business community, we always want more direct flights and cheaper airfares," he said. "I think we've got a pretty good plan of attack here."

Quick said flights to New York and Washington, D.C., are very important to local business people.

"We would like to see more of those," he said. "That's going to be tough, because there are other markets that want them too."

Jennifer Hewlett: (859) 231-3308.

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