What Does the Future Hold for Regional Airports?

(Reuters)

Travelers living near smaller airports have noticed an inconvenient trend: reduced availability of flights at their home airport coupled with soaring ticket prices.

In the current economy, the less profitable smaller markets have been first to get cut when airlines implement cost savings measures, either through discontinuation of service or greatly reduced capacity which drives up prices.

Airlines prefer to service large hubs where they know they’ll be able to fill planes multiple times during a day, and discount airlines can offer lower fares based on the sheer volume of travelers they fly. It’s a vicious circle for small airports - their travelers opt to drive to larger airports with better availability and ticket prices, which makes their airport less attractive to airlines, leading to further reduction in regional service.

For small town travelers, will flying soon mean a two hour drive to the nearest hub? Experts weigh in on precipitating events and which airports they think will survive the next decade.

A look back. Brett Snyder, author of the Cranky Flier blog, blames the small city air service decline on the airline industry’s fickle love affairs with regional jets. The darling of the 1990s was a nimble but fuel-guzzling 50 seater jet, which was quickly ditched in the 2000s as fuel prices climbed to new heights. The airlines’ new beau is a 70 seater model, which has a lower cost per seat than the 50 seater, but is too large to serve smaller markets.

Current situation. Based on USA Today’s analysis of Official Airline Guide’s (OAG) domestic route data, the year-over-year capacity cuts at smaller airports within a few hundred miles of larger hubs are significant. Two of the hardest hit were Milwaukee, WI (MKE) with a 20.1% drop in capacity over last year, and Manchester, NH (MHT) with a 16% reduction.

Future mapping.  According to William Swelbar from Massachusetts Institute of Technology’s International Center for Air Transportation “2012 begins a period in which U.S. air service map begins to redraw itself”. He’s confident the capacity reduction trend will continue for smaller regional airports as traffic is routed to relatively nearby hubs due to “too much duplication of service in the Northeast, Upper Midwest and parts of the Southeast”.

As airlines consolidate through mergers or acquisitions, it makes sense that their service also consolidates to the largest, most profitable airports. Is there an opportunity for smaller airlines to fill the vacuum left by the large airline exodus? PEOPLExpress Airlines thinks so - they hope to be flying to markets abandoned by larger airlines by this summer. By the grace of the FAA and the DOT, (oh, and some friends with deep pockets - its website is currently taking applications for investors to join its “owner family”) the once and possibly future airline could get its wings. Until then, small town travelers are left with few options.