“Cranky Flier” Explores Decline in Small City Airline Service – Part 1 of 2

Expert Flyer Hot Topics — Where the Rubber Meets the Runway

When you live in a big metro area, like New York, Los Angeles or Chicago, it’s assumed — taken for granted even — that one can snap their fingers and catch a flight to just about anywhere at some airport and at some point in the day.  But what if you’re in a micro city, like Santa Fe, NM or San Luis Obispo, Ca?  We caught up with Cranky Flier, Airline and Travel Expert, Brett Snyder, recently and he helped us explore this looming issue in a two-part Hot Topic series.

Brett Snyder, Cranky Flier & Cranky Concierge

Brett Snyder, Cranky Flier & Cranky Concierge

It’s been a rough few years for smaller cities when it comes to air service.  For the most part, they’ve seen the number of flights cut with the flights that do remain being less frequent on smaller aircraft.  Why is this happening?  Here’s a look.

The 1990s looked like there would be a renaissance for small city travel.  The introduction of the 50 seat regional jet meant that airlines could upgrade their older turboprop aircraft and offer faster jet flights to cities that couldn’t support them before.  That turned out to be a short-lived win.

Throughout the 1990s, airlines ordered regional jets in droves and replaced entire fleets of turboprops.  Travelers liked the jets because they could fly faster and could go above the weather.  In Chicago, when American opted to go all jet in its regional fleet (partially out of necessity, but that’s a different story), United felt compelled to follow for fear of losing its passengers.

As the regional jets ramped up in the latter half of the decade, fuel prices fell to record lows.  That combined with high demand led airlines to think they could thrive forever.  They were clearly wrong.

The year 2000 saw the bursting of the DotCom bubble, and that more than anything began the downfall.  As demand dropped, airlines realized that they couldn’t fill airplanes with high enough fares to stay profitable.  The events of September 11, 2001 only made things worse for demand.  Around 2004, fuel prices started to creep up.

There was a brief flash of hope around the middle of the first decade of the new millenium when ExpressJet decided to start a point-to-point model between smaller cities, emulating the Southwest-style of service with 50 seat jets.  The timing couldn’t have been worse.  As fuel spiked ever higher, this model using this type of aircraft was doomed to fail, and fail it did.

Flash forward to today and fuel prices have steadied at five or six times more per gallon than they were back in the 1990s.  That created a completely different dynamic for the airline industry.  Those hot rod 50 seat regional jets quickly became viewed as massive fuel hogs.

Airlines raced to get rid of 50 seaters as quickly as they could in favor of their new darlings, the larger 70 seat regional jets.  These airplanes have a lower cost per seat than the 50 seaters, but they’re also too big to serve many smaller markets.  That again put those smaller cities out in the cold.

Could the airlines go back to turboprops?  They could, but there simply weren’t many options.  The days of the 19 seat turboprops had come to an end long before when they were forced to operate under the same rules as the bigger jets.  That brought their costs up to a point where they weren’t sustainable without government support (which we’ll talk about in my next installment).

The larger 30 to 40 seat jets still had a place, but there were very few being made anymore.  The fleet size of these aircraft have been shrinking as the fleets have aged and an appropriate replacement was found.

The only part of the turboprop market that’s showing signs of life is the 60 to 75 seat market.  Both Bombardier and its faster but more expensive Q400 along with ATR’s slower but more economical ATR72 have done well over the last decade as airlines have looked to find more economical ways to serve cities.  But even this hasn’t worked out very well for small cities.

These airplanes have a large seat count and have only found limited success within the US market.  The biggest success is in the Pacific Northwest where Horizon Air flies a large fleet under the Alaska Airlines brand.  But these are again larger airplanes that aren’t meant for the smallest cities in the country.

What can be done to keep service to smaller cities?  The government has a couple of programs in place, but they don’t really solve the problem but in some cases make it worse.  We’ll talk about that next time.

8 Comments on "“Cranky Flier” Explores Decline in Small City Airline Service – Part 1 of 2"

  1. Matt says:

    Well true for the most part, many communities across the country have found a middle ground via revenue guarantees between driving to a medium sized city frequently over 100mi away following the cessation of air service due to a lack of profitability on 50+ seat RJ’s and haranguing their congressman for EAS type service. This solution comes at no expense to the government (be it federal, state or local) in the form of revenue guarantees to airlines for service or additional flights backed by local civic organizations in concert with large employers in the region. While not always successful, frequently the air service guaranteed brings in a second competitor or additional flight to a city where it in turn drives down prices if the airport has limited existing service thus driving further demand.

    This has been a successful approach in Ithaca, NY where when US Airways was the soul airline in the early 2000’s when it was in Chapter 11 bankruptcy and now ITH enjoys profitable service to EWR on CO and DTW on DL.

    While the exception does not prove the rule, towns across the country that need access to air service are waking up to the fact that they cannot rely on the government through SCASD grants or EAS funding and turning inwards to propel their future success skywards

    • Ginger says:

      Wichita is a great example of a community where its airport is the largest one in the entire state, so since the early 2000s, they have had a state, city and county funded program to provide affordable air fares to the state (through Wichita). The program provides revenue guarantees of up to $7 million annually, and most of it has gone to AirTran over the years. The result has been huge traffic increases at the airport and more importantly, a lowering of air fares by ALL carriers. Studies show that the $7 million annual cost provides a savings to passengers of more than $60 million a year, plus huge tax revenues back to the state (which puts up $5 million). In 2000, Wichita used to have some of the highest air fares in the country, but now they are just above the national average, and they are now less expensive than Tulsa and Oklahoma City, and the fare gap with Kansas City has shrunk a ton since the program started.

  2. Jessica says:

    Colgan also operates a good number of Q400s for Continental (well, United now) in the northeast, I think because the pilot contract used to forbid large RJs but not large turboprops. So they used RJs on smaller routes and props on higher capacity ones.

  3. Mike C. says:

    Government should not subsidize essential air service. The highway system and faster cars and bus systems can do away with small airports which are not more than 100 miles away from a larger airport.

    For instance, in Macon/Warner Robins Georgia there is a small shuttle service (the free market at work) which has sprung up called Grooms Shuttle. They can carry more people per day, with more scheduled times than any commuter airline and do it in less time. Not only is it more better in terms of time service but als in cost.

    There once was a time for government funding of the non-essential service, but like many government programs, it has out lived its usefullness, especially when the free market can do it cheaper and faster…

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