Competition stiff in battle for air service | nnbusinessview.com

Competition stiff in battle for air service

John Seelmeyer

The announcement by Delta Air Lines last week that it’s adding daily service between Reno and Minneapolis created only a minor splash in the media.

But it marked a major victory for Reno-Tahoe International Airport executives, who find themselves rowing against a strong current as they seek to increase the air service that’s critical for tourism as well as business travel.

At the same time that airport executives and their consultants are wooing new flights, many airlines are cutting back their domestic routes as part of an effort to control massive financial losses.

Reno has been among the most successful communities in the nation in winning new air service since 2009, but competition for additional flights and destinations is fierce.

“Your competition is the 450 other airports across the country that want the same airplane, maybe the same markets, that you do,” says Steven Martin, senior vice president of economic and strategic services for InterVISTAS LLC, a consultant to Reno-Tahoe International.

Rising oil prices double the challenges.

A $1 rise in oil prices costs the airline industry $415 million a year in fuel costs, Martin told tourism and economic officials at a briefing in Reno last week.

“It’s an extremely difficult revenue environment,” Martin said. “If Orville and Wilbur Wright were still flying, one of them would have to be laid off.”

Airlines are responding to higher oil prices with steps both small and large. Most carriers no longer provide magazines on flights in an effort to save even a few pounds of weight, and American Airlines is replacing heavy beverage carts with lighter models.

More significantly, airlines are grounding older planes that aren’t fuel efficient, and that means that fewer aircraft are available to provide new or expanded service.

Airlines also are moving planes from domestic to international routes to avoid competition from low-cost carriers.

“They’ve done it, in part, to get away from Southwest,” Martin said.

In this environment, airports and communities that want to boost air service will be successful only if they focus on ways that additional flights will boost an airline’s profits, said Kevin Schorr, vice president for air services development with InterVISTAS.

Southwest Airlines, for instances, identifies each of its Boeing 737 aircraft as a $60 million asset, and its route-planning work is designed to maximize the return on that asset.

The work to win new service involves research of business and leisure travel markets, detailed route analysis, preparation of a solid business case and, increasingly, marketing support or other steps by an airport and community to reduce the airlines’ risk, Schorr said.

When Continental Airlines launched Reno-Houston service last month, the Regional Marketing Committee that pushes for better air service to the Reno-Tahoe area arranged for Olympic gold medalist Jonny Moseley to promote the service in Houston.

Old-fashioned cheerleading can help reduce the risk.

When Reno-Tahoe International announced the new service to Minneapolis, for instance, the airport’s president and chief executive encouraged northern Nevada residents to get on board literally.

“Now that we have landed this service again for our community, it is very important for our region to support the flight and fill the seats,” said Krys Bart.

Schorr said the process of developing new air service is complicated by staff cutbacks that have reduced the number of route-development specialists at carriers.

While analysis by computers carries greater weight these days, Schorr said a well-crafted sales pitch based on solid numbers still can open doors.

“We can convince the airlines to look beyond the computer models,” he said.

But it’s a long process often taking a year or more.

The new Delta service to Minneapolis, for instance, reflects five years of work by Reno-Tahoe International executives after Northwest Airlines pulled back from the route in 2006.


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