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Still Grounded

AirTran sparked a revival at Richmond International Airport. But will it last?

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It's been the feel-good story of the summer. As the rest of the world struggles with rising airfare prices amid terrorist threats and increasing fuel costs, Richmond International Airport, long one of the most expensive airports in the country, enjoys a renaissance of shrinking fares and hordes of passengers.

Suddenly, old RIC is taking off. Travelers flying in and out of Richmond hit an all-time high last year — at 2.9 million passengers — and the airport is on pace to shatter that record in 2006. Fare prices are dropping dramatically, by more than 30 percent to many cities, and RIC's two new discount carriers are adding flights.

That's not to mention renovations to the new terminal that are nearing completion, and the concessions overhaul that includes new restaurants and retail shops.

But don't tell George Hoffer, an economics professor at Virginia Commonwealth University who specializes in transportation issues. Hoffer fears the renaissance could be short-lived. Specifically, he's worried about the celebratory catalyst — AirTran Airways, the discount carrier that brought its peanut fares to Richmond June 23, 2005, forcing RIC's six other carriers to lower prices in order to compete.

AirTran is struggling — badly. The airline's financial woes have forced its stock down to less than $10 a share. And it recently promised shareholders that it would scale back its growth and capacity on the East Coast in 2007 and 2008 to help stop the bleeding.

Consider: On his way back from a trip to Denver in late July, Hoffer booked an early flight on AirTran to Atlanta, its main hub serving Richmond. He landed just after 11 a.m. and proceeded to book his flight to Richmond. There was only one problem: The next plane to River City wouldn't be leaving until 6:30 p.m.

Naturally, Hoffer then tried to book AirTran to Newport News, barely an hour's drive from Richmond. He figured his wife could pick him up there instead. AirTran had several afternoon flights scheduled, but they were all booked solid.

How could there be so much demand for AirTran in Newport News, Hoffer wondered, and virtually none in Richmond, barely 60 miles away? It was a Sunday, no less, the busiest day of the week for air travel.

"Nobody flies into Richmond, yet they have the newest planes in the air," Hoffer posits. "Objectively, [AirTran] has the best service in the industry."

Richmond has long been known for its expensive air fares, and AirTran's launch a year ago was heralded as a major coup. The smaller JetBlue, which has a more limited service to John F. Kennedy International Airport in New York, came less than a year later. Lower airfares aren't just a nicety, but promise to have a major effect on the region's ability to attract new businesses and industry, the tax-revenue engines behind economically sound cities and counties.

The possibility of losing AirTran is quietly becoming the big fear in Richmond business circles. The Greater Richmond Chamber recently launched a public awareness campaign attempting to encourage Richmond businesses to "use it or lose it" and start flying AirTran.

Richmond, after all, has seen AirTran's departure before. The airline left Richmond in 1999 after less than a year, under similar pressures from archrival Delta Air Lines. At the time, AirTran had recently merged with another struggling discount carrier, ValuJet, and the combined company decided to focus on Newport News/Williamsburg International Airport, which was offering incentives that in effect guaranteed the airline would succeed financially.

To land AirTran last year, the business community coughed up $1 million to assist the airline with startup costs — "to get its sea legs under them," says Gregory Wingfield, president and chief executive of the Greater Richmond Partnership. But that money's been used up, and the federal grant money the airport tapped to assist the airline with marketing costs is also running out, says Troy Bell, the airport's marketing director.

The legs are still wobbly, worries Beverley W. "Booty" Armstrong, chairman of the Regional Airport Commission. "If over time AirTran's passenger loads don't increase, we stand a good chance of losing AirTran's service in Richmond," he says.

A spokesman with AirTran didn't return a message seeking comment. In a Times-Dispatch article in late August, however, the airline reiterated its commitment to Richmond.

There are no easy answers. AirTran is still new to Richmond, after all, and some say it just takes time to figure out a new market. Richmond is a conservative town, says Darryl Jenkins, an aviation consultant based in Fauquier County who's worked closely with Richmond International Airport.

"Richmond has its own set of dynamics. It's slower to adapt to change there," Jenkins says. "With a little bit more time, [AirTran] will do just fine."

Perception may be part of the problem. "Discount carrier" once connoted no-frills flying with less attention to service. But today, AirTran flies the youngest fleet of Boeing 737s and 717s in the industry, and ranks second overall nationally for quality of service, according to the 2006 Airport Quality Ratings report published in Consumer Reports. JetBlue Airways, which started service here in March, holds the No. 1 ranking.

Or perhaps the Richmond market isn't ideal for AirTran, which tends to do well in industrial, blue-collar cities such as Flint, Mich., Rochester, N.Y., and of course, Newport News, with its large shipbuilding and military presence.

Richmond is known primarily as a business market. And business travelers who fly frequently have "very established travel habits," RIC's Bell says. Richmond's larger corporations often have service agreements with specific airlines as well, making it more difficult for new carriers to gain market share. (Currently, AirTran and JetBlue have a combined market share of less than 20 percent in Richmond. Delta and US Airways have more than 50 percent of the market.)

Indeed, the larger carriers guard their turf in Richmond — aggressively. When AirTran first entered the market last year, Delta immediately began adding flights the Regional Airport Commission had been pining for for years.

As AirTran's launch date approached last year, "Delta announced new service to Tampa; they announced the addition of two new flights to Fort Lauderdale and two flights a day to Orlando," Bell recalls. "Tampa is a market that we had asked for for many years. It was curious that it happened so quickly."

Jenkins, the aviation consultant, puts it more bluntly. Delta didn't just add flights to protect its territory, he says — the airline added flights that it knew would lose hordes of money for the sole purpose of driving out AirTran.

"They were going to drown them in their own blood," Jenkins says. "They were doing things that would guarantee they would lose the most money possible. They are loony. I have lost all my respect for Delta Airlines as a business entity.

"It's a dog with fleas."

The blood feud between the airlines, in fact, may be one of the reasons why AirTran sticks it out in Richmond, some say. Giving up one market would signal that Delta's strategy works, and Hoffer says AirTran has vowed not to let Delta drive it out of any new markets again. Earlier this month AirTran launched additional afternoon service to Atlanta, one of the key destinations for business fliers in Richmond.

Still, AirTran's success will boil down to how it fares with the business community. The jury's still out. Business travelers don't choose who to fly with based on charity, says Bob Couture, executive director of the McGuireWoods law firm, one of the biggest corporate users of the airport.

"We're encouraging our people to use all the carriers in town based on convenience and price," Couture says. "We've gotten some of the letters [from the Chamber encouraging support for AirTran]. Our answer is always the same: Provide us with great value and convenience of service and you'll get our business." S



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