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Discount Air Carrier Performance Raises Specter of Subsidies

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Two months after the Greater Richmond Chamber of Commerce launched its $600,000 “save low fares” campaign to encourage fliers to use discount air carriers — or risk losing them — load factors at AirTran Airways and JetBlue appear to be on the wane.

George Hoffer, a professor of transportation economics at the University of Richmond, says the discount carriers are running below the national average in Richmond. Crunching flight numbers for January, Hoffer says both carriers are underperforming.

“We are still are having the problem where we are running about 10 percent below [AirTran's] system-wide load factor,” Hoffer says.

When considering passenger numbers at Richmond International Airport, Hoffer factors in a 3 percent cancellation rate for the weather. He found that AirTran's load factor — the percentage of seats filled per flight — averaged 64 percent in January.

JetBlue's load factor was 67 percent for January, according to Hoffer's calculations. For the month, overall passenger traffic at the airport was 219,255.

Troy Bell, a spokesman for the airport, says in fact AirTran's load factors increased from January 2010 to January 2011. He says JetBlue's load factor also appears to be improving. But Bell says he's prohibited from releasing specifics.

Hoffer says even if you assume that AirTran canceled 20 percent of its January flights because of weather, its load factor comes in at 72 percent for the month, which is still below the carrier's national average. On the whole, Bell says 8 percent of the airport's flights were canceled in January because of weather.

AirTran may have shot itself in the foot, Hoffer says, by canceling one of its flights out of Atlanta, its main connecting hub out of Richmond. JetBlue has largely become irrelevant after it canceled its flights out of New York in November, he says.

What could fix everything? Hoffer suggests AirTran begin a shuttle plane to Baltimore, which would connect Richmond with a major hub to the Northeast. Doing so now, in the run-up to Southwest's acquisition of AirTran, could provide a critical link.

“If JetBlue leaves Richmond you've got this void of low cost service to the Northeast,” Hoffer says. “Putting this little shunt in can access the entire Northeast.”

But a Baltimore shuttle would likely be too expensive to justify, Bell says. It's just a two and a half hour drive up Interstate 95 to Baltimore Washington International Airport. “Short segments like that tend to be relatively expensive on a unit basis,” Bell says.

But what if Richmond, instead of spending $600,000 on marketing, put that money toward a subsidy to guarantee the seats would be filled? “I don't think it would be enough to make any difference,” Bell says.

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