Airport Overcomes Sept 11

January 28, 2003
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GRAND RAPIDS — Gerald R. Ford International Airport exited 2002 with flying colors, posting the highest year-end passenger total in its history.

Passenger total through December was 1.95 million, which surpassed the 1.91 million total posted for year-end 2000, the previous biggest year on record.

Through December 2002, total passenger activity was up 4.8 percent and cargo activity up 13.4 percent over 2001 year-end totals, said Bruce Schedlbauer, the airport’s marketing and communications manager.

According to the Air Transport Association, demand for air service remains down sharply since Sept. 11, 2001, and the number of passengers remains well below 2000 levels.

But Ford International appears to have weathered the Sept. 11 storm better than many.

“In speaking to other airports across the country, it looks as though we are among the relatively small group of airports that could say we were running ahead of the year before,” Schedlbauer remarked. “We finished 2002 in a much better position than our surrounding airports here that were down in the double digits from the prior year.”

And from what he has been hearing, Ford International’s 2002 numbers were ahead of the national average, as well.

Aeronautics Director James Koslosky refers to 2002 as “The Year of Security.”

Ford International gained distinction last year as the nation’s first airport to provide 100 percent baggage screening for explosives, as well as the first to have federal screeners in place.

Both Koslosky and Schedlbauer think those “firsts” may have helped restore some confidence in flying, at least among area residents.

“Informally, from what we hear from passengers directly or from the airlines, I think it was certainly to our benefit to have been in that position,” Schedlbauer said.

Koslosky said the system is far better off now that the government has taken over screening.

“For years, we in the airport business had been trying to get someone to recognize (that) the screening function, as being performed by the airlines, was not appropriate for the times,” he recalled.

Issues such as high screener turnover, low pay and inadequate training have been corrected with the federal government’s assumption of those responsibilities, and a safer, more secure system has been achieved, he said.

During 2002, 100 percent of flights that had been suspended after Sept. 11, 2001, were reinstated.

But Ford International did enter the new year with a bit of old baggage, too.

From October 2001 to September 2002 the airport incurred nearly $1.5 million in additional costs for federally mandated security measures put in place after Sept. 11. More than a year ago Congress promised full reimbursement, but it has yet to deliver on its promise.

As it previously announced it would, Skyway Airlines discontinued service to Columbus, Ohio, on Jan. 1, citing inadequate load factors.

“Load factor is just one piece of the puzzle, but it gives an indication of how well the service is doing,” Schedlbauer said. “At today’s fares, a 45 percent load factor isn’t cutting it.”

Whether or not an airline makes money on a particular route isn’t solely determined by passenger head counts. An airline may be filling its planes, but its yield per passenger may not be producing a profit, he explained.

The airlines’ margins are getting squeezed by low fares, which, in adjusted dollars, are the lowest seen since deregulation in 1978. High labor and other costs are tightening the squeeze.

Koslosky said loss of Skyway’s Columbus service isn’t of great concern because Columbus “isn’t even on our radar screen” when it comes to top origin and destination markets.

But the fate of another Skyway service now hanging in the balance could have more impact on the community.

Skyway had cancelled nonstop service between Ford International and Ronald Reagan Washington National Airport following the Sept. 11 terrorist attacks.

It was a profitable service for the airline before then, and even though the service wasn’t consistently running high load factors, Skway was “satisfied” with it, Schedlbauer said.

Skyway resumed the service last October for a six-month probationary period. As of late December, the nonstop D.C. route was still not generating breakeven traffic.

If performance doesn’t improve by the end of March, the airline will consider discontinuing the service again.

“They have put the airport and the community on notice that, although they’d love to continue offering the service here, the community really does need to step up and utilize this service,” Schedlbauer said. “If we do lose it, it’s going to be even more difficult the next time to get it back.”

He said loss of the service would be particularly detrimental to the business community.

But the business community is not supporting the service as airport officials had hoped it would, Koslosky added.

“Prior to Sept. 11, traffic was building in that market; then we lost it for a year. When that happens it’s difficult to re-stimulate activity.”

Trying to induce demand can be difficult given the wealth of air service choices in this community, he said. There’s pricing, service and route competition, and that’s the battle Skyway is waging now to bring traffic back to that route.

“I believe with the new convention center and, in terms of travel, tourism and convention generation activity, Washington, D.C., will be a very important market for this community,” Koslosky said.

A Skyway sales representative is working with the airport, the Grand Rapids Area Chamber of Commerce and The Right Place Program to try to recapture the service’s pre-Sept. 11 momentum.

As Koslosky put it: “Air service is not a benevolent public right. It’s something you compete for; the community has to earn it and support it.”

He’s concerned about the airline industry as a whole. United Airlines is just one of the carriers going through major restructuring.

He pointed out that United is neither the first nor likely the last carrier to seek bankruptcy protection. U.S. Air has been in bankruptcy for a year now, America West is in bankruptcy and Continental Airlines has been in an out of bankruptcy three times.

Other major carriers are on the verge of the same due to their cost structure, which has gotten out of whack over the years mainly as a result of labor agreements, according to Koslosky.

It’s the inefficiencies in airline labor contracts in terms of performance and productivity that’s killing them, he said.

The hope is United will continue to be the stable carrier it has in the past.

“This community has enjoyed nonstop or single connection service to hundreds of global destinations thanks to United and its service to Chicago,” Schedlbauer said.

“Thus far, they have not informed us that they’ll be making any scheduled reductions because of the bankruptcy.”

In the next couple months United plans to shift some aircraft types within the schedule while retaining its frequency of seven flights a day to Chicago. The mix will change to four regional jets and three full-size jets.

Koslosky said airport officials are following United’s plight and that of the entire industry on a daily basis.

Looking ahead, a few minor airport projects begun last year will evolve into large, full-scale projects this year.

The airport started modifications to Oostema Boulevard in 2002 that will ultimately entail investing some $4 million in road improvements and landscaping to create a “gateway” image for West Michigan.

A lot of the roadwork was done in 2002. Depending on cash flow, landscaping work could begin this summer and be completed over one to three years, Koslosky said.

The airport also will launch a comprehensive update of its 20-year master plan, a project he estimates will take 18 to 20 months.

Another focus will be to continue monitoring the state of the airline industry and working to retain the airline service the airport already has, he said.

“Once some stability has been brought back to the airline business, then we can talk about enhancing what we have,” Koslosky said. “But right now we need to fight to preserve what we have and support what we have.”

Also, 2003 will mark Ford International’s 40th year at its Cascade Township location, and the airport is planning a series of events in celebration.           

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