Airlines Blamed For GFIA Losses

December 2, 2005
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GRAND RAPIDS — The Gerald R. Ford International Airport has seen a 1.2 percent decline in passenger activity in the past couple of months after enjoying several years of increasing passenger activity levels that have exceeded the national average.

One factor behind the decline has been the loss of two commercial carriers, thus the number of seats available in this market, Deputy Aeronautics Director Phillip Johnson told the Kent County Aeronautics Board last week. Along with that, GFIA has three carriers in bankruptcy.

From November 2004 to November 2005 the airport lost 17 percent of its airline seating capacity, he pointed out. Additionally, airfares have gone up and GFIA’s only low-cost carrier, ATA, has left this market.

“All of those things have resulted in the declines we’ve seen,” Johnson said. “It’s all been in the last few months and we’re definitely on the downside of the cycle, and I think we will see a turnaround.”

Asked whether the airport is losing market share to airports such as those in Kalamazoo and Lansing, Johnson said the airports in the region tend to “swap” passengers back and forth.

“A passenger may find a lower fare in a surrounding city,” he explained. “We tend to sell out on the lower fares in Grand Rapids. Kalamazoo fares tend to be higher than ours. Lansing and some markets might be a little bit lower, but not by much. Typically we swap and we all lose a few passengers to each other, but I think we may be seeing a little bit more of that going on.”

It’s not just an issue of fare price, Johnson pointed out; it’s an issue of available passenger seats. And with three carriers in bankruptcy, there’s no way of knowing whether seat availability will increase or decrease in the months ahead.

The airlines’ bankruptcy woes are affecting GFIA in another way, as well. The three carriers in bankruptcy or seeking bankruptcy protection are behind in their payments to the airport by more than $1 million collectively.

Of that sum, Northwest Airlines owes the airport $400,000 and United Airlines $200,000, said Brian Picardat, the airport’s finance and administration director.

Picardat told members of the board last week that the airport has $450,000 set aside in reserves to help cover some of the potential loss.

“I’m hoping that because of the fact that United, Northwest and Delta continue to serve here that we’ll get most of that money back,” Picardat said. “We’ll have to wait and see. If the airlines fold, then of course we’re not going to get anything, but we don’t anticipate that.”

Airport Attorney Robert Buchanan said if one of the bankrupt airlines decides to reject the airport’s lease and pull out of this market, it’s possible GFIA won’t get repayment from the company.    

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