Lansing airport gains ground after 2 years of decline

Posted: February 20, 2012 - 1:00 AM

Lansing’s airport appears to have turned a corner.

Hindered first by a large commercial airline merger that vastly reduced the number of available flights and later by economic recession, Capital Region International Airport in 2011 posted its strongest numbers in three years and sparked what its managers say could be the start of a turnaround for local air travel.

Airport leaders are hoping that’s the case after two difficult years marked by steep cost-cutting and sharp declines in passenger traffic.

“It’s nowhere near a trend,” said Bob Selig, executive director of the Capital Region Airport Authority, which oversees the airport’s operations. But, he added, “we were pleased to see it.”

Last year’s upswing can partly be attributed to the success of low-cost leisure carrier Sun Country Airlines, which in April launched nonstop daily flights from Lansing to Minneapolis and Washington, D.C. It also offers direct seasonal flights to Orlando, Fla.; Cancun, Mexico; Montego Bay, Jamaica; and Punta Cana, Dominican Republic. Sun Country flew more than 97,500 people in 2011.

Sun Country has eclipsed United Airlines, which offers flights to Chicago flown under the United Express commuter banner, as the second-largest carrier at the airport. It trails only Delta Air Lines Inc., which flies from Lansing to Detroit and Minneapolis.

That’s why Selig intends to fight hard to keep Sun Country’s Minneapolis-Lansing-Washington route. The airport and the Mendota Heights, Minn.-based airline are appealing to the U.S. Department of Transportation to create a new pair of landing and takeoff slots at Washington Reagan National Airport after a court ruled the department wrongly offered the set to Sun Country instead of another merged airline.

If the slot deal doesn’t materialize, Sun Country leaders say the daily service could end.

For now, though, Sun Country has lifted an airport that in 2010 saw its fewest inbound and outbound passengers — 264,083 — since 1982.

Travel plummets
Passenger travel through what was then Capital City Airport peaked in the late 1990s, with more than 720,300 people leaving or arriving in 1997. But traffic fell after that, plummeting 38 percent in 2009 alone.
The effects of the last decade on the air travel industry are well-documented. The 9/11 terrorist attacks grounded planes, tightened security and reduced demand for flights, leading airlines to limit their schedules. Then, carriers hiked fares and added fees as fuel prices and other costs rose. Some carriers were pushed into bankruptcy, mergers, or both.

In Lansing, several airlines pulled out, including American Airlines’ American Eagle commuter carrier in 2001 and US Airways in 2004. Continental Airlines left by 2002, though it brought in a short-lived commuter service in 2003.

Even Delta left the Lansing market in summer 2008, though it returned a few months later after it closed a deal to buy Northwest Airlines Corp., which was the largest carrier at the airport.

Selig, understandably, champions “buying local,” a popular catchphrase he believes extends to air travel. He knows airlines now will cut a flight if it’s not making money, turning “use it or lose it” into a survivor’s mantra. He knows passengers will drive somewhere else, often Detroit, for lower fares. And he knows all of that means Lansing stands to lose even more revenue — and lobbying power with the airlines to add more flights — if people can’t be convinced to fly from their home market.

“All I can tell you is that we’re counting on it being a trend that will sustain itself,” Selig said of recent growth. “We’re pleased with that progress.”

Fares drive traffic
Capital Region International Airport’s traffic improved markedly in 2011, with nearly 366,000 passengers flying in and out, but it hasn’t been able to regain its pre-recession ground. In 2008, just as the economy started to tank, airlines serving Lansing carried more than 429,000 people.

Fares also played a role in the Lansing airport’s rise last year. U.S. Department of Transportation data show Delta’s one-way fares from Lansing to Reagan National fell from $184 in the second quarter of 2010 to $160 in the second quarter of 2011. That correlates with the launch of Sun Country’s service.
High fares compared with nearby airports have hurt Lansing passenger traffic, with travelers opting to drive to Detroit or other airports to take advantage of lower ticket prices.

But airport officials were able to persuade Delta in late 2010 to keep its Lansing fares in line with those it offered at Detroit Metropolitan Airport. That didn’t necessarily happen on every flight all the time — but some fares did come down.

Selig said the smaller airlines are vital to maintaining low fares and convenient schedules for passengers, and can draw people from other in-state markets that often absorb Lansing residents. But the region still needs the larger commercial airlines to meet all needs.

“It’s just part of reality when a new entrant comes into a market,” said Stan Gadek, Sun Country’s president and CEO. “It’s a classic David vs. Goliath situation there between us and Delta. And they can flood the market with seats and they can undercut us and, if they wanted to, they could put significant competitive pressure on us.”

But Gadek said he believes the opposite has happened: As Sun Country keeps fares low and creates flights, other airlines follow suit to win passengers, which benefits everyone.

Delta officials could not be reached for comment.

Ripple effect
A 2004 economic impact study found that the airport contributed nearly 7,400 jobs, directly and indirectly, and $239.4 million in wage income to the tri-county region. In addition to commercial airlines, the airport also has a substantial cargo business that includes air service run by shipping giant United Parcel Service Inc.

The airport brings in revenue from a passenger facility charge added to fares, as well as a portion of revenue from parking, car rentals and food service, Selig said. But all of those ancillary businesses take a hit when passengers aren’t flying.

That’s part of the reason the airport sought and won the a designation as an international port of entry and a foreign trade zone. It recently earned a Next Michigan, or “aerotropolis,” designation to encourage development of property at and near the airport.

Throughout history, the strongest communities were the ones positioned around seaports and rail towns, said Rod Taylor, manager of DeWitt Township, where the airport is located. These new classifications, he said, are setting Lansing up for the 21st century.

DeWitt Township now receives about $40,000 in tax revenue from businesses located there, Taylor said.

“We’ve positioned ourselves extremely well with the assets that we have to offer,” he said. “The foundation is being built to allow us to take advantage of that future.”

It will take time to get there. The airport became leaner in 2008 and 2009, operating now with $2 million less and 36 employees instead of 54. Its nearly $12 million budget projects slightly higher revenues this year than last, a sign that recovery might continue.