Allegiant may help cut fares

Sunday, August 19, 2007

By MARIAN ACCARDI

Times Business Writer marian.accardi@htimes.com

Airport seeks more carriers to reduce passengers' costs

Huntsville International Airport lost its first low-cost airline a year and a half ago when Independence Air shut down its operations.

Airport officials here - looking to step up competition, improve airfares and give travelers another nonstop destination - will welcome the low-fare Las Vegas-based Allegiant Air next month. The direct flights between Huntsville and McCarran International Airport will operate twice weekly, on Mondays and Fridays, starting Sept. 21.

"We have been aware that we have higher fares in some of our markets than our competitors," primarily the Birmingham and Nashville airports, said Barbie Peek, the airport's marketing director. "We estimate we lose in excess of 500,000 passengers a year" from the airport's 18-county service region to other airports. "We understand we have had issues with our fares, and attracting a low-fare carrier has always been at the top of our list."

Independence Air, with a hub at Dulles International Airport, started operating here in October 2004. That service, combined with the simplified fare program that Delta Air Lines introduced in January 2005, led to a successful period of "fare parity" with Nashville and Birmingham, Peek said. Then, Independence Air discontinued all of its flights in January 2006.

"Competition drives fares," said Peek, "and fares creeped back up because of the loss of competition." Fares industry-wide climbed between '05 and '06.

Having a market with a lot of business travelers can also influence fares, said Peek. Sixty-nine percent of the Huntsville airport's passengers are business travelers, she said.

Huntsville's average one-way fare for all markets year-end 2006 was $220, according to Peek, up 23 percent from the year-end 2005 fare of $179. The average one-way fare for all markets was $177 year-end 2004.

Huntsville had the third-highest market average fare - at $270 - of more than 100 airports in the country for the first quarter of 2007, according to the Domestic Airline Fares Consumer Report prepared by the Department of Transportation's Office of Aviation Analysis. That figure was based on the Huntsville airport's 37 markets with more than 20 passengers a day. Airports at Cincinnati and Eagle, Colo., had higher market average fares than Huntsville; none of the three airports had low-fare service.

"What Allegiant Air can offer is two to four or five flights a week with significantly lower fares," said Kevin Schoor, managing director of TranSystems Campbell-Hill in Alexandria, Va., a consulting firm. "They are masters at offering cheap fares and a decent product. For people who want to get from point A to point B at bargain basement fares, this is a perfect product."

The service could help lure those passengers who now drive to Birmingham or Nashville for cheaper seats, said Schoor. But flyers who want the flexibility of multiple flight options could keep driving to the other airports, he said.

Some travelers who are loyal to a legacy carrier's frequent-flyer program or whose employer may have a contract with a legacy airline may keep flying with them, he said.

Tim Sieber, vice president and general manager of The Boyd Group Inc., an Evergreen, Colo., firm that specializes in aviation consulting, research and forecasting, said that other airlines serving Huntsville "may match fares to those markets Allegiant will fly to." But, Allegiant's "ability to impact fares across the market is confined to the specific destinations they serve."

Sieber described Allegiant Air as "a cruise ship with wings," taking travelers to vacation spots like Florida and Las Vegas. "For the vacation traveler, it certainly is a net positive."

Huntsville's air service development program provides incentives not only for new or existing carriers that provide low fares, but also to existing carriers that add destinations and for new airlines that enter the market. Incentives can include waiving certain fees and assistance with advertising costs.

All of the airport's carriers have taken advantage of the incentive program, Peek said. Some of the latest examples: US Airways last August cut its fares to 24 cities from Huntsville and United Airlines returned to the Huntsville market this year with direct flights to Denver International Airport and Washington Dulles International Airport. Delta Air Lines will start weekday nonstop service to LaGuardia Airport beginning Sept. 6.

"What we try to do is think of ways to enhance air service for our community," said Peek.



Allegiant may help cut fares Sunday, August 19, 2007 By MARIAN ACCARDI Times Business Writer marian.accardi@htimes.com Airport seeks more carriers to reduce passengers' costs Huntsville International Airport lost its first low-cost airline a year and a half ago when Independence Air shut down its operations. Airport officials here - looking to step up competition, improve airfares and give travelers another nonstop destination - will welcome the low-fare Las Vegas-based Allegiant Air next month. The direct flights between Huntsville and McCarran International Airport will operate twice weekly, on Mondays and Fridays, starting Sept. 21. "We have been aware that we have higher fares in some of our markets than our competitors," primarily the Birmingham and Nashville airports, said Barbie Peek, the airport's marketing director. "We estimate we lose in excess of 500,000 passengers a year" from the airport's 18-county service region to other airports. "We understand we have had issues with our fares, and attracting a low-fare carrier has always been at the top of our list." Independence Air, with a hub at Dulles International Airport, started operating here in October 2004. That service, combined with the simplified fare program that Delta Air Lines introduced in January 2005, led to a successful period of "fare parity" with Nashville and Birmingham, Peek said. Then, Independence Air discontinued all of its flights in January 2006. "Competition drives fares," said Peek, "and fares creeped back up because of the loss of competition." Fares industry-wide climbed between '05 and '06. Having a market with a lot of business travelers can also influence fares, said Peek. Sixty-nine percent of the Huntsville airport's passengers are business travelers, she said. Huntsville's average one-way fare for all markets year-end 2006 was $220, according to Peek, up 23 percent from the year-end 2005 fare of $179. The average one-way fare for all markets was $177 year-end 2004. Huntsville had the third-highest market average fare - at $270 - of more than 100 airports in the country for the first quarter of 2007, according to the Domestic Airline Fares Consumer Report prepared by the Department of Transportation's Office of Aviation Analysis. That figure was based on the Huntsville airport's 37 markets with more than 20 passengers a day. Airports at Cincinnati and Eagle, Colo., had higher market average fares than Huntsville; none of the three airports had low-fare service. "What Allegiant Air can offer is two to four or five flights a week with significantly lower fares," said Kevin Schoor, managing director of TranSystems Campbell-Hill in Alexandria, Va., a consulting firm. "They are masters at offering cheap fares and a decent product. For people who want to get from point A to point B at bargain basement fares, this is a perfect product." The service could help lure those passengers who now drive to Birmingham or Nashville for cheaper seats, said Schoor. But flyers who want the flexibility of multiple flight options could keep driving to the other airports, he said. Some travelers who are loyal to a legacy carrier's frequent-flyer program or whose employer may have a contract with a legacy airline may keep flying with them, he said. Tim Sieber, vice president and general manager of The Boyd Group Inc., an Evergreen, Colo., firm that specializes in aviation consulting, research and forecasting, said that other airlines serving Huntsville "may match fares to those markets Allegiant will fly to." But, Allegiant's "ability to impact fares across the market is confined to the specific destinations they serve." Sieber described Allegiant Air as "a cruise ship with wings," taking travelers to vacation spots like Florida and Las Vegas. "For the vacation traveler, it certainly is a net positive." Huntsville's air service development program provides incentives not only for new or existing carriers that provide low fares, but also to existing carriers that add destinations and for new airlines that enter the market. Incentives can include waiving certain fees and assistance with advertising costs. All of the airport's carriers have taken advantage of the incentive program, Peek said. Some of the latest examples: US Airways last August cut its fares to 24 cities from Huntsville and United Airlines returned to the Huntsville market this year with direct flights to Denver International Airport and Washington Dulles International Airport. Delta Air Lines will start weekday nonstop service to LaGuardia Airport beginning Sept. 6. "What we try to do is think of ways to enhance air service for our community," said Peek. © 2007 The Huntsville Times © 2007 al.com All Rights Reserved.