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New carrier could help in airfare fight

Airport officials: JetBlue in Albany would lower prices

Saturday, February 22, 2014
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Passengers visit the Southwest Airlines ticket counter at Albany International Airport last Thursday.
Photographer: Patrick Dodson
Passengers visit the Southwest Airlines ticket counter at Albany International Airport last Thursday.

— Before Southwest Airlines decided to begin flying from Albany International Airport in 2000, there had been growing discontent over the cost of airfares for flights out of Albany.

Federal officials had met the year before to gauge just how high fares were in the region, from which business travelers were known to drive three hours north to catch cheaper flights out of Montreal. A Siena Research Institute survey cited top executives at more than 1,000 local companies saying they were unhappy with Albany’s high airfares.

Six days into the new year, Southwest made the announcement: It was coming to Albany.

“When they came, the average ticket price for a one-way trip fell $80 immediately,” said Albany International Airport spokesman Doug Myers. “In fact, prices started to fall even before they got here. The announcement was all it took.”

Today’s demand for lower airfares out of Albany is hardly as feverish as it was 15 years ago, said Albany County Airport Authority CEO John O’Donnell. But it’s still enough of a concern that airport officials are constantly working behind the scenes to entice new carriers to Albany.

Rising fares

A look at average airfare for one-way flights out of Albany International Airport:

2009: $156

2010: $185

2011: $213

2012: $218

2013: $228 (first three quarters)

Source: U.S. Department of Transportation Domestic Airline Consumer Airfare Reports

One trend airport officials would like to reverse is the drop in boardings, a trend since 2005. Even though the Capital Region has gained high-tech jobs in recent years — which usually portends increased air travel demand — high airfares and decreased seating capacity have caused travelers to skirt Albany International for cheaper flights at airports in New York City and Connecticut.

Airport officials hope that a visit last week from U.S. Sen. Charles Schumer, D-N.Y., to call on low-fare carrier JetBlue to come to Albany will be the first step in eventually winning back those boardings.

“Schumer was instrumental in bringing Southwest to the area,” said O’Donnell. “We are hopeful that JetBlue will respond to his request. We have space in the terminal. We would have to work on parking and some infrastructure changes, because we would see a pretty strong increase in our numbers. But we’re ready. We’ve been ready for a while now.”

As soon as the Internet made finding low-cost flights easy, airlines were forced to compete for low prices. But airfares move in a life cycle. So when Southwest, a low-fare carrier, arrived in Albany in 2000, it kept the other carriers’ fares low for quite a while. But about three years ago, O’Donnell started to notice the prices reaching new highs.

Average airfare was $163 for a one-way flight out of Albany International in the third quarter of 2009, according to the earliest data available from the U.S. Department of Transportation. Five years later, in the third quarter of 2013 (the most recent available data), average airfare was $247 — a more than 51 percent increase.

Meanwhile, the number of people boarding a departing aircraft at Albany International peaked at 1.55 million people in 2005. Since then, the number has fallen to 1.2 million people.

“When we speak to the airlines, their argument is that the fuel costs have risen so tremendously and they need to compensate for that,” said O’Donnell. “In their defense, there is some merit to that argument. But we most definitely would love to have another low-cost carrier in to bring competition to the market and hopefully reduce those higher prices.”

Competition is great for the consumer, of course, but not for the airline, which barely makes a profit off of the higher fares. A 2012 Wall Street Journal article that examined how airlines spend airfare found that fuel was by far the biggest cost for airlines. Airline salaries were second, followed by ownership costs associated with buying and leasing planes, federal taxes and maintenance costs.

One of the ways airlines have sought profits is by upping fees — for baggage, for reservation changes, for early boardings and picking prime seats. They’ve fended off bankruptcy through mergers. But that decreases competition, which undoubtedly means higher airfares for customers — so much so that last year the government tried to put a stop to the American Airlines and US Airways merger, to no avail.

“When they join forces, it reduces the number of seats dramatically, too,” said O’Donnell. “That is one of the reasons prices have gone up.”

Seating capacity at Albany International has shrunk every year since 2004, from 214,582 average available seats in a month to 130,374 as of 2013.

Carriers at the airport include Cape Air, Delta Air Lines, Southwest, United Airlines and US Airways.

At the end of 2011, Albany International Airport started an air service incentive program designed to attract a new airline to the airport or to prompt an existing Albany airline to begin new service to a new destination without reducing existing service. Between the program and a federal Small Community Air Service Development Program grant, the airport has about $1.5 million on the table for an airline willing to come to Albany or enhance service there.

“We’ll pick up their operating costs for one year,” explained Myers. “It’s worth it, because as long as you have competition, it will help drive the fares down. But we’re between a rock and a hard place with the airlines. We meet with them at least once or twice a year, talk to them about these fares. But we can’t control the fare. We can do some arm-twisting. We can talk to them. We can beg. But they set the fares.”

O’Donnell said he has pitched Albany International Airport to a number of airlines: American West, Air Tran, Alliance, Midwest Airlines, ATA and Frontier. Most recently, the airport tried to secure nonstop service between Albany and Houston and/or Denver, which would allow more connections to the West Coast.

“We meet with them at least once a year and we pitch the region,” he said. “That’s what airport managers do. So we talk about new developments in the region, like GlobalFoundries and the nanocollege. We talk about our unemployment numbers. We talk about why it’s a perfect match for them to come to Albany and service Albany.”

So far, no one has bit. But local officials are confident it won’t be long before someone does. After all, the Albany airport is one of few airports of its size that has seen service increase over the years.

“We think we’re on a good track going forward,” said O’Donnell. “Our seat capacity is up at least 7 percent from last year. In December, we were up 10.2 percent with boardings. And this week we’ve had a real struggle with parking. We’re at capacity with almost 4,000 cars parked here. These are all good signs.”

In a statement last week, JetBlue said it was “always looking for opportunities to grow” and that it would “strongly consider” Schumer’s proposal.

 
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