Monday, February 23, 2009

Richmond International Airport saw fewer fliers last year due to economy

By Peter Bacque

Published: February 23, 2009

Jon Mathiasen has had to make some tough decisions in recent months.

As the top executive at Richmond International Airport, he's cut employment 10 percent to 13 percent, clamped down on overtime and restricted purchases.

He even dropped the catered rolls and coffee for the monthly airport commission meetings.

"Traffic's down," he said. "And when traffic's down, it affects all of our sources of revenue."

The cutbacks come as Richmond International Airport -- and most of Virginia's eight other commercial airports -- face declining passenger traffic and revenue.

Richmond travelers have benefited from the fare competition produced by RIC's low-cost carriers, AirTran Airways and JetBlue Airways. But airport officials worry that Richmond-area passengers are not buying enough tickets on those airlines, putting their service in jeopardy.

Despite the downturn in travelers and income, Richmond International Airport -- with nine airlines providing 190 flights a day -- is still planning and building for expansion.

Work is under way, for instance, on a 2,600-vehicle space, $40million expansion of its north parking garage. A master plan calls for more runway capacity, terminal space and parking facilities to accommodate more growth.

The average passenger traffic among the state's nine commercial airports fell about 5 percent in 2008 compared with 2007.

Richmond's airport traffic declined 4 percent last year, to nearly 3.5 million passengers.

Roanoke's airport had the biggest decline among the state's airports, with passenger traffic falling 10.1 percent last year compared with 2007.

"The airline world goes as the economy goes," explained Keith McCrea, the Virginia Department of Aviation's air service and policy manager. "It's going to be directly tied to the level of economic activity that's driving the market."

When passenger traffic is down, an airport's income drops. "Passengers are the lifeblood of the airport," Mathiasen said.

Richmond expects to confront at least two years of recession-depressed traffic, Mathiasen said, before its traffic begins to grow again at about 5 percent a year.

. . .

Since airports like Richmond are overwhelmingly self-supporting for their operations -- no local tax dollars go to RIC -- airport executives have had to take steps to trim their budgets.

Richmond International had budgeted operating revenue of $42.4 million for the fiscal year that ends in June.

"We're not going to meet that," Mathiasen said. "Our net income is going to be off about 7 percent."

The slowdown at airports also is impacting those companies serving the traveling public.

Groome Transportation, which provides limo service to about 100,000 customers annually at Richmond International, saw a nearly 12 percent decline in its business last year, according to Vince Groome, the company's president. However, Groome said, "our business [profitability] is fine because we're managing our overhead" by cutting staff and equipment.

. . .

After AirTran came to Richmond International in 2005 and JetBlue entered the Richmond market in 2006, passenger traffic increased by 46 percent while average fares fell almost by half, airport officials said.

The discount carriers' competition helps keep fares in check, Mathiasen said.

But for JetBlue and AirTran, Mathiasen said, their riderships from Richmond are among the lowest of the cities that the two low-cost carriers serve.

In the use-it-or-lose-it airline world, every Richmond flight by the low-cost carriers needs to carry 12 to 15 more travelers, he said, in order to bring their passenger loads up to those airlines' system averages.

"Once a carrier leaves," Mathiasen said, "it could be a decade-long battle -- or longer -- to have a chance to woo [a low-cost carrier] back."

Keeping airfares down is incredibly important for the capital region's businesses, said Kim Scheeler, president and chief executive officer of the Greater Richmond Chamber.

Scheeler has joined Mathiasen in meeting with executives from the area's larger companies and urging them to consider all RIC's airlines when they book their corporate travel.

"It's really easy for companies to get locked into flying on XYZ Airlines all the time."

AirTran's Cynthia Tinsley-Douglas seconded that idea: "Continued support from the business community is critical for our success and our ability to increase RIC service."

Richmond's air service will probably hold up better than other locations in the country, said George Hoffer, an economics professor at Virginia Commonwealth University who studies the transportation industry. "I don't think we'd be in imminent danger of losing the low-cost carriers," Hoffer said, "because there are not many places where you have a better use for the airplanes."

. . .

Virginia's two largest fields, Washington Dulles International and Reagan Washington National airports, are critical nodes in the national airline system.

Dulles alone handles more than 800 domestic and international flights a day. Reflecting that large traffic volume, Dulles recently opened a $355 million runway, and plans call for a fifth runway at the Northern Virginia field.

Because it is one of the nation's largest hub airports, making sure Dulles has the capacity to handle more takeoffs and landings helps the closely intertwined national airspace system avoid traffic jams that can cause delays that ripple across the country.

Each airports' traffic was down 3.5 percent from their 2007 levels.

"The Washington airports suffered some capacity cutbacks," McCrea said, "but the service is so extensive up there you don't notice it."

. . .

Virginia's smaller commercial airports struggle to hold on to their markets, which frequently overlap with other airports.

"We are smaller than our neighbors on either side of us," said Jessica Wharton with Newport News/Williamsburg International Airport, which experienced a passenger decline of 1 percent.

Yet Shenandoah Valley Airport, located between Harrisonburg and Staunton, saw its passenger traffic balloon 64 percent, from 9,200 passengers a year to 15,100.

The large increase sprang from simply replacing the 19-passenger aircraft on Shenandoah Valley's three daily flights to Dulles Airport with planes seating 34 passengers.

Norfolk International is comparable in size and service to Richmond's airport. And both have benefited from service by low-cost carriers, McCrea noted. Southwest Airlines serves Norfolk.

Wayne Shank, deputy executive director of the Norfolk Airport Authority, said an airport has little ability to influence the number of passengers using its facilities.

"A lot of it is outside our control," he said.

Even with fly-the-airport advertising campaigns, Shank said, "There's only so much you can do in an economic downturn."

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