Where have all the passengers gone?

The onslaught of capacity reductions taking place this fall does not bode well for airports dependent on revenues from passenger facility charges.

Airports large and small are being impact as airlines cut capacity and passenger levels drop, says the American Association of Airport Executives (AAAE). The trade group's Energy/Air Service Task Force final report is available today.

A quick breakdown:

• Total system arrivals and departures are expected to drop 7.3% between October 2007 and October 2008, according to the Official Airline Guide (OAG).
• Carriers have eliminated service on more than 400 routes since March 2008, the The US House transportation and infrastructure subcommittee on aviation reports.
• Airlines have already abandoned 60 communities and roughly 40 more will lose service this year, says The Air Transport Association of America (ATA) The airline trade group also says it is “not unrealistic” to expect as many as 200 communities could lose air service by early 2009.

AAAE will make policy recommendations. I'll blog about that after the press conference.

Mineta (the airport, not the man) fights back

Locked in a bitter battle to with its northern neighbours, San Jose’s Norman Y. Mineta International Airport will use municipal funds to help lower airport rents in an effort to keep airline service.

A city council measure lets the airport use about $2.2 million to reduce the Cost per Enplaned passenger to $8.61 in this fiscal year (ending in June.) The cost, a key airport metric, had been $9.02, a figure that was inflated by the airport’s ambitious $1.3-billion modernization and expansion program, airport spokesman David Vossbrink says.

The largest carrier at Mineta, Southwest Airlines, with a 45% market share, approves of the airport’s expansion, he said. Southwest usually seeks a CPE of about $5, however. A prime rival to the San Francisco and Oakland international airports, Mineta sits in the heart of the Silicon Valley and has long attracted hi-tech traffic.

The moves, along with a traditional incentive program, may be used to persuade carriers to resume service to the East Coast, Mineta air service development director Ed Nelson says. JetBlue is ending its San Jose to Boston Logan flight, Continental is ending service to Newark Liberty and United ends its Washington Dulles flight this autumn, leaving the airport with only one transcontinental route, JetBlue to New York JFK.

Nelson said that the airport also hopes to persuade a foreign-flag carrier to begin Asian service. American, which had ‘de-hubbed’ domestically at San Jose starting in the year 2000, ended a Tokyo Narita flight in 2006, a major blow to the airport. Its only international service is to Mexico.

A special thanks to Airline Business Americas editor David Field for guestblogging.

One is a lonely number

Runway construction will ground nearly all operations at Idaho Falls Regional Airport next month.

Only one of five carriers will continue service between September 2 and October 2. Horizon Air will maintain Boise flights using 37-seat Bombardier Q200s on a shorter runway while the 9,000 ft runway is rebuilt because of failing asphalt.

Loss of air service and related activities, such as car rentals and concessions, is expected to cost the airport $10,000 a day, director of aviation Len Nelson says. Actual construction is estimated at $9 million.

Meanwhile, Delta Air Lines/Skywest Airlines will bolster service at Pocatello Regional Airport to handle passengers from eastern Idaho.

Horizon will resume service to Seattle and Boise with 76-seat Bombardier Q400s on October 12; other carriers will resume Idaho Falls operations on October 2.

(Photo from Idaho Falls Regional Airport)

Taxman has a field day

The National Business Travel Association adds up airport taxes.

Cleveland has the highest taxes and Honolulu has the lowest.

USA Today has a handy chart.

Price cut

Ottawa International Airport will cut terminal fees effective July 1.

The Ottawa International Airport Authority will reduce fees by 5% because of skyrocketing fuel costs and weakened economies in Canada and the USA, Canadian carrier WestJet Airlines says in a statement.

Obviously, the airline is pleased with the decision and would like other Canadian airports to follow suit.

Airport sugar daddy under microscope

Fingers crossed that the bookkeepers in charge of FAA’s Airport Improvement Program (AIP) are more judicious than the folks at Baltimore-Washington International Airport.

Starting today, the US DOT’s Office of Inspector General will audit the AIP to check for improper payments.

The objective is “to evaluate whether FAA had adequate internal controls to prevent and detect improper payments to AIP grant recipients,” the office says in a statement.

The audit will test a statistical sample of AIP payments made between June 2007 and May 2008. Reviews will occur this week at FAA headquarters in DC, regional offices, airport district offices and AIP grantee locations.

The US Office of Management and Budget, “estimates that 3.5% of payments made government-wide were improper,” the office notes.

New lighting, smaller bill

Albany International Airport will be testing ways to save on its electricity bill.

Energy-efficient fixtures-light-emitting diodes (LED)-will be installed in the parking garage this fall.

The fixtures are expected to save between $10,000 and $15,000 annually per floor, reports The Albany Times Union.

Electricity usage is expected to drop 75%.

Hunger pains, gains

Hungry people at an airport. Sounds like a winning business plan.

Check out the concessions at Fort Lauderdale-Hollywood International Airport.

The airport received $7.6 million from food vendors and $4.3 million from news and gift vendors.

Math according to BWI

Last week must have been embarrassing for Thurgood Marshall Baltimore-Washington International Airport.

The airport, which under-collected roughly $54 million in terminal rents, construction costs and fees because it overstated its amount of terminal space, will only recover about $25 million.

The airport under-collected funds between fiscal year 2004 and fiscal year 2008 and miscalculated its terminal space by 12%, an airport spokesman says.