Saturday, May 25, 2013
Weather ForecastSince the 1930s, we have proudly served the air transportation needs of the people of the Gulf Coast. Today, we continue to upgrade our facility and offer all a range of air travel’s most modern amenities. As an independent, self-funded entity we do it all without local tax dollars.
The Airport Authority answers frequently asked questions about airports, airlines, airfares, air service and economic development:
A multitude of circumstances affect how an airline will price a city pair. Airlines compete for passengers with airfares, frequent flyer program perks, in-flight service, and other differentiating characteristics. The most intense price competition occurs when a low cost carrier enters a market. Absent that, competitive intensity will depend on how many airlines are fighting for passengers and whether or not one dominant airline can set market prices. More competition means lower fares.
The level of competition between airlines largely determines Mobile’s fares. Competition increases when the number of passengers is more evenly distributed among carriers at the airport.
So why did the passenger next to you pay less than you? Airlines spend millions of dollars on computer models to set ticket prices. But the goal is simple—charge enough to cover costs and as much as competitors and customers allow. If airlines charge too much, passengers don’t fly; if airlines charge too little, they can’t cover their costs.
Airlines don’t sell seats; they don’t even rent seats. They sell transportation, which is moving a customer between two airports with a mix of different levels of comfort, convenience and flexibility. Airlines charge more for the convenience of last-minute purchase, international service, frequent flights, first class luxury, flying on busy days, generous frequent flyer programs, larger seats or the right to a refund. A non-refundable weekend Mobile to New York City ticket costs considerably less than a refundable, midweek ticket. It is only reasonable that there is a price discrepancy between these two types of tickets.
Customers often pick the lowest fare. At airports with low-cost carriers, other airlines match low fares or lose customers, even if they lose money at the low fares. They offset the losses by charging as much as possible at airports without low-cost carriers. Airports without low-cost carriers can have lower fares if several airlines compete intensively for passengers. Mobile travelers can increase competition by flying on all airlines serving the airport.
Airline pricing is a pure example of free market economics at work. All day, every day, customers tell airlines what to charge by which tickets they buy. Airline computer models adjust prices minute by minute to get the most revenue from each flight. More competition makes airlines drop fares; less competition lets them raise fares.
Airports themselves cannot. The Mobile Airport Authority is, as with all airports, the landlord for the Airport. Fees charged by airports average less than 5% of airline expenses. Labor and fuel are airlines' largest expenses. Airports have no more influence over airfares than the owners of Colonial Mall Bel Air have over the price of power tools at Sears.
If a discount store moved into a mall, other stores would tend to match prices. But, if customers continued to shop at the other stores, now with lower prices, and not shop at the discount store, it would close and prices would rise. So it was when too few Mobile passengers chose to fly AirTran and they left. Any new store or new airline will shut down if they do not get enough customers to succeed in a market.
The community, however, can influence fairs by supporting all incumbent carriers and enthusiastically getting behind new service that enters the market.
Airlines at Mobile sometimes charge less, sometimes the same, but too often, they charge more. By purchasing tickets more in advance of the travel date and checking alternate schedules, travelers can often find comparable fares. The fare discrepancy has decreased in recent months.
Support competition. Fly on all airlines and use your airport. Airlines launch, change or eliminate air service to a city based on passenger numbers (demand). They add service when demand increases and cut service when demand drops.
Overall demand for air service grows when the local economy grows. Mobile’s economy is experiencing its greatest economic expansion in its history. Airlines will add service to meet it. However, if passengers choose to fly from Pensacola or Gulfport, that is where airlines will add service.
Passengers, particularly business travelers, can help improve our air service and influence fares, by choosing not only to fly from Mobile, but by flying on all of our airlines especially new service. It simply means you can increase competition and lowering fares.
The Mobile Airport Authority doesn’t create new air service, but it can and does communicate new service opportunities to airlines. The Authority, with support from some of the leading aviation consulting firms identified demand for and recruited new service to Charlotte, Birmingham, New Orleans, Orlando, Cincinnati, Dallas/Ft. Worth, Tampa, Chicago and Washington, DC. We recruited new airlines, including AirTran, UltraAir, Conquest, Gulfstream International, Continental Express, US Airways Express, United Express and American Eagle. Mobile competes for this service with cities across the country.
The Authority works to build community support for competition and for new service and encourages passengers to choose Mobile. We created the first airport frequent flyer/loyalty initiative—the Passport Program—to thank travelers for choosing Mobile, regardless of which airline they fly. The Authority has lowered start-up and operating costs for new Mobile air service by establishing the first low-cost airport-operated airline station, for which airlines pay on a per-landing basis. US Airways Express uses our station.
Southwest makes their own decisions based on their own strategies. Unfortunately, there is little a community can do to attract the airline, short of keeping them abreast of an expansive and growing economy. Southwest offers low fares because it has low costs, in part because they operate one type of airplane and fly them more hours each day, carrying more passengers, than other airlines. (Apologies to our friends at Southwest, we don’t mean to diminish the contribution of creative marketing, distribution, scheduling and above all, the employees). That number of flights requires ~750,000 potential passengers in a new market. The Mobile market currently has 600,000 total passengers. However, we have worked closely with Southwest for 10 years and, hopefully, one day they may change their business model to fit cities Mobile’s size.
In fact, Southwest has been to Mobile to speak to our Air Service Task Force. Their message was clear. To help improve our business case for Southwest service, we must support competition (fly on all Mobile carriers) and fly from your local airport. If they ever begin serving smaller markets like Mobile, we hope to be one of the first.
Relocating the Mobile Regional Airport to the Brookley Aeroplex has significant implications for passengers and airlines at the current Airport. While Brookley is closer to South Mobile County and Baldwin County, the current location was chosen because it’s closer to current and future population centers. Brookley offers better access to interstates 10 and 65, though internal complex roads would require a complete restructuring. Noise over densely populated areas surrounding Brookley was a primary factor in the FAA’s opposition to moving the airport. As Mobile grows, the airport will require more land for terminal, runways and parking, which is available at the current location and not at Brookley.
It is uncertain whether a Brookley airport would have more flights or lower fares than the current airport. Carriers don’t care about location unless it affects passenger numbers. Southwest declined Mobile’s offer of Brookley because there are not enough potential passengers to support the service.
Airports charge fees to airlines based on expenses and debt service. The cost to build new facilities and infrastructure improvements at Brookley would significantly increase airline fees.
Regardless of a move, Mobile Regional Airport must remain open to serve existing tenants: USCG; National Guard; Fixed Base Operators; Charter Services; EADS-CASA and general aviation.
Relocating the airport raises a number of issues affecting Brookley’s development and Mobile’s economic development. More than 4,000 employees (over 2,500 directly attributable to the airport) work at 120 companies at Brookley, many of which would be forced to leave if the airport were moved. A Brookley airport would do away with the unique intermodal logistic advantages that enabled the Mobile Airport Authority to bring MAE and Airbus to Mobile and would eliminate Mobile as a candidate for future such projects. In simple terms, a Brookley airport could eliminate 3,000 jobs without a guarantee of improving air service. Brookley’s proximity to the Choctaw Point Container Terminal offers a unique mix of intermodal facilities attractive to manufacturing and distribution firms and is one of the reasons Northrop Grumman/EADS choose Brookley for their Tanker Facility.
Maybe. It is plausible that a large airport in Baldwin County would support better service and fares than two smaller airports could alone. The Mobile Airport Authority initiated discussions with representatives from Pensacola to explore the idea. Pensacola withdrew from the project, voicing an aversion to having their airport in Alabama. We are prepared to pursue the concept; but it will require two communities working together.
In 2009, 25-35% of local travelers drove from Mobile to other airports for lower fares or more convenient flight schedules. Conversely, approximately 18% of Mobile Regional Airport passengers drove here from Mississippi and Florida for better fares and service.
Airlines have different policies, so check before flying, but most recommend travelers arrive at the airport at least one and a half hours before a domestic flight and two hours before an international flight. Also, travelers who need to check in at the ticket counter must do so 30 minutes before departure. You should be at the gate by 15 minutes before departure, and on the plane 10 minutes before departure. We completely understand how some of these rules could be seen as arbitrary, especially when it’s 29 minutes before departure and the ticket agent refuses to check you in or it’s nine minutes before departure and the gate agent refuses to let you on a plane that you can see out the window. However, while the Airport might do things differently, it has absolutely no influence on airline rules.
The Mobile Airport Authority was created in 1982 to own and operate the Mobile Regional Airport and Brookley Aeroplex. Its mission is to improve the quality of life in our community through economic development, air service development and real estate development at its two facilities. It is not a part of the City or County and receives no local taxes, and like most airports, must live on its own income and Federal Grants. The Authority’s five board members are appointed by Mobile’s Mayor, approved by the City Council and serve staggered six-year terms. Led by the Executive Director, 130 employees work at both facilities.
The Authority is the landlord for Mobile Regional Airport and is responsible for maintaining a safe and customer-friendly facility, which it does with rental income from airlines, car rental companies, food service providers and parking lots. The Authority provides police, fire protection, maintenance, customer service, airport shuttle service, airline stations, air service development, aviation operations and engineering.
With over 100 companies and 4,000 employees on 1,700 acres, Brookley Aeroplex is the region’s largest industrial and transportation complex. The Authority’s economic development effort has produced results as a number of large, high-profile companies call Brookley home: Mobile Aerospace Engineering’s (MAE) aircraft maintenance facility; the Airbus Engineering Center; the Northrop Grumman/EADS-NA aircraft assembly facilities for the KC-30 advanced tanker; and many more. In addition, the Authority created an aerospace workforce development program to meet the increasing need for trained workers in these aviation businesses.