Shame that airport day trips are ending with Denver
August 7th, 2008 at 12:14pm Thomas V. Bona
By now you’ve heard that RFD’s flights to Denver - and its fledgling day trip program - are ending. Denver was a big money loser - to the tune of $600,000-$700,000 because fuel is so high and the planes weren’t full. Had a conversation with a friend who commented that they “wanted too quick results” but you can’t justify losing that much money at a time like this. He also wondered if lack of frequency killed it, but A. United couldn’t make money with daily service in this environment and B. I’m not sure RFD could have gotten a deal that would have given them an affordable plane for daily flights.
There may be a lot of “woulda, coulda shouldas” on the post-mordem, but it comes down to another route failing in a country of failing air routes. High fuel prices = high fares. High fares + economic questions = decline in leisure traffic. So it goes. But give the folks at RFD credit for being willing to try, and the knowledge to know when to give up.
The day trips were breaking even, and by any reasonable measure were an overwhelming success. But they’re ending because the deal with Southern Skyways required a certain number of flight hours, and the airport couldn’t pack enough day trips to meet that minimum.
Will day trips come back? The airport sure hit on something with sold out flights to Niagara Falls, Indianapolis and Mackinac Island. But finding a deal with an airline to have planes available for non-regular service would be tough. Perhaps a deal with Rockford-based Ryan International Airlines sometime? Or we just may have to wait until things pick up…
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9 Comments Add your own
1. Bob Trojan | August 7th, 2008 at 2:48 pm
I’m sure glad my wife and I booked the Niagara flight for Sunday. It’s like buying a rare commodity!
2. rfdbusinessman | August 7th, 2008 at 11:02 pm
Thomas, your comments sure seem right on. It is a TOUGH environment for air service out there right now. I believe that on this very blog it was stated that Frontier has expressed interest in Denver service. It wont happen in the current business environment, but if fuel prices, etc can get stabilize and Frontier does not go under themselves,
Passenger air is not dead at RFD. Allegiant is still going and I would assume that Apple Vacations will be serving with the Cancun packages again this winter season.
Does anyone know what the load factors to Myrtle Beach were with Southern Skyways ? I understand that Myrtle Beach Direct Air expressed interest in service. Could they have done any better with their service and product ?
It will be interesting to see if talk of the Ireland charters via Kenny Tours comes up again. It also appears there could be an opening for Mexican flights via VivaAerobus now that Gary has effectively pulled their plans for now for a customs facility.
Long term and when the airline industry and economy stabilizes (and it will), lets hope airlines like Southwest, AirTran, Frontier, JetBlue, and Spirit see opportunity. I suspect also that there will also be some small start up airlines, or public charter airlines willing to try some service as well. USA 3000 is another airline which comes to mind as an option.
3. ANCJason | August 8th, 2008 at 7:01 am
I think that the joint venture with Southern Skyways was actually a success if you look at the big picture: It raised more community awareness that the airport actually exists for purposes other than those big brown planes crossing over Bypass 20 in the morning; it kept enplanement figures up to a level by which the FAA can use to determine potentially greater funding appropriations; it shows that the management has the ingenuity to weather out the hard times; lastly, I’m sure certain carriers were checking the Southern Skyways site regularly to see how many seats were filled up. With the right type of airline, the right type of aircraft, the right type of fare structure, and a frequent-flier program attached, this will not be the last time RFD sees service to Denver. Or Detroit. Or Atlanta. Maybe RFD will even get that LaGuardia service that Coleman Air Transport promised almost 30 years ago.
4. Thomas V. Bona | August 8th, 2008 at 12:15 pm
Bob,
Yeah, we wanted to do one but we’re pretty vacationed out this summer. Woulda surely done one this fall or next spring.
5. Thomas V. Bona | August 8th, 2008 at 12:31 pm
Rfdbusinessman,
Yeah, Allegiant is doing well here … though being 1,000 miles from its focus cities limits RFD’s potential will Allegiant right now. And the airline doesn’t seem in a rush to try brand new focus cities, at least not ones that aren’t sunny (I’m looking at you Buffalo/Niagara). Last I heard, Apple is back for another season too, but I’ll monitor that.
It’s hard to get an accurate load factor on the Myrtle Beach route because flights had passengers from both RFD and West Virginia, and the airline didn’t break down how much capacity was given to either. So it reports only 48 percent loads out of RFD, but that could be because another 48-52 percent got on in West Virginia. What I heard was that the flights generally did real well, with some selling out, but most tickets sold before fuel really ran up, and tickets were cheaper than they would be now … so the airline was flying expensive flights without enough revenue. No clue how well they would have sold if tickets cost what the airline would have to charge now.
Despite the yammering on Airliners.net and elsewhere about “scheduled charter” service, I don’t think that’s what limited Southern Skyways’ success here. It was just the worst possible time to start brand-new service anywhere. I doubt Direct Air would have done any better … or they woulda tried it first.
I’m personally pessimistic on the Ireland flights for the same reason … terrible time to try something new and risky. While the dollar’s so low vs. the Euro, the Ireland plan will ONLY work if they can get strong loads from Ireland here. Not sure how connected Kenny Tours is with that market. I think it’s a good idea sometime - Euro travelers would have less problem flying to Rockford and making their way to Chicago or Milwaukee, while seasonal flights to Europe should be rather popular among the northwest suburbans and Madison/Milwaukee crowd. I know I’d do that before braving ORD again.
You’re right on the long term … that’s exactly what RFD has to and will look for. The question is how early in the recovery curve can they get “discovered.” As Bob likes to say, you don’t want to compete with the ORD airlines when they’re at their strongest.
6. Thomas V. Bona | August 8th, 2008 at 1:06 pm
Jason,
People need to keep in mind three things when judging the Southern Skyways experiment:
1. What else was the airport going to do? Sit back and slowly die, like so many others? That’s not been the attitude under current leadership, and the community’s backing has shown it doesn’t want that either. The airport never chased away other, more established airlines, it took what it could and made its own destiny. If trying, failing, learning and trying again is celebrated with entrepreneurs … why not airports?
2. The $600,000 to $700,000 lost was essentially marketing money. It led to at least 2,300 people using the airport in June and July that might not have otherwise … maybe they liked what they saw and will come back and use Allegiant’s service next. It also shows airlines that RFD can fill seats in the right situation, as you said, which could reap benefits later on.
3. Unlike other airports that are passenger-focused, RFD isn’t in financial trouble. They budgeted $475,000 for the year for the program, and are cutting it before going toooo far over that. The total expenditure is about 7.8 percent of their 8.9 million operating budget … no small amount, but also not a bankbuster when stopped in time.
Finally, before you scream, “That’s my tax money they threw away,” property taxes make up only about $3.3 million of that budget. Another $3 million comes from landing fees - mostly UPS. $1.5 million comes from property leases, Another $220,000 comes from rental car commissions. And if the cargo development that just broke ground takes off, that’s even more non-tax money to fund the airport.
The question is, do people want the airport to play dead or take reasonable chances to stay on the radar?
(Pun totally intended)
7. thurdust | August 8th, 2008 at 5:33 pm
Thomas V. Bona Wrote:
“1. What else was the airport going to do? Sit back and slowly die, like so many others? That’s not been the attitude under current leadership, and the community’s backing has shown it doesn’t want that either. The airport never chased away other, more established airlines, it took what it could and made its own destiny. If trying, failing, learning and trying again is celebrated with entrepreneurs … why not airports?”
The problems I had with the Southern Skyways flights to Denver was the fact that it had been tried twice before and failed both times, first as a less-than-daily flight operated by Hooters with no connection options, and then by United with two flights a day with several connection options. This wasn’t a “reasonable chance” as you put it in your last paragraph, but trying the same thing over and over again and expecting different results, and losing $600,000 in the process. Also, you couldn’t book Southern Skyways flights between Rockford and Denver using third party sites like Travelocity or Expedia, so the chances of anyone in the Denver area even knowing that Southern Skyways existed, let alone flew the route, would be slim at best (I’d love to know how many people booked DEN-RFD-DEN round trips versus RFD-DEN-RFD, or DEN-RFD one ways versus RFD-DEN.)
“2. The $600,000 to $700,000 lost was essentially marketing money. It led to at least 2,300 people using the airport in June and July that might not have otherwise … maybe they liked what they saw and will come back and use Allegiant’s service next. It also shows airlines that RFD can fill seats in the right situation, as you said, which could reap benefits later on.”
That’s $260 per person. Am I the only one who thinks that that’s just a little bit excessive?
8. Thomas V. Bona | August 8th, 2008 at 7:27 pm
Thurdust,
Thanks for taking the time to comment, you ask good questions.
I don’t have the Hooters numbers in front of me, but they went under because of a general failure of the business model, not because RFD-DEN wasn’t a good route. The route didn’t fail, the airline did (because, as I understand it, of matters beyond whether it’s RFD routes worked). Obviously it succeeded enough for UAL to want in … or, as I suspect, enough for someone like Frontier to want in and UAL to want to block them.
UAL’s “failure” seems another story. They flew small planes that didn’t do well at fuel efficiency. They never got the kinks out of their pricing system that seemed to let lower-paying leisure travelers take too many seats and didn’t get enough high-paying business fares. Plus it seemed they just didn’t put their full heart into it with their prime ORD service nearby. Didn’t want to vulture their own nest, which makes sense. I think this again hits on the “squatting to keep Frontier out” theory, and you’ll notice they left around the time Frontier started its fall.
The reality is, the run up in fuel prices from March through July was a real game changer. Again, I don’t have the numbers in front of me, but didn’t jet fuel go up from $3.50 to nearly $5? The fact is, early sales on Southern Skyways to Denver were strong, enough that they added a fourth flight. But by the time it took off, fuel cost so much that the tickets already sold weren’t paying enough to offset it. And future flights cost too much to make it work. Had fuel been at nearly $5 when UAL pulled out, I don’t think RFD even tries this.
$260 a person is, yes, excessive, and that’s why they pulled the plug. But under the original business model, it would have come close to breaking even … maybe costing under $500,000 to have, what, six times as many passengers or more? And then, the following year, an even better rate of return.
They tried and failed, but I’m not sold they shouldn’t have tried in the first place. It was a good idea in March, it just didn’t work in June and July. That’s how much the game has changed with fuel and economic issues.
Does that make sense?
9. Gina | June 24th, 2009 at 1:39 am
I am reading older posts, yet today I see that day trips are back. I think it is great, especially in this economy for people to be able to get away even for just a day without breaking the bank. I just learned of your Airport late last summer when a co-worker mentioned it to me. ( Growing up in Chicago we are aware of O’Hare and Midway… and that’s pretty much it!) I hope that you are able to get the word out that you are there and that you offer such a great opportunity for people on a budget, but most importantly for me a time budget. Keep up the good work Rockford!
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