Departures and arrivals | BIA finds itself riding the ups and downs of the airline industry at large
Photo/David A. Rodgers
BIA Director Rebecca Hupp is trying to keep the airport moving upwards in a shaky industry
Photo/Bangor International Airport
BIA has added some surface parking and expanded the terminal to help promote future business
The U.S. airline industry has taken a nosedive in the past year and a half, with net operating profit dropping from nearly $5 billion in 2007 to a projected loss of nearly $10 billion in 2008, according to the Air Transport Authority. Though 2009 has brought lower fuel prices, airlines have continued to struggle under falling passenger numbers and cargo traffic.
The industry’s woes hit home earlier this month for the Bangor International Airport when Continental Airlines pulled out of the airport after announcing in May that its departure was coming. Continental operated two flights a day to Newark, N.J., where airport congestion made the service too problematic and costly to maintain, the airline told airport and city officials. A day later, on Aug. 6, news broke that Delta Air Lines, its biggest carrier, would be ending its twice-daily service to Boston on Dec. 1, saying the flights were no longer profitable.
Ironically, this news came only days before BIA announced passenger traffic in July grew nearly 10% over last year, the sixth consecutive month traffic has risen. Overall, passenger traffic is up that same amount for the year.
Continental’s departure, though looming, was still somewhat of a surprise, says Rebecca Hupp, BIA’s director, especially since the airline added a second flight to Newark at the end of last year and saw an above-average load factor, which measures how full the flights are. But “the issue wasn’t the success of the flight, it was congestion at the other airport,” she says, adding that the Newark airport is rated as one of the worst airports for on-time performance. As for Delta’s decision, the “volatile industry” is to blame. “If flights aren’t profitable, airlines can’t continue to operate them,” she says. Delta still operates daily flights from BIA to Detroit and JFK International Airport in New York.
Industry changes have put a damper on some of BIA’s plans for growth. In 2005, the Boyd Group, an aviation consulting and forecasting firm based in Colorado, predicted the airport would have the fastest growth of any U.S. airport over the next five years. At that time, the airport was hoping to reach 500,000 annual passengers for the first time and was planning a $7 million parking garage. But the airport is still waiting to break the 500,000 passenger mark, after topping out in 2005 at 480,605 passengers. In 2008, it reached only 351,807. Construction of the parking garage has been put off until passenger numbers rebound, Hupp says.
But instead of riding out the airline industry’s recent drop, Bangor International Airport officials are preparing for its upswing. Besides adding some surface parking, the airport just completed a $4 million terminal expansion that included, among other amenities, more rest rooms, big-screen TVs and massage chairs. “We’re focusing on things that are in our span of control,” Hupp says.
The airport also recently made a number of changes to its fuel supply, ending its exclusive, nearly 40-year contract with supplier Exxon Mobil, bringing on Irving Oil as the new supplier of commercial fuel on Aug. 1. The airport also established an open-access fuel model — more common at larger airports but growing in popularity at regional hubs — that allows airline carriers to buy their own fuel and store it at a fee, or buy from Irving. So far, response to the change has been positive, Hupp says. “Our expectation is that by going to this model, it will improve competition, which will hopefully lower prices for our airline customers and create better operating margins for them, making service to Bangor more attractive,” she says.
Hupp says the airport is pursuing other airline carriers to replace the service it lost to Boston and Newark. The airport continually researches flight paths that would be profitable and pitches them to new and existing carriers. The airport has been trying to convince current carrier U.S. Airways to add flights, as well as entice United Airways and JetBlue to service Bangor. But at this point, “none of them are in expansion mode,” Hupp says. “We’re positioning ourselves so that when they are able to expand and grow, they’re thinking about Bangor.”
The size of the Bangor region makes it hard to attract additional carriers and cheap fares, says Bob Ziegelaar, former director at BIA for 10 years and now president of Telford Aviation Inc. in Bangor. Rural markets like Bangor mean minimal competition for pricing, allowing airlines to charge more to make higher margins, he says. And since airports can’t set fares, they are left to entice travelers by offering perks like affordable parking rates. “A lot is outside the airports’ control,” he says.
While he expects another carrier to scoop up the Bangor-to-Boston service Delta abandoned, attracting JetBlue is doubtful, especially since that airline already serves Portland, which he says “creates a huge sucking sound out of Bangor’s market, and there’s nothing Bangor can do about it.” He adds, “Bangor doesn’t have the market size to attract JetBlue or Southwest.”
But Bangor did attract one low-cost carrier, Allegiant Air, which began offering twice-weekly service to Orlando in 2007 and has since added seasonal flights. The airline specializes in low-cost or nonstop service from smaller markets like Bangor to leisure destinations like Florida. Tyri Squyres, a spokeswoman for Allegiant, said via email that the Bangor “market has exceeded our expectations. Such success has allowed us to grow our service.”
Allegiant will continue to add flights to the popular vacation destination this winter and spring, according to Hupp.
Despite the industry’s challenges, both Hupp and Ziegelaar are hopeful for the airport’s future growth. Recent economic growth in the Bangor area should create a stronger base of travelers that could help attract carriers to launch new services or increase what they already offer, Ziegelaar says. “As Bangor develops and as the region develops, I think we’re going to see traffic strengthen again at Bangor.”
Mindy Favreau, Mainebiz staff reporter, can be reached at mfavreau@mainebiz.biz.
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