Flight Blog

Oct 09 2007 Airport Fees BY sgf-adminTAGS How the Airport Works


Jake inquires, "Is the building of the new airport going to raise airport fees for the airlines? If so, this certainly isn't going to make SGF more competitive to lower rates to draw travelers to SGF from TUL, MCI, STL. Any comments on this is appreciated."


Fees at our airport go up three percent a year in the current terminal and that will continue in the new terminal. Landing fees are currently at $1.06 per 1,000 pounds. Exclusive use space (offices, ticket counters) have an annual rent of $32 per square foot. Joint use space (ramp, gate, tug areas) is assessed using a formula which results in an average rate of $35.55.


These rates are dirt cheap. It's one of the reasons why we have such good service for a small market. In fact, the Federal Aviation Administration has told us that we ought to raise rates. We've respectfully declined!


People ask me what we do to attract airlines. I’ve touched on this several times, but have never brought it together in one posting. Here’s what we do:


  1. We talk to airlines on a regular basis and provide information. The first and most important thing airlines care about is passenger numbers. How many people use the airport and what do the trends show?
  2. We make airlines aware of our incentive program:  A) marketing incentive: maximum of $50,000 available for additional or new service. B) We routinely waive landing fees, gate fees and common use rental fees for new airlines entering the market. The waiver of fees is temporary, but long enough to let the airline establish service. C) Ground services. We are one of a handful of airports in the country to offer ground services to the airlines and it's at least part of the reason why we have service to five of our 12 destinations: Atlanta, Cincinnati, Orlando, Las Vegas and Tampa/St. Petersburg. More on this in a minute…
  3. Besides courting the airlines, we court people (potential passengers) living within 70 miles of the airport. We try to make them aware of the airport and what it offers. We do this through speaking engagements and advertising. The goal is to get more people to use the airport—remember—airlines care about passenger numbers. The more the better.

Getting back to ground services—the following is adapted from a story published several months ago in the airport newsletter. It should give you a good idea of why our ground service program is so important.


An Unremarkable Sight


Delta/Comair flight 4303 creeps into Gate 4 at the Springfield-Branson National Airport (SGF). When it stops, several workers begin servicing the plane and unloading luggage. It’s a scene repeated thousands of times every day across the globe. It would be unremarkable except for one thing: these workers don’t work for the airline or a contractor--they work for the airport.


The fact that SGF offers the service doesn’t sound like a big deal, but it is. “We were one of the first airports, if not the first to provide it,” says Gary Cyr, SGF director of aviation. “When you think about it, they’re not only servicing the plane, they’re engaged in economic development.” pushback.jpg


Airplanes need many things when they land: baggage unloaded and loaded, water tanks filled and lavatories serviced. It’s generically referred to as “ground services.” Airline employees and private contractors perform it in most corners of the aviation world. But at SGF the airlines have the option of using airport employees. From the airline’s point-of-view, it’s a good way to cut cost without affecting customer service. From the airport’s perspective, it’s a lure that can attract new airlines or entice an existing airline to add service.


An Accidental Occurrence


This story couldn’t be told if TWA was still in business. The bankrupt airline was bought out by American in 2001. Its absence at SGF meant more than a loss in airline service: TWA was the only airline in Springfield willing to provide ground services for large charter airplanes. Those charters were typically full of Branson tourists. Charles Jackson, who was TWA’s manager at SGF when the airline folded, had an idea. “I pitched airport management the idea of forming a department that would service the charters.” A month later SGF was in the ground service business and Jackson worked for the airport.


The first challenge: equipment. There’s the cost of the tractors (called tugs) that pull luggage carts; the truck that deices planes in cold, wet weather; the tug that pushes an airplane away from the gate—the list goes on and on. “An airline can easily spend half-a-million dollars to set up shop at a given airport,” says Jackson. He convinced American to sell TWA’s old equipment for less than $10,000.


For the first two-and-a-half-years, Jackson and the new department serviced charters. Then, in April 2004, Delta decided to come to town with daily flights and it needed ground services. Jackson’s department bid for the service and won. This was a significant step forward—not only was SGF servicing an airline that had a daily schedule, it was saving the airline a significant amount of money.


Rapid Growth G4atsgf.jpg


Fast forward to April 2005: Allegiant Airlines, a low cost carrier providing niche service to vacation cities, wanted to start flying between SGF and Las Vegas. The airline had flown charters to Springfield, so it was familiar with the airport’s ground handling. Jackson pitched the airline a bold idea: SGF would provide “below wing” and “above wing.” In industry slang, “below wing” refers to ground services. “Above wing” refers to the staff at the ticket counter and gate. Allegiant jumped.


Now SGF provided below wing for the charters, Delta, and Allegiant and above wing for Allegiant. This was unchartered territory--the challenges mounted. Every airline has its own rules and standard operating procedures. The SGF staff had to learn them for each airline. “I had to send people out-of-town to each airline’s training classes,” says Jackson. load.jpg


Within a month of beginning service to Las Vegas, Allegiant doubled the number of flights. Then in October it added service to Orlando. As the work load increased, the size of the SGF service staff increased. It currently has 24 members handling at least 43 flights a week. “It’s not a huge revenue stream, but it helps develop airline service,” says Mark Roy, SGF’s business director. The program has done so well that airports across the country are paying attention.


For the past year-and-half SGF representatives have been in demand at airport conferences. “There’s extremely high interest from both airports and airlines,” says Jackson. “The airline representatives are saying, ‘yes, this is what we want airports to do!’”


Cyr is now asked to speak on the subject on a regular basis. Airport representatives jammed the room at a recent meeting of Airports Council International. Managers from bigger airports, including Orlando and Raleigh-Durham, asked questions and wanted more information. Cyr sums up the conference this way: “airport ground handling was all the buzz.”


Follow these links for more information on airport ground handling: Airport or FBO? and Springfield Success.


faucet.jpgGood thoughts and questions this morning from Watcjer. Got enough here for a book! Let's go through them one by one...


1) I think the "leakage" of thirty percent is underestimated. Maybe I don't travel in moneyed circles because almost EVERYONE I know drives to another airport to fly to their destination.


I hope you're wrong about leakage being underestimated. Care to guess how many people thirty percent is? It's a painful number: 181,877.


Aviation consults have a formula for coming up with this number. Our most recent leakage study was delivered at the end of 2005 by the Boyd Group. Here's how it approximates leakage, and I'm quoting from the study, "The Boyd Group uses two ratios, enplanement-to-population and enplanement-to-EBI [EBI is the per capita Effective Buying Income of people living the metro area], as general indicators of how much traffic a particular airport is capturing relative to total demand created in the market...the Boyd Group compared the Springfield-Branson region to four other Standard Metropolitan Statistical Areas that have similar populations and per capita EBI. When compared to the similar markets, it is estimated that the Springfield-Branson SMSA is generating approximately 614,100 annual enplanements. During the 12-month period ending September 30, 2005, the airport enplaned 432,223 passengers. The above formula indicates that the airport is capturing approximately 70% of the traffic generated by the primary service area."


2) Sam Walton understood low prices. People go where they can get the best deals, LOTS of people.


I agree. Allegiant Airlines' presence in Springfield is a perfect example. Here's a sample of its growth numbers in Springfield:


  • July: passenger numbers up 87% over the same month last year
  • May: passenger numbers up 41% over the same month last year
  • March: passenger numbers up 34% over the same month last year

Allegiant has done more for this market than just provide low fares: in my opinion it has generally raised awareness of the airport in the market and it has proven that the demand is here when the price is right. If the airline can maintain and improve its market performance over several years, I think it can help us convince other low cost carriers (LCCs) to try the market. Having said that, I would be remiss if I didn't point out that comparing Allegiant to other LCCs is an apple to orange sort of comparison. Remember--the Allegiant business model is unique. It has a very small fleet and it does not provide daily service.


The economics of other LCCs are different: they have bigger fleets and provide daily service.


3) Is there anyway the Springfield airport can give gate concessions to get in competitive airlines?  What can the airport do to make up the difference of what airlines consider low numbers of passengers.  Could we give them cheaper gates or cheaper gas or landing fees etc. possibly allowing ticket prices to drop? Then, hopefully enplaned passenger numbers would go up and the airline's revenue would shift from airport inducements to passenger ticket sales.


We do offer the sort of incentives you're talking about, plus more:


  • Marketing incentive: maximum of $50,000 available for additional or new service.
  • We have routinely waived landing fees, gate fees and common use rental fees for new airlines entering the market. The waiver of fees is temporary, but long enough to let the airline establish service.
  • Ground services. THIS IS A BIG DEAL! We are one of a handful of airports in the country to offer ground services to the airlines and it's at least part of the reason why we have service to five of our 12 destinations: Atlanta, Cincinnati, Orlando, Las Vegas and Tampa/St. Petersburg.

Ground service personnel do the following: guide the airplane to the gate, bring the jet bridge up to the plane, load and unload luggage, service the lavatories, etc. Historically, airlines have provided their own ground services. But in Springfield they have the option of contracting it from the airport for a significant savings. Please read the linked story; I'll do a post dedicated to ground services later in the week. One other thought before moving on: the commercial airlines negotiate their own price for fuel at this airport from Conoco-Phillips. Each airline has its own contract. The airport puts the fuel in the plane. The fueling charge is 10 cents a gallon.


4) ...is there a way for the city/government to help make up the revenue difference for airlines until passenger numbers go up?


I think I've mostly addressed this question. If you're alluding to big subsidies, like they do in Wichita, it's my opinion that we're not likely to see that tried in this market. The trick to subsidies is getting the service to the point where its self-sustaining. I'm not sure that's happening in Wichita.


5) Is there profit for Springfield airport in gas sales, gates, landing fees?


As I said, we charge for the service of fueling the plane. The airlines negotiate their own fuel deal with oil companies. We do charge landing fees and gate use fees. I'm not sure I'd call it profit--at least not in the traditional sense. What sometimes get forgotten is that it cost a lot of money to run an airport and the revenue has to come from somewhere!