Jackson airport’s regional draw, role in feeder system seen as strengths after Southwest loss

Etihad 777 flightSouthwest Airlines’ final take off from Jackson- Medgar Wiley Evers International Airport in Jackson Saturday left local passengers without the option of a low-cost, no-frills carrier they have relied on for 17 years.

For the airport, the departure left marketing and revenue challenges to overcome.

To start, executives at Mississippi’s largest airport must confront the distinction of having a destination-limited airport that is now even more limited in its destinations. They as well must sell carriers on a secondary-market airport that is the first to lose Southwest Airlines’ service.

The only other two service closings occurred in the major metro markets of Denver and Detroit, though in 1973 — early in Southwest’s life as a Texas commuter airline — it ceased service to Beaumont, spokesman Brad Hawkins said. Southwest included shutdowns of service to Branson, Mo., and Key West, Fla., in its December announcement on Jackson, though the airline took over those small markets just a few months previous through its acquisition of AirTran.

Hawkins attributed the decision to leave Jackson to the airport’s failure to meet passenger load expectations over a several-year period. Southwest offered four flights with direct service to Chicago, Houston and Orlando.

On the revenue side, Fitch Ratings Service this spring downgraded the Jackson Municipal Airport Authority’s rating on $39.4 million of revenue bonds to “BBB+” from “A-”, forcing year-long delays in upgrades for airport security checkpoints, improvements to the terminal building and the relocation of a facility to service rental cars.

In its downgrade announcement, Fitch noted the pending loss of Southwest led to an 18 percent increase in landing fees to remaining carriers and an 8 percent jump in parking fees. Medgar Evers International also was to implement another 15 percent landing fee increase in May to offset future declines in revenue caused by Southwest’s departure.

Today’s circumstances leave the airport minus two key assets marketers say increase an airport’s competitiveness: Low fees and a modern terminal.

So why is commercial aviation consultant Michael Boyd bullish on Jackson-Edgar Wiley Evers International?

To start, Boyd said, the airport’s current carriers are not too bothered by the series of fee increases, and are encouraged by passenger load factors that surpass 80 percent. “They understand that to get the traffic that Jackson delivers, there are airport costs,” said Boyd, principal of Evergreen, Colo.-based Boyd Group International.

Boyd, who is familiar with the airport through previous work for the Jackson Municipal Airport Authority, said rising costs forced Southwest out of Jackson. Absent increased expenses, it could have continued at Medgar Evers International with its load factors of 65 percent to 70 percent, he said. “Remember that the Southwest decision was made due to issues at the carrier, not at Jackson.”

Recent developments have increased Jackson’s importance to the Mississippi air access picture, Boyd added. “Tupelo, Meridian, and Hattiesburg now have essentially no viable scheduled air service. The Silver Airways flights simply could not offer access to the rest of the world, and with just two to three flights a day, the drive to Jackson still could mean less travel time, rather than wait for an inconvenient departure time and poor connectivity at Atlanta.”

Regardless of what carrier might replace Silver in Greenville, Hattiesburg, Meridian and Tupelo, Jackson will still be the air gateway for those regions, Boyd said in an email.

Fort Lauderdale, Fla.-based Silver filed a 90-day service termination notice with the U.S. Department of Transportation in April. Silver began providing connections service to the four Mississippi airports in October 2012, stepping into the void left by Delta Air Lines 2011 elimination of 24 routes in smaller markets across the nation. Silver was awarded the routes as the Essential Air Service subsidy jumped from about $1.4 million annually to about $2.9 million, the Associated Press reported.

For now, overall load factors and a “very strong” feeder system have Medgar Evers International’s remaining carriers sitting pretty, Boyd noted.

“In the fourth quarter of 2013, Jackson delivered over 90,000 passengers to and from other Delta flights at Atlanta. Ninety percent of Delta Jackson passengers to-and-from Atlanta are connecting to other Delta flights. “The figure is over 72 percent for American’s service to DFW (Dallas-Fort Worth),” he said. “The point is that Jackson is a strong revenue contributor to its incumbent carriers.”

Based on an assumption that more flights equal more passengers, Boyd said he expects the airport’s passenger numbers will rise in the third quarter as United and Delta add more seats.

Officials at the Jackson airport say United has already scheduled additional flights to its hubs in Chicago and Houston.  Further, Delta is introducing larger scale aircraft to offer additional services, they say.

At this time, American Airlines and US Airways are completing their planned merger to become the

“New American.”  Once American Airlines and US Airways merge, airport officials expect that the “New

 American” will assess the cities it serves and the type of aircraft it is operating.

Both American and US Airways now serve the Jackson airport.

The merger could help Medgar Evers International fill the space vacated by Southwest, according to Gene Moore, airport spokesman. “Representatives from the New American have made inquiries about consolidating the existing American Eagle and US Airways operations in the leasehold currently held by Southwest,” he said last week.

Meanwhile, Jackson is not an attractive candidate for a new airline, according to Boyd. “There are no magic ‘strategies’ to lure more airlines,” he said.

No additional airlines have strategies that fit Jackson, he added.

“This is typical of communities such as Jackson – carriers such as Spirit, JetBlue, Frontier, Virgin America, Alaska all have strategies that do not focus on markets such as Jackson. But the current service is solid.”

Boyd, whose firm does an annual assessment of the U.S. commercial airline sector, said nationally 200 fewer jets will be in service by the end of the year compared to last year.

“That means not only are there fewer airlines in the sky, there are fewer airplanes, too. What is taking place is ‘regionalization’ of air service access – Jackson will continue to be the access point for much of Mississippi,” he said.

 

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