News: CJ Exclusives

Small Cities Feel Airline Trends

Markets, not government subsidies or incentives, key variable

Earlier this year, a regional airline affiliated with Delta Airlines began service to Kinston and Hickory. For the two communities, the new flights represented a payoff to long years of effort and hard work trying to lure an airline back to town.

Delta’s Hickory gambit failed, while service to Kinston is doing well.

The difference is not some sort of government subsidy or advertising that Kinston provided or Hickory didn’t provide but rather in markets. Kinston, effectively represented a new, not previously served, market for Delta. Hickory travelers already could fly Delta from Charlotte and enough weren’t willing to pay a premium for less frequent service closer to home.

Like many smaller cities, Kinston and Hickory have a long history of airline service — until relatively recently that is. The airline industry, like all industries, changes over time. And the two cities were caught out several years ago by changing airline economics.

While there’s a demand for air travel in smaller markets, there generally aren’t enough people wanting to go to a specific destination at the same to come close to filling a flight. The way airlines address this is through hub-and-spoke systems, where passengers fly to a central point and connect onward to their ultimate destination. The region’s traditional hub is in Charlotte on US Airways.

By the late 1990s, however, the long-standing instrument of choice for serving smaller cities — small turboprops, often seating 19 passengers — became increasingly unprofitable and were largely withdrawn from use over time.

Of the over 500 daily flights by US Airways and its affiliated regional carriers from its Charlotte hub today, only three are on 19-seat turboprops. These planes operate federal-subsidized Essential Air Service routes to Athens, GA, and Greenbrier, WV. The next smallest sized planes currently flown from Charlotte are 37-seaters.

Effectively, this meant the bar was raised for keeping air service. While 10,000 enplanements a year — about 30 a day, or half capacity on three daily flights on 19-seaters — had been enough to maintain service in the past, the minimum with the larger aircraft common today is more like 30,000.

“Unless entirely new airframe and powerplant technology is developed, the traffic floor for supporting air service… will continue to move toward one which can sustain at least three 70-seaters a day,” stated airline consultant Mike Boyd recently on his company’s website.

Many communities just can’t generate that sort of traffic, and have lost their scheduled airline service as a result. In North Carolina, five of the 14 communities with scheduled air service in 1998 were without it five years later. In addition to Hickory and Kinston, Winston-Salem, Rocky Mount, and Southern Pines saw their flights discontinued.

Most of the cities that lost service have since actively sought replacements and been willing to provide generous incentives to sweeten the pot. Some have had success; late last year, Delta Airlines announced that it would start service to Hickory and Kinston from its Atlanta hub in the spring.

Unfortunately for Hickory, the party didn’t last long. Delta Airlines ended service to Hickory on Nov. 30 only seven months after it began and despite extensive advertising and other incentives by the city to promote the flights. The carrier cited low load factors, high oil prices, and Delta’s Chapter 11 bankruptcy filling.

Hickory officials contend they did all they could to market the service.

“We did our part. We made travelers aware of the service,” Hickory Mayor Rudy Wright said to The Charlotte Observer. “It was up to Delta and the fliers to get together and get the tickets sold. In a nutshell, that’s where the frustration is, because that didn’t happen.”

Wright noted that 80 percent of Delta frequent flyers in Hickory were aware of the flights and those that used the service were happy with it.

Service to Hickory was three-times a day on 40-seat Canadair Regional Jets, the sort of 37 to 50 seat plane that has largely replaced turboprops. Regional jets have a major drawback, however: they are significantly more expensive to operate on a per-seat mile basis than larger aircraft. To make up for the additional cost, airlines have to command a fare premium to sustain service.

That didn’t happen in Hickory. Hickory’s problem lay 38 miles away to the southeast as the crow flies or about an hour by car. It’s Charlotte/Douglas International Airport, and the vastly larger number of travelers it attracts. More passengers means both more flights and larger aircraft used.

In the end, not enough people — Delta was only filling 40 percents of its seats out of Hickory most of the time it offered the flight — were willing to pay enough money to sustain the service given the lower-priced and more-frequent service only an hour away.

With Hickory’s air service disappeared again, Kinston’s flights are doing well despite Kinston being a smaller city than Hickory. Nor can the appeal of Kinston be ascribed to a robust local economy, one that’s creating jobs and drawing people to the immediate area. Estimates by the N.C.

Demographer show both Kinston and Lenoir County’s actually losing population between 2000 and 2004.

Kinston’s airport also doubles as the Global TransPark. The most notable improvement — lengthening the runway from 7,500 feet to 11,500 feet — made in the transformation into the GTP was also not critical in attracting Delta. Kinston’s previous runway configuration was more than adequate to support flight. Indeed, Hickory’s main runway is only 6,400 feet long.

Rather, Kinston’s appeal to Delta is regional. A significant number of people live in the area east of Interstate 95 and north of Wilmington and south of Norfolk. The region has no dominant metropolitan area though, making it more difficult for airlines to market to. Indeed, US Airways use to serve Kinston — and three other cities less than 35 miles away.

Eventually, Kinston lost out, though US Airways still retains their flights to nearby New Bern, Greenville, and Jacksonville from Charlotte.

Delta, however, had not previously served any of the four eastern North Carolina cities. It chose to essentially serve the region through Kinston, one of the most centrally located of the four airports and the only one without current service.

Michael Lowrey is an associate editor of Carolina Journal.