Unlike industry trends, Greater Peoria Regional Airport (GPRA) had a positive 2002. Total passengers were up 5.65 percent from the previous year, totaling 423,582. American Airlines (AMR) continues to be our largest carrier, with 43 percent of the market, followed by United Airlines (UAL) at 28 percent, Delta Airlines (DAL) at 16 percent, and Northwest Airlines (NWAC) at 12 percent. However, the airline industry faces some serious challenges in 2003, which will put pressure on the tri-county area to support GPRA more than ever.
It doesn’t look brighter in 2003. With military action in Iraq looking more certain, industry analysts estimate losses in 2003 from $3.5 billion to $4 billion. The major carriers still point to a severe economic impact from the September 11, 2001 attacks, an economic slowdown, a marked falloff in business travel, and new security costs as the problems which have led to this dire situation. However, the core reason is a lack of walk-up business travelers.
The major carriers also face new market pressures from low-cost carriers. However, these low-cost carriers don’t provide the type of service needed, especially for business travelers. The hub and spoke system still creates better efficiency to move passengers throughout the United States and to the rest of the world. The point-to-point service offered by most low-cost carriers doesn’t provide the necessary connections or service reliability for most business travelers.
The major carriers are also looking to enhance revenues. DAL struck an alliance with Continental and Northwest airlines, which should bring a collective $600 million in additional revenue. AMR has successfully instituted its “rolling hub” concept in St. Louis to gain better efficiency of its labor. Every week, the airlines are attempting to charge new fees for things such as additional luggage, excess luggage weight, in-flight meals, change of tickets, and upgrades.
Increasing revenue will still remain difficult for the airline industry. The airlines need more customers, and attempts to squeeze dollars from them through new fees may have a negative impact on their overall revenue. Also, they’re still too dependent on the business traveler. Annual costs per business traveler among North American companies dropped from $10,000 in 2000 to $6,667 in 2002. Travel is usually one of the first places organizations reduce spending. It appears business travel budgets will remain flat at best in 2003.
But each time a member of our community catches a bus to Chicago or drives to any other airport to use air service, we all lose. These short-term benefits may have the unattended effect of changing the future of air service in the tri-county region. If we, as a community, don’t support our current air service, we make future decisions to reduce service by our airlines easier as they evaluate their network. Loosing air service simply means businesses will choose to locate and grow elsewhere.
Driving or taking a bus for more than two hours doesn’t put any business in competitive advantage. If the air service choices become more limited here, then over the long term we’ll face extraordinary competitive disadvantages in attracting quality employees to fill critical positions for our employers. IBI