The skies were not friendly to travelers in 2006, and while they won't be much kinder in 2007, there are some positive developments afoot for passengers.
Coming off a year of airline bankruptcies, domestic routes being slashed, and airfares skyrocketing between 10 percent to 18 percent, 2007 could be viewed as an improvement on a couple of fronts. First, seating capacity is expected to inch higher, and second, airfares should rise a more modest 3 percent to 5 percent.
That is, of course, barring an industry shake-up, which is possible since rumors of two major airline mergers began buzzing in December.
Nonetheless, the projected increase in seating capacity is welcomed by many meeting planners, including Linda Bailey, assistant vice president, conferences and meetings, National Fire Protection Association, Quincy, Mass., who says that airlift and accessibility (direct flights, choice of carriers) are the most critical criteria — even more than airfare.
Where the Flights Are
According to Air Transport Association of America data, available seat miles — a measure of seating capacity — will increase 1.1 percent for just domestic flights and 2 percent including international flights in 2007. (For all U.S. airports, the projected increases are 1.4 percent and 2.1 percent, respectively).
Seating capacity will increase at 33 of the 50 largest U.S. airports, including Palm Beach (West Palm Beach, Fla.); Southwest Florida (Fort Myers); Dulles (Washington, D.C.); Austin-Bergstrom (Austin, Texas); Chicago's Midway; Charlotte Douglas (Charlotte, N.C.); Tampa (Fla.); Hartsfield-Jackson (Atlanta); New York's JFK; Fort Lauderdale/Hollywood (Fort Lauderdale, Fla); Raleigh-Durham (N.C.); Nashville (Tenn.); Hobby Airport (Houston); and Indianapolis — all of which anticipate available seat miles gains of more than 5 percent. Also, a 27 percent increase is expected in New Orleans, which saw airlift severely cut last year because of Hurricane Katrina.
Airports in Memphis, Tenn.; Cincinnati; San Jose, Calif.; Pittsburgh; Anchorage, Alaska; and Dallas-Fort Worth are among those that saw declines in seating capacity.
“This is about following the revenue, that's where we're scheduling to,” says John Heimlich, chief economist at ATA, which represents the airline industry. “Airlines schedule principally to demand,” says Heimlich. “Profitability is going to be the principal attraction to enter a market or expand one's presence in a market.”
Some airports, however, lost seat capacity more because of route restructuring caused by airline bankruptcies than by lack of demand. Pittsburgh is one example. The city lost hub status with US Airways after the carrier merged with AmericaWest last year, but it was a blessing in disguise, says Joseph McGrath, president and chief executive officer at Visit Pittsburgh, the city's destination marketing organization. The downside of being a hub, says McGrath, is the airport is dominated by one carrier, which limits competition. “In the situation we have now, where airlines are competing for business, rates are substantially reduced,” he says. “When you're a second-tier city, you're competing on not only your [destination], but you're certainly expected to have more reasonable airfare rates than a gateway city.” In the past year or so, low-cost carriers Southwest Airlines and JetBlue have added service to the city.
While seating capacity will shrink by 3.4 percent in 2007, Pittsburgh's airport still serves 28 of the top 30 destinations with direct flights. And convention business has actually picked up since the hub was eliminated in 2005, says McGrath, perhaps because Pittsburgh is now more of a final destination than the stopover it often was as a hub.
As legacy carriers restructure, merge, and expand service into international markets, low-cost carriers like Southwest, AirTran, and JetBlue are filling the void left in major domestic markets. “You've seen carriers like Southwest enter markets they have traditionally shied away from — the generally more expensive, high-profile, metropolitan airports like Dulles, Denver, and Philadelphia,” says Heimlich. “That's a fairly recent trend.”
Despite the fact that demand is high, fares will be kept in check this year because the low-cost carriers are creating stiff competition in big markets, states Jack Keady, president, Keady Transportation Consulting, Playa del Rey, Calif. Also, fuel prices have appeared to stabilize.
The Airlift Factor
Airlift is not the most important factor for planners when choosing a site — that would be the destination and hotel prices — but it is a secondary concern that can certainly sway a planner toward a destination, everything else being equal.
The problem for planners is that hotel rates and airlift are rarely in sync. “First-tier cities have great airlift, but they don't have good hotel prices, so it's kind of a double-edged sword,” says Mary Ann Linder, meeting manager at the Soap and Detergent Association, Washington, D.C. However, she says, “The cities that you can really afford don't always have the flights you want in and out. So how do you balance that?”
That's why second-tier cities that have good airlift can be a boon. Just ask Roy Benear, senior vice president at the Austin Convention and Visitors Bureau. “When you get past the big hub cities, lift becomes an issue,” Benear says, because groups don't want to spend all day getting to a destination.
In Austin, the Austin-Bergstrom Airport, which has been ranked among the best airports in the country by J.D. Power, “has been a tremendous asset,” says Benear. With a projected increase of 7.6 percent in available seat miles, the airport ranks as one of the five biggest movers for 2007 following 8 percent seat-mile growth in 2006. The increase in seat miles seems to go hand in hand with the demand that the city is getting from groups and leisure travelers and new hotel development that is in the pipeline.
“One of the things we hear from customers is they like the fact that it's easy to get around, it's easy to maneuver through,” says Benear. The bureau uses that as a selling point to groups. Shorter lines, easy access to the convention center (15 minutes away), and a more relaxed atmosphere than the major airports — which can seem like cities unto themselves — makes the ever-increasing hassle of air travel a little more palatable.
The airport left an impression on Beth Helberg, senior manager of meeting planning at San Antonio-based American Payroll Association. “It's a beautiful little airport,” says Helberg, “and it's fun — they have live music!” She also says it has surprisingly good airlift for a second-tier city, which is why she considers it one of the better second-tier airports in the country.
Since joining APA three years ago, Helberg has broadened her search for convention sites to smaller cities because of the rising hotel rates in the major cities. When she does, she looks for second-tier cities with good airlift. Austin is one; Long Beach, Calif., is another.
“Long Beach has multiple fly-in options,” says Helberg, including Los Angeles International Airport, Long Beach Airport, and Orange County airport, all of which are a short drive to Long Beach. So while she flies into LAX, other attendees might have better access into one of the other airfields. Plus, she finds, attendees appreciate the shorter lines and convenience of smaller airports. Often, when conventions are held in mega-cities, attendees leave the meeting earlier because they anticipate longer lines.
Among the first-tier cities, SDA's Linder cites Orlando as one of the best because it has great airlift and reasonable rates. “Just because it is such a vacation spot and they've got so much volume, it's a good deal.” And unlike other major convention cities, Orlando complements its great lift with a range of price points in hotels — luxury to economy — to serve different groups.
McCarran International Airport in Las Vegas is also lauded as a top-notch facility, primarily because of its close proximity to the Strip, says Keady. But while airlift is not a problem for Las Vegas, capacity could be in the near future. Tourism and meetings are growing so fast in Las Vegas that there is some concern that the airport might not be able to keep up before the new airport is built, says Keady. (A new airport is slated to open in 2017 to supplement McCarran and handle the additional capacity that's expected.) “But so far, it's a very workable airport.”
Linder also cites Pittsburgh; Phoenix, Ariz.; and Kansas City, Mo., as second-tier destinations with good airlift. She recommends, as a guide, looking at cities served by low-cost carriers to help determine which second-tier cities might have good lift. In general, she cites Florida as having terrific airlift, not just in Orlando, but also Fort Lauderdale/Hollywood, West Palm Beach, Tampa, and Fort Myers — all of which are expected to gain air capacity in 2007.
Stuck in the Middle
The wild card that could throw everything off is airline mergers. Late last year, rumors were swirling about two major mergers — US Airways-Delta and United-Continental. Whether they will actually happen is a big “if,” says Keady. “The clearest thing you can say is it's a murky picture.” US Airways and Delta will fall probably apart, he says, while Delta and Continental is not a sure thing. “United and Continental talking to each other is an act of desperation.”
Even if it does happen, it probably won't affect travelers this year because of the time it takes to integrate airlines. Also, adds Keady, the major convention destinations like Orlando, Las Vegas, Atlanta, Los Angeles, and Chicago probably won't be affected because if a carrier drops out, another airline will likely move in. However, some cities will undoubtedly suffer a net reduction in routes if a merger occurs.
Planners don't really dwell on the swirl of rumors in the airline industry. In the rapidly changing world of airlines, anticipating what's going to happen for a meeting several years out is impossible, says Helberg. “I'm planning seven years out,” she says. “I have no idea what the airline routes are going to be or what airlines are even going to be around.”
But for the here and now, planners have some advice for their attendees: Don't wait too long to book a flight. “One of the biggest changes I've seen is those last-minute deals are gone,” says Linder. “Buyers' behaviors are going to have to change. When you see a great price, you're just going to have to trust that it is the best price.”
Booking early may also allow travelers to avoid the dreaded middle seat. But that doesn't mean they'll have an empty seat next to them; more often than not, they will be filled. While an uptick is expected, capacity is not where it was a few years ago. Combine lower capacity with an increase in demand, along with an industry looking to maximize profits after some lean years without drastically raising rates, and it adds up to full flights. “All airlines are trying to fill their seats and get rid of any excess, so we see a harder time finding seats, regardless of which destination we're going to,” states Julie Carroll, vice president, partner and industry relations, BCD Meetings & Incentives, Atlanta.
But it's just another problem travelers have to deal with. In the end, says Helberg, it's not airfares that will keep people from flying, it's the hassle. “If the process of flying — lines, security checks, luggage restrictions, packed flights, etc. — becomes so unpleasant, that's going to keep people from wanting to travel,” she says.
Check Bags at McCormick Place
To make air travel more convenient and encourage attendees to stay at meetings longer, Chicago's Metropolitan Pier and Exposition Authority, which runs McCormick Place, implemented a program last year that allows attendees to check their bags and get boarding passes at McCormick Place.
The program, used by more than 1,600 conventioneers already, lets attendees check their bags on the final day of the convention and get their boarding passes for domestic flights from O'Hare airport on American, Delta, Song, Ted, and United airlines. They are hoping to expand the program this year to Midway Airport.
“On that final day of the convention, visitors may cut their visit short to get to the airport,” says David Causten, general manager at McCormick Place. The baggage check stations are usually set up at the coat check area, where bags are screened by TSA officials and shipped to the airport.
It not only helps the attendee by eliminating the hassle of waiting in lines, but it also benefits the association by facilitating more meaningful participation on the final day of the convention and, ultimately, encouraging more people to attend.
“This is the wave of the future,” says Causten. Other convention centers, such as Orange County/Orlando, have similar programs, as do many hotels.For more airline stories, click here.