The skies were not friendly to travelers in 2006, and while they haven't been much kinder so far this year, there are some positive developments in the air for passengers.
Coming off a year of airline bankruptcies, domestic routes being slashed, and airfares skyrocketing between 10 percent and 18 percent, 2007 could be viewed as an improvement on a couple of fronts. First, seating capacity is inching higher, although it's still way below pre-9/11 levels; and second, airfares are anticipated to rise a more modest 3 percent to 5 percent as fuel prices have stabilized and the low-cost carriers are creating stiff competition in big markets.
Here's a look at where airlines are headed this year and what it means for meeting planners.
Where the Flights Are
According to the Air Transport Association, available seat miles — a measure of seating capacity or airlift — will increase 1.1 percent for domestic flights and 2 percent for all flights, including international flights, this year. Among all U.S. airports, the projected increases are 1 percent domestic and 2 percent international. International routes are benefiting from the fact that airlines are using their larger jets for the more lucrative overseas flights and their smaller planes for domestic routes, says Jack Keady, president, Keady Transportation Consulting, Playa del Rey, Calif.
Seating capacity will increase at 33 of the 50 largest U.S. airports, including West Palm Beach, Fort Lauderdale, Fort Myers, and Tampa, Fla.; Washington Dulles; Austin Bergstrom and Houston, Texas; Chicago Midway; Charlotte and Raleigh-Durham, N.C.; Atlanta; JFK (New York); Nashville, Tenn.; and Indianapolis — all of which anticipate gains of more than 5 percent, according to ATA projections. Also, a 27 percent increase is expected in New Orleans, which saw airlift severely cut back last year because of Hurricane Katrina.
Memphis, Tenn.; Cincinnati; San Jose, Calif.; Pittsburgh; Anchorage, Alaska; and Dallas/Fort Worth are among the destinations that saw declines in seating capacity.
“This is about following the revenue,” says John Heimlich, chief economist at ATA. “Airlines schedule principally to demand. Profitability is going to be the principal [reason] to enter or expand one's presence in a market.”
Some airports, however, lost seat capacity more because of route restructuring caused by airline bankruptcies than lack of demand. Pittsburgh is one example. The city lost hub status with US Airways after the carrier merged with America West 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 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 is expected to shrink by 3 percent this year, the 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 markets. “You've seen carriers like Southwest enter markets they have traditionally shied away from — the generally more expensive, high-profile, metropolitan airports like Washington (Dulles), Denver, and Philadelphia,” says Heimlich. “That's a fairly recent trend.”
The Airlift Factor
Some planners say that they look to maximize convenience for travelers by booking meetings in large hub destinations in the middle of the country like Dallas and Chicago. “There's still a sensitivity to whether it's a one-hop or two-hop destination because of time concerns and the number of travelers still not thrilled with getting on airplanes,” says Gregg Talley, president and CEO, Talley Management Group, a Philadelphia-based association management company.
On the other hand, the large hub cities are typically more expensive. The problem for planners is that hotel rates and airlift are rarely in sync. For example, first-tier cities typically have great airlift, but they don't have affordable hotel prices. Smaller cities have affordable prices, but don't always have good airlift.
That's why smaller airports in second-tier cities that have good airlift can be a boon to the convention business. Just ask Roy Benear, senior vice president at the Austin Convention and Visitors Bureau. “When you get past those big hub cities to cities the size of Austin, lift becomes a big issue,” says Benear, because groups don't want to spend all day getting to a destination.
The Austin-Bergstrom Airport has helped the city attract meetings, says Benear, citing its ranking among the best airports in the country by J.D. Power. With a projected increase of 8 percent in available seat miles, the airport ranks as one of the five biggest movers this year following an 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, which is also spurring hotel development, explains Benear.
“One of the things we hear from customers is they like the fact that it's easy to get around, to maneuver through,” says Benear. Austin uses this as a selling point. Shorter lines, easy access to the convention center (15 minutes away), and a more relaxed atmosphere than the first-tier airports offer makes Austin's airport a little more palatable given the ever-increasing hassle of air travel. Austin-Bergstrom may also be one of the only airports in the U.S. where you can hear live music every day. “That first impression, that initial experience, is going to carry through the entire length of the stay for a meeting,” Benear says.
Planners also appreciate second-tier destinations with multiple fly-in options. Long Beach, Calif., is one example of a second-tier city that is accessible because it has three airports — Los Angeles International Airport, Long Beach Airport, and Orange County Airport — all within a short drive to Long Beach.
Pittsburgh, Phoenix, Seattle, Cincinnati, and Kansas City are other second-tier destinations cited by planners as having good airlift. Planners recommend looking at low-cost carrier routes to help determine which second-tier cities have good lift.
Among top-tier cities, planners cite Orlando as an accessible and affordable destination. Because of the volume of leisure travelers, it not only has good airlift but also a range of price points in hotels — luxury to economy — to serve a lot of different groups.
McCarran International Airport in Las Vegas is also lauded as another top-notch facility, primarily because of its 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 concern that the airport might not be able to keep up with the growth facing it before a 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.)
Stuck in the Middle
While capacity nationally is expected to inch higher this year, it is not where it was a few years ago, experts say. “We're back to full passenger volume similar to before 9/11,” says Dean Headley,associate at the National Institute for Aviation Research at Wichita State University and co-author of the “Airline Quality Rating” report. “We also have about 18 percent to 20 percent less seat capacity in the system now [compared to pre-2001]. It's a very complex system with high volume, and it just doesn't hold up well to the pressure.”
Combine lower capacity with an increase in demand — and 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,” says Julie Carroll, vice president, partner and industry relations, BCD Meetings & Incentives, Atlanta. So chances are if you book last minute, you'll be sandwiched in the middle seat. Not only will you be more uncomfortable, but you may also pay more.
Planners say those last-minute deals that travelers were accustomed to getting the last few years are hard to come by because planes are running so full. So, experts say, when you see a good price — don't hold out for a better rate, just book it.
Ultimately, planners say, it's not airfares that will keep people from flying — it's the hassle. With all the waiting, long lines, security checks, delayed flights, and ground transportation to and from the airport, a one-hour flight can turn into a five-hour affair, prompting more people to just hop in the car and drive instead.
But you can help alleviate some of the hassle through strategic planning. “You have to think that your attendees are probably not going to be in the best mood when they arrive at the destination,” says Carroll. Meeting planners can ease the arrival experience for attendees by improving the transfer process with comfortable and convenient airport shuttles, having rooms “pre-keyed” so guests don't have to wait in line to check in to the hotel, and building in time for guests to unwind after arrival.
Airports with the highest projected percentage increase in available seats in 2007:
- Southwest Florida International (RSW) (Fort Myers)
- Palm Beach International (PBI)
- Charlotte Douglas International (CLT)
- Chicago Midway (MDW)
- Tampa International (TPA)
- Dulles International (IAD)
- Austin/Bergstrom International (AUS)
- Houston William P. Hobby (HOU)
- Raleigh-Durham International (RDU)
- Fort Lauderdale/Hollywood International (FLL)
Airports with the highest projected percentage decrease in available seats in 2007:
- Kahului Airport (OGG) (Maui)
- Chicago O'Hare International Airport (ORD)
- Cleveland Hopkins International Airport (CLE)
- Sea-Tac International Airport (SEA (Seattle))
- Pittsburgh International (PIT)
- Memphis International (MEM)
- Anchorage International (ANC)
- San Jose International (SJC)
- Dallas/Fort Worth International (DFW)
- George Bush Houston International Airport (IAH)
SOURCE: Air Transport Association
Fares Headed Up
Average airfare in 2005: $216
Average airfare in 2006: $231
Average international fare in 2005: $1,604
Average international fare in 2006: $1,707
SOURCE: 2006 Business Travel Monitor
McCormick Place Eases Travel Pains
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 their boarding passes at the convention center.
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.
The service 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 David Causten, general manager at McCormick Place.
Other convention centers, such as Orange County/Orlando, have similar programs, as do many hotels.