All-out battle for air supremacy at DIA drives 80 percent of local passengers to jump in the car
February 25, 2014
Steamboat Springs — As long as United, Southwest and Frontier airlines are waging "hub wars" in Denver, it will be a challenge for Routt County's Yampa Valley Regional Airport to win back the 80 percent of airline passengers generated locally who drive to Denver to take advantage of lower fares.
"Denver is a black hole," air service consultant Mike Mooney told an audience of about 20 people at the Routt County Courthouse on Tuesday. "It just sucks passengers away from you because of what's going on there."
What's going on in Denver, Mooney said, is that it is a rare major airport in the United States where three airlines are determined to operate a hub out of one city.
"Most big hubs in the U.S. have one airline," Mooney said. "Chicago has United and American, but Denver has three — United, Southwest and Frontier. When you have three airlines hubbing in one place, it's like a bar fight. It's ugly."
As the former vice president for planning and pricing for now-defunct Midwest Airlines, Mooney understands the market forces that drive airline executives.
The battle for market share in Denver means fares to hundreds of cities from Denver International Airport are unrealistically low, Mooney said. As recently as 2004, the one-way fare gap between Denver and Hayden was $11. Today, it's more like $48 each way.
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Putting that in practical terms, "that means that if I buy a ticket out of Hayden to Moline (Illinois) on United, it's $504. And out of Denver, it's $408," said Tom Kern, Steamboat Springs Chamber Resort Association CEO.
There's more. The travel booking website Kayak is quoting fares in mid-June between Denver and Seattle of $178 and $182 roundtrip. Begin that trip at YVRA on the same airline, and the fare is $358, almost twice the price and with an extra stop in either San Francisco or Portland, Ore.
Multiply the price difference for a family of four, and it fuels the decision to drive to Denver.
Mooney works for Sixel Consulting Group, the company retained by Routt County to conduct a preliminary market study of air travel here to determine whether it makes sense to take the next step and put together a plan to go after additional non-ski season service on a second airline (United currently is the only carrier that flies into YVRA outside ski season) from a destination other than Denver.
Mooney told his audience that, given his recent successful experience in attracting a new legacy airline to serve the energy boomtown of Bismarck, N.D., it would take considerable amounts of money and likely even assurances from business travelers that they would help fill the airplane.
"Bismarck has the strongest economy on the planet right now," Mooney said. "It's the state capital, is a health center, and oil and gas is booming. They had to put $1 million on the table to get a new network airline. Given the metrics here, and the power of the United brand for business travel, you're going to have to do something along those lines to bring in year-round flights from Delta from Salt Lake City, for example."
The board of the Local Marketing District, which oversees planning of ski season jet flights, announced within the past seven days that it had secured four weekly flights this summer on United from Houston on a 50-passenger jet.
LMD board member Chuck Porter, who attended Tuesday's meeting, said the Steamboat Ski and Resort Corp.'s long-standing relationship with officials at United were a factor in securing that flight. But there are no assurances the flight will return in summer 2015.
Strong fiscal performance against airline revenue guarantees in the 2012-13 ski season freed up money that made the summer flights possible. The fate of the Houston route for next summer will depend on the revenue performance of this winter's flights as well as lodging tax numbers in addition to contract negotiations with the airline.
Mooney said that since Southwest entered the market in 2006 and gained a foothold, the stakes were raised dramatically. He went as far as guessing that United is losing money in Denver, but with its hundreds of millions, if not billions, in assets committed to the Denver hub, United and Southwest with similar investments are reluctant to give in.
And that in turn will influence the viability of non-ski season flights out of YVRA.
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