All-out battle for air supremacy at DIA drives 80 percent of local passengers to jump in the car

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— 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.

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“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.

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.

To reach Tom Ross, call 970-871-4205, email tross@SteamboatToday.com or follow him on Twitter @ThomasSRoss1

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Comments

scott bideau 6 months ago

If we built the airport ourselves, why not start up Rocky Mountain Airways again - funded by the County/City? :)

In all seriousness - Sixel's presentation was very fascinating. I would have never predicted that over 200 area locals are driving to DIA every single day! I appreciate the county/city/Chamber going together to pay for the study.

I do disagree that a considerable amount of money is our only option. Here are two:

  1. Now that we have the data on flights flown out of DIA, let's look at schedule optimizations that could allow more people to make their connection from HDN. This is a common problem in the summer when flights leave too late or return too early to make a connection. Show the United CEO how leaving 15 minutes earlier from HDN or returning 15 minutes later could help him steal revenue from a competitor.

  2. For the areas where we already spend money via the LMD/revenue guarantee program, cross reference desired routes requested by the tourism stakeholders with data we now have on locals flying to those same markets. This would provide beneficial routes to locals and save the LMD money by filling more seats with paying locals rather than costing the revenue guarantee program money. I believe Sixel's study identified Dallas as a much larger market for local travelers than Houston. Let's get American in for daily summer 2015 service to DFW to both provide United some competition at HDN and have a route which both tourists and locals want to fly on. Add in some marketing to both groups (not just tourists, but also locals) and watch your revenue guarantees become unnecessary.

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Dan Hill 6 months ago

I'm sorry, it's not $98 round trip that causing me to drive 3+ hours to Denver, pay for parking etc, it's the fact that there is no @#$%^ service out of HDN, and even when there is, it gets cancelled half the time! I mean seriously, in Spring and Fall we're getting one flight a day - at 6am. If I'm going to get up at 3am for a business trip I may as well drive to Denver the afternoon before and at least get a decent night's sleep before my meeting. Stop wasting money on low frequency direct flights that don't change the game, go to United and pay them to run reliable, high frequency services with reasonable fares via Denver - year round. Either that or close down YVRA and fund free luxury shuttle vans to DIA on the hour every hour with the LMD money.

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David Moore 6 months ago

Would like to know where these low figures of $48 one way and $98 round trip are coming from. If that was the price, I would not be complaining, but it is not. I checked yesterday and a round trip to DIA from HDN on United was $471. Please tell me where I can get a $98 ticket and I won't drive to Denver ever again.

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Mark Ruckman 6 months ago

David, I think the $98 round trip is the HDN-DEN-HDN portion of flight that has another destination from DEN.

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mark hartless 6 months ago

"I want to live in the middle of nowhere AND have cheap accessability to the outside world... Waaahh".

Somehow, I'm sure more intervention by some government body is the answer...

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mark hartless 6 months ago

Wasn't the recently enacted sales tax gonna fix the air problem??? Or maybe it was the "solution" before that which was gonna "fix" it?? I'm sure the next "solution" will do the trick...

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Dan Hill 6 months ago

If United really is in a fight to the death with Southwest and Frontier at DIA, shouldn't they be using their network to their advantage? To put it another way, if you are United how do you stop someone driving from Steamboat to DIA to catch a flight with Southwest? Isn't the obvious answer, sell them a fare out of HDN that makes it a no brainer to fly out of there.

Are they too dumb to do this? (maybe they are, but as much as I hate UA, I doubt it.) More likely there are major economic trends at work that are killing regional air services across the country. That suggests that beyond the peak winter season flights, we can't realistically hope for much. I'm surprised about the new summer service to Houston. A 50 seat jet is about the least economical aircraft flying today with high fuel prices and increased hours for command pilots. Hate to think what this is going to cost us.

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mark hartless 6 months ago

No they are not dumb. But they needn't be very smart when they are sitting across the table from municipalities whos constituents are desperate for their service.

Here's a real example: I arrived in DIA one morning about 11am; early enough to just barely make the 11:30 flight back home to Steamboat. However, I was booked on the 3:55pm flight (United). The 11:30 flight was half empty, but those United jackasses still charged me $75 to "upgrade" to the earlier flight.

What if the later flight had been full? they might have missed out on selling a last minute fare.

The tourist that might have taken the 11:30 flight and got to Steamboat in time for a half-day of skiing or shopping was basically screwed out of the money they would have used that afternoon for shopping or skiing by the airline that the taxpayers subsidized to be there for them.

The alternative? The tourist could have waited till 4pm to catch the flight and thgereby not had the afternoon to shop or ski in the town that subsidized their flight.

Bottom Line: Steamboat taxpayers are the suckers and United knows it.

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