Denver’s cheap fares a barrier to new airline service at Yampa Valley Regional Airport
November 27, 2013
Steamboat Springs — The Routt County Board of Commissioners voted unanimously this week to spend as much as $38,000 for an air service consultant to determine whether it's feasible to entice an airline to fly to a second hub from Yampa Valley Regional Airport outside ski season.
Ironically, it's the affordability of flights in and out of Denver International Airport that raises one of the biggest hurdles to expanding air service out of the Yampa Valley.
Jviation, the consulting firm working on YVRA's master plan, told the airport's planning advisory committee this fall that the intensity of airline competition is constraining the growth of service at the airport in the Yampa Valley.
With intense competition among United, Southwest and Frontier airlines driving artificially low fares out of Denver, DIA is the lowest fare airport in the country, airport Manager Dave Ruppel told the commissioners this week.
"What it means is that you might be able to fly to Denver for $150 one way when our one-way fare is $250," Ruppel said.
While a business traveler flying solo on the company expense account likely would not hesitate to pay the higher fare to get in and out of the valley quickly, a family of four on vacation might look at the $800 difference and decide to drive to Denver.
One of the goals of the new consulting contract is to determine how much potential traffic is leaking from this market, whether to Denver or perhaps Eagle County or Grand Junction.
The Denver Business Journal described DIA in an Oct. 28 article as having the world's sixth-largest low-cost seat capacity in the world. He cited the global-travel tech company Amadeus, reporting that Denver's low-cost carrier capacity for the first six months of this year was nearly 7 million seats.
And it doesn't look like the growth trend in discount airline tickets in Denver is poised to decline. There is an excess of capacity in Denver, and Frontier Airlines, recently acquired by Indigo Partners LLC, is on course to become one of the nation's no frills, ultra-low-cost airlines, according to The Denver Post. That means Denver will become the only major hub in the country with competition among all three of the prevailing commercial airline models: several legacy carriers, most notably United, as well as value airlines like Southwest, plus the no-frills version of a low-fare airline including Spirit Airlines and, coming soon perhaps, the revamped Frontier.
It's likely Southwest has ratcheted up the competition in Denver, grabbing the large share of local traffic while growing rapidly during its seven years in the market, according to some analysts. Southwest accounted for almost 26 percent of available seats in Denver in 2012, according to DIA's press kit.
Southwest was offering numerous roundtrip airfares from Houston to Denver in January for less than $300, for example.
The airport's automated flight statistics report showed that Southwest commanded 23.3 percent of DIA's total market share year to date through September. That compares with Frontier's 21.9 percent and United's 40.8 percent. The legacy carriers American Airlines, 2.9 percent, and Delta, 4.63 percent, which serve YVRA in ski season, do not have as great a presence in Denver.
But the statistics on overall passengers numbers don't tell the whole story.
The telling statistic for Southwest may be its newfound dominance with passengers who originate trips at DIA or fliers for whom Denver is their destination. That number excludes passengers connecting to flights through DIA on United, for example.
The Wall Street Journal reported this fall that for the first time last summer, Southwest passed up United as the biggest carrier of local passengers, growing by a million passengers while United and Frontier were down.
Ruppel said there is no doubt that fares between Denver and YVRA would be lower if there was competition on the route.
DIA is the fifth-busiest airport in the nation in 2012 behind Dallas and JFK in New York with more than 53 million passengers, according to its own press kit. That ranks it 13th in the world, just ahead of Bangkok. Of its total passengers, 45 percent simply are connecting with other flights.