Posted August 15, 2021
Airports and communities have long been competing to attract airline service since the first scheduled passenger flights took off between Tampa and St. Petersburg in January 1914. Human curiosity and our desire to open new business markets has developed many connections between cities across the globe. Over the past 100 years, air travel has become commonplace and is now an important part of our economy.
These global connections drive demand for more air service. Retaining and attracting flights to one’s community is known as air service development. It’s ultimately a form of economic development as airports create jobs, enhance quality of life and increase prosperity, but more about that later. Attracting new service is part science in terms of economics as the airlines want to be profitable and know that they will make more money flying the planes from this pair of cities versus some other pair. These days airlines aren’t expanding so most new air service will result a service cut from another route that’s less profitable.
Another part of the science equation is demand elasticity. At a competitive price would there be enough passengers to fill a profitable number of seats on a new flight? So, let’s assume the demand exists, yet the next hurdle becomes leakage. For example, a new direct flight to New York has 76 seats and 80% of those seats need to be filled on average for the airline to break even and show a small profit. 80 people a day on average want to travel from Jacksonville to NYC, but only 50% of those currently use Ellis Airport. The airline looks at their data and only sees demand of 40 passengers per day, well below the number needed to initiate service. This leakage is a hurdle that keeps many communities like OAJ from attracting and retaining new air service.
Assuming sufficient demand exists, this is where art enters the equation. Airports and communities essentially have to win the hearts and minds of both passengers and airlines. The task is to attract the majority of local residents to use their local airport by showing them that OAJ, is the best choice to get from point A to B. This isn’t always easy, usually it requires considerable effort through clever marketing, guarantees, incentives etc.
These incentives help to reduce the risk and cost associated with introducing new service. They come in many for from subsidies to co-op agreements. In some communities’ businesses guarantee to buy a certain number of tickets on a new flight, called a travel bank. In other markets businesses and development agencies commit funds to pay for advertising and guarantees that the flights will generate a certain level of profit. Grants are sometimes available to help with this effort, however airport funds cannot generally be used for this purpose. The common element in successful communities is broad support and participation. What destination would help your business or attract more visitors?
The third leg is luck. As they say, timing is everything and this is true in air service development. You may have everything else, but no planes are available. Maybe you have an idea, but no incentives yet an airline has an extra airplane and is looking for a reasonable opportunity. In any case, you have to tell your story effectively and often enough to remain top of mind. COVID resulted in an entirely new set of rules and airlines trimmed their planning staffs, so the future is uncertain. What is certain is that the staff of your Albert J. Ellis Airport will continue to engage our airline partners and pitch how great eastern North Carolina is and how additional air service will benefit them. Please flyLOCAL so they can see the demand at OAJ.