Big carriers are concentrating on major hubs, leaving many smaller-city airports behind.
Updated: July 9, 2012 - 8:55 PM
The fate of Lambert-St. Louis International Airport may be a portent for other airports serving smaller cities around the United States.
Once the main hub of Trans World Airlines, the airport offered as many as 475 departures a day. But now there are just 256 daily departures, leaving half the concourses at the older of its two terminals vacant and the airport scrambling to find new, revenue-generating uses for the space.
Already, airports in Pittsburgh (a former hub for US Airways), Cincinnati (a much-downsized Delta Air Lines hub) and Oakland, Calif., have lost a significant amount of their business as airlines concentrated more of their flights at bigger-city airports.
As airlines continue to consolidate and cut back on their use of smaller, regional jets, more airports will be in the same difficult position -- looking for new uses for unoccupied terminals, hangars and other specialized buildings.
"This is an issue many airports are wrestling with," said Lois Kramer, an airport consultant based in Boulder, Colo., and principal author of a report on reuse of airport buildings commissioned last year by the Transportation Research Board, a division of the National Research Council. "Nobody wants to talk about it, but vacant space at airports is more widespread than one would think."
Unlike airlines, many of whose assets are movable, "the airport industry is primarily a business of fixed assets: terminals, parking garages, roadways and airfields," Kramer said. "When an airline vacates a terminal, the airport still has to cover the cost of operating the building and pay on any outstanding debt service."
Airports generate revenue in two ways -- through fees paid by airlines and general aviation operators and through income from parking, car rentals, concessions, advertising space sales and rentals of maintenance and other buildings.
If airlines merge, file for bankruptcy protection or eliminate flights at an airport, both types of revenue may be reduced, said Deborah McElroy, executive vice president for policy and external affairs for Airports Council International-North America. To deal with a drop in revenue, she said, airports have taken a number of steps, including "personnel reductions, deferral of nonessential projects and renegotiation of existing debt obligations." They also "may be forced to raise prices for services at the airport, such as parking," she said.
Although demolition often is the lowest-cost option, that, too, can be expensive and out of the reach of financially stressed airports. A good example is Oakland International Airport, which, at its peak in 2007, served 14.8 million passengers but served 9.3 million passengers last year.
In 2003, when United Airlines filed for bankruptcy, it walked away from a 25-year lease, signed in 1988, for the Oakland Maintenance Center. It consolidated its maintenance operations nearby at San Francisco International Airport.
According to Kramer's report, the Port of Oakland has had trouble finding a replacement tenant that would generate comparable rental income. Nor does the port have the $4 million needed to demolish the building. The port uses the building for offices, and rents its exterior as billboard space.
While port officials declined to comment on their search for a new tenant for the maintenance building, they did say they have been able to increase general aviation operations on the north side of the airport. Michael Visconti, property manager on the north side of the airport for the Port of Oakland, said companies offering general aviation services paid the port rent and fees totaling $4.9 million in the past fiscal year.
Officials at Cincinnati/Northern Kentucky International Airport face many similar problems. Delta at one time operated a major hub there, flying 600 of the airport's 650 daily departures in 2005.
Today, Delta is still the biggest carrier at the airport, but offers just 125 of the airport's 170 daily departures. Delta occupies one concourse in the largest of the airport's three terminals, and in May, the other carriers serving the airport -- United, American Airlines, US Airways and Air Canada -- all moved to the same terminal as Delta, leaving the other two terminals empty.
The airport is looking at its options, said Meghan Glynn, the airport's vice president for external affairs, including demolishing one or both empty terminals and moving the rental car operation closer to the remaining terminal.
Rhonda Hamm-Niebruegge, the director of the St. Louis airport, is aggressively seeking new tenants. The B concourse in the airport's old terminal could be turned into "great office space, because it's small, compact and close-in," she said.
The old terminal's long, one-sided D concourse is a different matter. The airport could turn part of it over to Southwest Airlines, which now flies almost half of the airport's service, should the carrier wish to further expand its operation. The concourse could also be torn down to open up revenue-generating parking space, now in short supply.
"As an airport," Hamm-Niebruegge said, "you need to go out and look at everything, things that a decade ago you wouldn't have thought about."
© 2013 Star Tribune
Powered by Limelight Networks