Five Practical Ways An Airport Can Attract More Airline Service

A current, but unnamed, U.S. airline CEO once said that there are two types of airports: those with costs too high, and those on their way to that. This highlights the way that many airlines think of their primary landlords, the airports. Each commercial flight begins and ends at an airport, and airlines pay to land there, park their planes at a gate, and for the people and space they use indoors and outdoors to check-in passengers, sort baggage, and the like.

Airports also spend marketing dollars to attract new service, and every airline gets pitched by airports as to why their facility should be the next added to the airline’s route map, or where the next expansion should be focused. Rarely do these pitches result in actual service changes, as airlines have to consider many things other than the airport when making these kind of capital allocation decisions. That said, there are practical ways that airport leadership can make their facilities more attractive to both airlines and customers. While these cannot overcome a weak catchment area for air travel demand, it can tip the scales when things are close. Here are five things airports can do to win more business:

Keep The Costs Low, Maybe Even Free

The costs to operate an airport are often discussed by airlines as a “cost per turn.” This takes all the costs an airline pays to the airport, and the costs they pay for equipment and people working there in service of their flights, and divide this by the number of operations at the airport. Some expensive airports, like New York’s JFK, could result in costs per turn in excess of $5,000 because of the high landing fees, airport rental fees, and the local labor market. When you think of a typically-sized U.S. airline flight with 150 seats, that means each seat must generate over $33 just to cover the airport costs at a place like JFK.

Anything an airport can do to lower these costs will make their facility more attractive to more airlines. If an airline can operate around an airport for less, they can likely charge lower fares to that airport which in turn creates more people traveling, Christina Cassotis, the dynamic CEO of the Pittsburgh airport, has gone so far as to say that she’d like it to be free for airlines operating there. No one thinks she can get Pittsburgh’s costs that low, but even having that mentality sets her apart from a typical airport leader. One thing airlines do not want to hear is that the airline could charge higher fares because passengers would be willing to pay that for their expensive airport. And fees that add to there cost of customers of flying there, like Passenger Facility charges, backfire because when ticket costs are higher, fewer people fly.

Have Space For New Entrants

Airports can be constrained for new service in several ways. There may be a lack of physical gates available, either because all are full or more likely because contracts don’t allow the airport to use the facilities to full capacity. Or, there may be pricing inefficiencies that would require even a small airplane carrying leisure passengers to pay the same high rates as a global business airline pays. To attract more service, airports need to show an airline where they can fit and how their operations will not be constrained. Having a diversity of airlines and nonstop destinations served is a goal of every airport. To do this, there has to be an ability to invite, and have access for, new airport entrants.

This can be hard to do in an airport used as a big hub. These airports have an overwhelmingly large tenant in their hubbing airline, and often that airline doesn’t want competition from a new carrier. As Miami airport has recently shown, a simple change to the pricing structure can create a lot of new flights from airlines serving there for the first time. Not every airport has the space that Miami had to do this, but finding ways to accommodate new airlines is a key way to attract new service, and ultimately lower fares too.

Make Customer Parking Affordable, And Ride Sharing Convenient

Parking at airports can be expensive, and at times an airport can attract more customers by lowering that price. For a time least, parking at Atlantic City airport (ACY) was significantly cheaper than at Philadelphia or Newark. Some customers chose ACY for that reason as much as the airline ticket price. By lowering the customer price, more airlines would be interested in serving the airport, which in turn makes even more customers chose the cheap parking offers.

But not all customers park at the airport thanks to the growth in ride sharing services. My local airport, Reagan National Airport (DCA), charges $25 a day to park by the terminal. It costs me less than that for a one way Uber from my home to the airport, but more for the round trip back home. Thus, when going for one day, I park, but more than one day I choose to use Uber. Even when traveling for business, where my expenses are reimbursed, I still do this as I see no reason for the company paying the bills to pay more than needed. The point is, if DCA lowered its parking price at least for people like me, they might generate more revenue and thus be able to charge their airlines less. The easier it is for people use the airport, then the more airlines will want to serve that airport.

Be Willing To Share Start-Up Costs

Starting new routes can be expensive for an airline, especially if they are setting up in an airport for the first time. No airline expects a subsidy for long periods of time and no route justifies itself on subsidies alone. But help, especially in the first year and in the initial airport set up, will absolutely encourage airlines to consider service since they can lower the risk of the entrance.

Some airports do this today, usually for serving cities not yet served nonstop from that facility. Not every investment like this works, but sharing the investment between the airport and the airline can result in a better long-term partnership.

Stay Flexible As Demand Environment Changes

Like airlines, airports faced unprecedented shock when the pandemic hit. Airline service is their primary means of revenue, and with fewer flights and fewer passengers, key revenue sources dried up. This happened while debt service remained for many, and for some airports this meant increasing rates as passengers dropped. What a terrible position to be in.

Just as the pandemic has taught airlines maintaining flexibility is key in a post-pandemic world. This is harder for the airports that house a huge hub, as these facilities are tied to the fortunes of their hub carrier. For all others, and that means most airports in the world, they have more choices. This means keeping debt low or structured to adjust in times of unforeseen and uncontrollable macro economic factors. It could also mean re-thinking longer-term gate lease strategies to allow for quick reallocation of space if an airline fails or decides to stop serving the airport. Further, it could be re-thinking concessions and retail and how this could be adjusted in the event of change. It also means passenger flow and parking, too. Getting too comfortable with any one system will mean more problems when the next demand destructive event occurs. Airlines know the airports that runs their businesses like this and those that are more concerned with quality of marble on their floors.