Airlines are scaling back service at smaller airports, driving up fares and driving customers to drive to airports with more service. Several years ago, carriers ordered a large number of 50-70 seat regional jets to replace its aging turboprop fleet on many routes. However, many of these planes turned out to be fuel inefficient and airlines are turning back to turboprop service on some routes.
Moving their full-size jets to their most profitable routes and focusing their energies on international service, this has left smaller routes full and underserved. Airlines frequently change their schedules on these regional flights, trying to adjust capacity. Less flights with smaller planes also mean higher fares.
Delta cut its July domestic capacity by thirteen percent, while Northwest dropped twelve. Airports that had expansion plans have postponed them due to reduction in loads. As the Providence Journal reports, traffic at T.F. Green Airport in Providence was 3.5 million up until July, down by 8.5 percent from the same time last year.
Manchester Airport in New Hampshire is down 8 percent, Tupelo, MS is down 15 percent, Toledo 16, and Grand Rapids 6 percent.
It seems like the rise of many of these smaller airports was fueled by Southwest, especially those like Providence and Manchester which are relatviely close to a larger city. Is Southwest retrenching, or has Jetblue’s strategy of using major airports outflanked it?
First, Jetblue’s strategy isn’t quite as you described. Jetblue’s new service to Houston is to Hobby airport, which is a secondary airport to the larger Intercontinental. It has said it won’t serve Dallas without being allowed access to Love Field. And its recent strategy is medium-sized markets…although not necessarilly smaller airports.
Southwest, conversely, has been moving into larger airports such as Washington-Dulles, Denver, Philadelphia, and Pittsburgh. They’ve proved that their concern is the viability of the market, not the size of the airport.
Smaller airports often have untapped markets of their own of people who go to larger airports. Southwest’s decision to build service at airports such as Manchester, Providence, and Long Island – Islip was because they saw a large market of people who currently had to go to Boston or New York because their local airport was too expensive. The goal had the unexpected effect of a reverse, in which travellers in Boston itself made the commute to these cities to receive lower fares.
Southwest’s skill is that they can take markets that no one else thinks can handle multiple flights on 737s and make them work.