Airlines abandon small cities

USA TODAY - October 23, 2002

Since the Sept. 11 attacks, Youngstown-Warren Regional Airport in Ohio has become a ghost town. In the past year, the airport that serves this former steel town in northeastern Ohio went from handling 4,000 commercial airline passengers a month to none. Regional carriers for US Airways and Northwest left the market. In the two years before the attacks, Continental Express had flown away, and United Express had shut down.

Northwest's exit last month was especially tough, casting a cloud over an airport that had just been overhauled. In the last five years, $50 million in federal money has been spent to double the size of its terminal, triple the number of passenger gates and expand the runway for wide-body jets. The airport even got a highway interchange.

But airlines are more interested in survival than money-losing markets, and Youngstown was costing Northwest $100,000 a month after the attacks.

Under enormous pressure to cut costs, the nation's major airlines are retreating from airports in small and midsize cities that are mostly served by turboprop planes.

Nine other small airports across the USA have lost all commercial airline service since Sept. 11 of last year, a USA TODAY analysis shows. Service in about a dozen other communities has been cut by at least 50%. Scores more are vulnerable.

The smallest half of the nation's airports are hard hit, because some travelers are driving instead of flying on shorter trips, and others are choosing to drive farther to reach an airport served by Southwest or another low-fare carrier.

For more than 200 of the smallest airports in the continental USA, domestic scheduled flights this month are down 17% from what had been scheduled for last October (before Sept. 11), compared with a 10% drop at the rest of the nation's airports, according to the analysis of Official Airline Guide schedules provided by Back Aviation Solutions.

Many small airports, such as Las Cruces, N.M., had already begun to lose service: In the past five years, flights at these airports have dropped about 30%, the analysis shows. Some of the smallest airports were only able to keep planes coming mainly because of federal subsidies.

The situation is likely to worsen. Airlines are retiring more turboprops and laying off more workers. There is mounting pressure in Washington to revamp the subsidy program and possibly eliminate incentives at airports where a larger airport is within about an hour's drive.

A community now can get subsidies if it is more than 70 miles away from a medium or large hub airport and if the service costs less than $200 per passenger.

Nearly 200 smaller airports are served by a single carrier, posing more risk if that carrier makes deeper cuts, aviation consultants say.

Still, Youngstown residents are luckier than some. They can drive to three airports - Pittsburgh, Cleveland or Akron-Canton, Ohio - within about an hour and a half.

"You could say, 'What's so bad about that?' " says sales executive Stewart Yang. "But if you're catching a 6:30 a.m. flight and you have a 1 ½-hour drive and you have to be there 1 ½ hours beforehand, suddenly you're leaving at 3 a.m."

Among other small cities that have lost all commercial service:

Ruidoso, N.M. After the Sept. 11 attacks, only about 20 people were flying every month out of this resort community in the southern Rocky Mountains. Rio Grande Air, a small Taos-based airline that flies nine-seat single-engine turboprops, stopped serving the town last month. Despite a subsidy, it was losing $30,000 a month.
"After 9/11, boardings just dropped off," says Rio Grande Air CEO Timothy Wooldridge. Area residents now drive nearly 3 1/2 hours to Albuquerque or 2 1/2 hours to El Paso. Skiers who come from as far as Dallas and Houston, 700 to 800 miles away, still prefer to drive.

When Roy Parker, general manager of a ski resort in Ruidoso, travels, he flies his own plane to Albuquerque, then catches a flight. "The fares are so cheap," he says. "This weekend, I'm going to Lexington, Ky., and the ticket was only $200."

Ottumwa, Iowa. A year ago, Great Lakes Aviation, then a United Express carrier, pulled out of this southeastern Iowa city of 25,000, citing rising operating costs and more service in Des Moines. It was Ottumwa's sole commercial airline. Today, Ottumwans must drive about 1 ½ to four hours to catch a flight from Des Moines, Omaha or Kansas City.
Joy Johnston, executive director of a local business development group, says air service is key to her city's ability to recruit and retain businesses such as food processor Cargill and farm equipment manufacturer Deere.

"While we have some great assets here, we also have this as a liability," she says.

Hickory and Southern Pines, N.C. Mesa Airlines, a US Airways regional carrier, pulled out of these towns after Sept. 11, having already been losing money for months.
Local officials are trying to find a replacement.

Hickory, known for its furniture companies and mountain resorts, also has two large fiber-optic cable companies and a growing number of retirees. It's a 1 1/2-hour drive from Greensboro and about an hour from Charlotte. The Pinehurst/Southern Pines area, a golfing mecca and retirement haven, is about an hour's drive from Raleigh/Durham. Golfers are increasingly hiring private jets to fly directly into Southern Pines.

A lingering problem

Sept. 11 exacerbated the situation, but small cities have had trouble keeping air service for years.

The challenge started when Congress deregulated the airline industry in 1978.

As a safety net, Congress established the Essential Air Service program, which subsidizes air service to 114 smaller communities, the most in its history. The subsidies were supposed to expire in 10 years, but Congress kept them.

The Bush administration is expected to propose changes to the subsidy program, which the General Accounting Office says is increasingly hard to make viable. After Sept. 11, Congress nearly doubled its budget to $113 million in anticipation of growing demand.

But the investigative arm of Congress says costs at these airports have been going up and ridership dropping for at least seven years.

"Either Congress needs to provide substantially more funds or look at some options to streamline the program so that it provides service where it's going to be used," says JayEtta Hecker, a GAO director who overseas transportation issues.

"Passengers don't say, 'Oh, I'd much rather fly from my local community.' They say, 'It costs me three times as much!' The preference is far more driven by lower cost and more service options than can possibly be supported by a local community."

Plus, regional carriers are retiring their 19-seat turboprops - long considered the cheapest way to serve routes under about 350 miles - and buying small jets, which have more seats, can fly longer routes and are preferred by passengers. The jets don't make economic sense in some smaller markets, though, airline executives say.

Northwest still relies on 70 turboprops to serve its many smaller communities, but this year, the airline's turboprop flights will be down 15%, while regional jet flying will be up 25%.

"There's going to come a day when either your city is going to make the cut and be large enough to support jet service, or the city may lose service altogether," says Jim Cron, a Northwest vice president.

Turboprops have been falling out of favor with manufacturers and carriers alike. Three manufacturers make them for commercial airlines, compared with at least eight makers five years ago. Bombardier, for example, delivered just three turboprops in the first nine months of this year compared with 11 in the same period last year.

Horizon Air, Alaska Airline's regional affiliate that serves many smaller cities in the western USA, is the nation's only carrier taking delivery of new turboprops - but those are larger 70-seat models from Bombardier that fly farther and faster.

Airline executives say the government pushed them away from turboprops by subjecting them to the same safety regulations as those of a wide-body jet. Mesa CEO Jonathan Ornstein, who lobbied against the regulations at the time, says Mesa has shed almost 80 turboprops because of the higher costs.

"We had 13 airplanes in our Albuquerque operation. Now, we have five. There's no more service to Taos. Las Cruces? No more service. We're exiting Gallup, N.M.," says Ornstein. "The costs went up, fares went up, and people started driving. But what can we do?"

by Barbara De Lollis and Barbara Hansen