Air travel jump won’t speed up Mitchell expansionRecord number of passengers, but fewer planes using airport
The Business Journal of Milwaukee - by Rich Rovito
Media

Although passenger traffic has reached all-time highs, further expansion of Milwaukee’s General Mitchell International Airport won’t be rushed, according to airport officials.

“The last thing we want to do is over-build,” Mitchell spokeswoman Pat Rowe said. “We look at things over time and there certainly are peaks and valleys for travel. We’re in a significant peak now that will eventually level off.”

Mitchell recorded an all-time single-month passenger record in March, the most recent month for which figures are available. The total of 896,598 passengers represented an increase of 41 percent compared with the 633,763 passengers who used the airport in March 2009.

The total eclipses the previous high month recorded in July 2008 with 821,610 passengers. The March total marked seven straight months of passenger growth at Mitchell.

The number of passengers for the first quarter of 2010 also was a record at 2,262,597, a 39.6 percent increase compared with the 1,621,067 passengers who used the airport during the same period a year ago.

Airport officials monitor passenger counts as well as the number of flights in and out of Mitchell when considering expansion, Rowe said.

While passenger traffic has skyrocketed over the past year, the airport has experienced a slight decline in the number of flights, she said.

“This is a reflection of airlines’ efforts to match seats with demand,” Rowe said. “The number of flights have been trimmed to meet market demand. There are fewer flights, but there are fuller flights.”

At this point, two of the airport’s 48 gates are unleased, giving the airport room within its existing infrastructure to accommodate additional air traffic, Rowe said. The available gates are on Concourse E.

“We haven’t gotten to the point where we’ve decided to do a terminal expansion,” she said. “At 48 gates, we have a good number of gates for a medium-size hub airport. We want to make sure the existing gates are being used to capacity before doing additional construction.”

Rowe pointed out that Mitchell has more gates than Chicago’s Midway airport, which has 43. Mitchell is being marketed as Chicago’s “third airport” as it works to attract travelers from northern Illinois.

A master plan for the airport lays out various expansion options, including additional concourses as well as the construction of a second terminal.

The airport plans to conduct, within the next year, a “concept analysis” pertaining to an expansion of the existing terminal at Mitchell, Rowe said.

“We will be gathering more detailed information to determine what, if anything, in the master plan needs to be developed,” she said.

The airport plans to hire a consultant in the near future to lead the analysis, Rowe said.

Mitchell completed an eight-gate expansion of Concourse C in 2007. The $18 million project added 61,000 square feet to the concourse, as well as a variety of services.

An additional runway that would accommodate larger aircraft at Mitchell also is included in the airport’s master plan. The plan indicates that the new runway would be needed between 2016 and 2021, Rowe said. The runway would be constructed south of and parallel to the airport’s existing east-west runway.

“At this moment, there isn’t an urgent need to start in on it,” Rowe said.

Airport officials also will consider whether a 2,000-space addition is needed to the airport’s parking structure. The airport currently has 8,200 parking spaces in its parking structure, to which a 3,000-space addition was completed in November 2002. The airport also has 514 spaces in its surface lot and nearly 3,000 spaces at its remote discount lots.

Intense competition
Competition among airlines at Mitchell has intensified, leading to lower airfares and increased passenger traffic. The increased competition has been sparked mostly by an aggressive expansion by Orlando, Fla.-based AirTran Airways, which began adding service in Milwaukee after a failed hostile takeover attempt of rival Midwest Airlines of Oak Creek in 2007.

Competition also became more fierce following the arrival of the nation’s largest discount air carrier, Dallas-based Southwest Airlines, to the Milwaukee market in November 2009.

AirTran currently leases seven gates for its mainline service at Mitchell. Another gate is leased for its regional air service partner, SkyWest Airlines, Rowe said.

“AirTran is making good use of its gates,” she said. “I’m sure they are jockeying aircraft at this point.”

AirTran recently added New Orleans and Sarasota, Fla., as destinations, bringing to 26 the total number of cities it serves. AirTran management has said that the airline plans to continue to expand its service in Milwaukee.

“We will need more gates,” said Kevin Healy, AirTran’s senior vice president of marketing and planning. “At peak periods, we have had to move some airplanes around.”

AirTran’s ticket counter on the lower level at Mitchell has become “kind of tight” due to the increased service and a growing number of passengers, he said.

An expansion at Mitchell is inevitable and would drive economic growth for the area, Healy said.

“It will get there at some point,” he said. “When it gets to that point, adding a terminal or a runway is a great problem to have.”

Mitchell has become the most competitive airport in the United States, Healy said.

“It’s the story of the airline industry,” he said.

Midwest Airlines and Frontier Airlines, which are being merged under the Frontier brand, occupy 21 gates at Mitchell. Although Frontier and Midwest combined have about the same market share at Mitchell as AirTran, they occupy more gates because their flights are more frequent and involve smaller aircraft, Rowe said.

“We have just the space we need right now and are happy to talk to the airport about future expansion, but we don’t really have a firm opinion on what is needed at this point,” said Jim Reichart, vice president of sales, distribution and loyalty programs at Indianapolis-based Republic Airways Holdings Inc., which owns Frontier and Midwest.

As airport officials contemplate a potential terminal expansion and an additional runway, ongoing renovations to the airport’s existing facilities are expanding amenities for the airport’s growing number of passengers, Rowe said.

Quiznos sub shop and Famous Famiglia recently opened in the food court located in the airport’s public area. A Chili’s Too restaurant, Nonna Bartolotta’s eatery and an Alterra coffee shop opened at Mitchell about a year ago. A Johnny Rockets restaurant is under construction and the patio seating and bar area at Nonna’s is being expanded.

Milwaukee airfares among lowest in nationThe Business Journal of Milwaukee - by Rich Rovito

View Larger As further evidence of how competition between four major airlines is benefiting Milwaukee-area travelers, airfares at General Mitchell International Airport fell by more than 25 percent in the fourth quarter of 2009 compared with the same period a year earlier.

The price decline was the second-largest among the country’s top 100 airports, according to a recent report from the U.S. Department of Transportation’s Bureau of Transportation Statistics.

The average airfare at Mitchell dipped to $247 compared with $331 for the fourth quarter of 2008, according to the report. The decrease at Mitchell ranked second only to Cincinnati/Northern Kentucky International Airport, long regarded as one of the most expensive airports in the country. The average airfare at the airport serving metropolitan Cincinnati fell nearly 31 percent to $384, compared with $554 for the same period a year earlier.

Mitchell’s average airfare ranked among the lowest in the nation. Atlantic City International Airport in New Jersey had the lowest average fare at $190, while Huntsville International Airport in Alabama had the highest average airfare at $492.

Increased competition is responsible for the decrease in airfares at Mitchell, airport spokeswoman Pat Rowe said.

“That’s the key factor,” she said.

In addition to lower airfares, the boost in competition has led airlines vying for passengers at Mitchell to add more nonstop flights to key business destinations, including cities on the West Coast, said Pete Beitzel, vice president of infrastructure and international business at the Metropolitan Milwaukee Association of Commerce.

“That’s what the business traveler really needs,” he said. “You like to go to an appointment and come back on the same day if possible. There’s nothing worse than changing planes.”

The competitive landscape at Mitchell has changed dramatically, mainly due to an aggressive expansion by AirTran Airways, which has been adding service at a rapid pace since its failed hostile takeover of Midwest Airlines of Oak Creek in 2007.

The airline’s parent company, Orlando, Fla.-based AirTran Holdings Inc., held its annual shareholders meeting in Milwaukee last month. The airline’s chief executive officer, Robert Fornaro, reiterated at that time AirTran’s commitment to making Milwaukee a major hub for AirTran’s operations.

Midwest, which is being absorbed by sister carrier Frontier Airlines, for years had been the dominant airline at Mitchell, with a market share of greater than 50 percent before financial struggles beset the airline in 2008, forcing it to dramatically reduce service at Mitchell.

Midwest has been adding back service and, combined with Frontier, is in a tight battle for the No. 1 market share position at Mitchell. Midwest and Frontier are owned by Indianapolis-based Republic Airways Holdings Inc.

As of March, the most recent month for which figures are available, the combined operations of Midwest and Frontier had a market share at Mitchell of 32.2 percent, compared with 31.9 percent for AirTran.

Competition became even more fierce at Mitchell in the fourth quarter of 2009 with the arrival of Dallas-based Southwest Airlines, the nation’s largest discount carrier.

Southwest launched 12 daily departures from Mitchell in November 2009 and already had captured a market share of nearly 8 percent at the airport for March.

With Atlanta-based Delta Air Lines, the world’s largest airline and the No. 3 carrier at Mitchell with a market share of about 14 percent, added to the mix, competition at the airport has reached unprecedented levels.

With four airlines competing for the majority of business at Mitchell, fares likely will remain depressed for the foreseeable future, Beitzel said.

“We’re in good shape, at least for the short term,” he said.

Inexpensive airfares and an abundance of nonstop flights are key factors in attracting and retaining businesses in the region, said Pat O’Brien, executive director of Milwaukee 7, an economic development group for the seven counties in southeast Wisconsin.

“It’s part of the package that we present to companies,” O’Brien said. “Companies want to know the number of flights, the number of destinations and what it’s going to cost them. Nonstop flights tend to be the first benchmark.”

The cost of air travel and the frequency of flights is especially important to “global” companies, O’Brien said.

“It’s more important to some companies than others but it’s always an important piece,” he said.

Although Milwaukee has seen a dramatic drop in the cost of air travel, average fares throughout the United States fell 7.4 percent year-over-year in the fourth quarter of 2009, representing the largest decline since 2001, according to the DOT’s Bureau of Transportation Statistics. The fourth-quarter 2009 average fare was $319.

Fares are based on domestic travel, round trip or one way for which no return ticket is purchased.

Fares include only the price paid at the time of the ticket purchase, and do not include other costs, such as baggage fees, paid at the airport or onboard the aircraft.

Lower airfares also have been crucial to the efforts of Visit Milwaukee, the area’s visitor and convention bureau.

“Can we get there and what will it cost? That’s always one of the first questions we get,” Visit Milwaukee president and chief executive officer Paul Upchurch said.

The organization is “aggressively selling” Milwaukee’s cheap airfares in discussions with meeting planners, he said.

“When airfares were less competitive, it was a factor that hurt us,” Upchurch said. “Now it is one of our strengths.”


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Falling airfares
Airfares at Milwaukee’s General Mitchell International Airport decreased by more 25 percent in the fourth quarter of 2009 compared with the same period a year earlier. Only one other airport had a larger dip in the cost of air travel.Airport Avg. domestic airfare
(4th quarter 2009) Avg. domestic airfare
(4th quarter 2008) Percent change
Cincinnati/Northern Kentucky International Airport $384 $554 -30.8
General Mitchell International Airport $247 $331 -25.4
Minneapolis-St. Paul International Airport $347 $435 -20.3
John Wayne Airport (Orange County, Calif.) $286 $336 -14.8
San Francisco International Airport $351 $405 -13.2


Source: U.S. Department of Transportation’s Bureau of Transportation Statistics