As a pilot, Larry Cooper has spent thousands of hours in the cockpit
and faced storms and wind that would turn your stomach, but his most unsettling
times in the last decade have been spent at his desk, feet flat on the
ground, as airport manager in Huron, S.D.
In 1993, 2,548 passengers boarded flights at Huron Regional Airport,
up slightly from the year before. When Huron brought in a new carrier,
Great Lakes Aviation, in 1994, customers enjoyed additional flights to
Denver and Minneapolis, and by 1995, boardings had climbed to 4,920. But
over the next three years, despite Cooper's best efforts, passenger traffic
plummeted to 1,951 by 1998. The airport managed to pull out of the tailspin
in 1999, turning things around with a dramatic 74 percent rise in passenger
boardings. But this year, just when things should be leveling off at cruising
altitude, Cooper says he's facing more service cutbacks and a probable
12 percent decline in passenger traffic. Forecast: turbulence ahead.
Unfortunately, Cooper's tumultuous experience is more the norm than
the exception among regional airports in the Ninth District. Trends at
the district's one truly large hub airport, Minneapolis-St. Paul International,
are climbing steadily, with passenger boardings increasing 20 percent
between 1996 and 1999. But the health and future of the district's 43
regional airportsspokes with scheduled service to the Minneapolis-St.
Paul hub and elsewhereare far less clear.
At North Dakota's four largest airports (Bismarck, Fargo, Grand Forks
and Minot), passenger boardings declined 3 percent from 1996 to 1999;
at the four smallest airports with scheduled service (Devils Lake, Dickinson,
Jamestown and Williston), boardings plunged 25 percent during the same
At the three Wisconsin Ninth District airports with scheduled service,
passenger boardings were up just 4.5 percent from 1996 to 1999; 1998
to 1999 trends were down or static.
In South Dakota, passenger boardings increased 17 percent at Pierre
from 1996 to 1999, and rose moderately in Rapid City and Watertown (up
7 percent and 6 percent, respectively), but dropped nearly 2 percent
in Aberdeen and over 9 percent in Huron, while Mitchell lost commercial
In Michigan's Upper Peninsula (U.P.), from 1996 to 1999, passenger
boardings dropped 7 percent at three airports (Ironwood, Iron Mountain
and Escanaba), and climbed 38 percent at two others (Houghton and Sault
Ste. Marie), while growing just 2 percent at the largest U.P. airport,
In Duluth, July 2000 boardings were down 8 percent from a year previous,
and August 2000 boardings were down 11 percent. Other Minnesota airports
(Bemidji, Ely, Grand Rapids, Chisholm-Hibbing, St. Cloud and Thief River
Falls) face reductions in scheduled air service by regional carriers
despite significant increases in passenger traffic at some of them.
See map of Ninth District Cities with Scheduled
These regional airportsfacilities with multiple runways and million
dollar budgetsplay a critical role in the region's economy, but
they face enormous economic pressures. And while some of them thrive,
others are suffering a downward spiral of decreasing consumer demand and
crippling cutbacks in airline service. Policymakers and aviation experts
are embroiled in debate over the costs and benefits of supporting marginal
airports that, some argue, should simply close the hangars and turn off
the runway lights on the way out.
Importance of regional airports to business
Though future flight trends are unclear, no one questions the importance
of airports to regional economic development. "If we are going to attract
business and new jobs to Montana, we absolutely must have the best aviation
infrastructure possible," Sen. Max Baucus told the Billings Gazette
last July prior to an airline summit held at Montana State University.
Regional economic development groups emphasize that businesses count
on dependable and frequent flights to deliver both freight and passengers.
"Reliable air service and access to that service remain important determinants
of business location decisions," according to a July 2000 report of the
Northeast-Midwest Institute and Northern Great Plains Initiative for Rural
Development (NGPIRD), a group concentrating on rural development in Minnesota,
Nebraska, North Dakota, South Dakota, Iowa, Manitoba and Saskatchewan.
In an e-commerce economy, where inventory management is an increasingly
critical business tool, companies rely on fast, reliable shipping, and
air freight is an essential component of the product delivery system,
said Jerry Nagel, president of NGPIRD. "Fed Ex and UPS are serving the
region well, but we have concerns about access to air cargo [in the future],"
Nagel said. "As companies move to greater time sensitivity ... depending
on just-in-time delivery ... we want to make sure that [air service] is
maintained at that high level. Businesses in our region increasingly depend
on even more timely air cargo."
Development of good regional airports is critical to ensuring that the
Upper Midwest not remain "fly-over" country when businesses decide where
to locate. "We are not the crossroads of the nation," noted Phil Scherer,
executive director of the Transportation Development Association of Wisconsin.
"If we want to compete for business and industry, we're going to have
to offset that geographic disadvantage with a better-than-average air
transportation system. If you want to attract an industry, they're going
to say 'what kind of airport do you have? how long is your runway? what
are your NavAids [navigational aids]?'"
Rice Lake Regional Airport in Wisconsin's Barron County is a case in
point. Built in 1995 to serve local businesses, the airport has exceeded
projections "on everything from fuel sales and hangar rent to freight
shipped," according to Stu Durkee, chair of the airport commission, who
says that growth in demand is pushing them to extend the runway next year
and possibly install a full instrument landing system. Demand comes from
a variety of industries in the region: an industrial scale company, a
drill bit manufacturer, a large cheese factory, a turkey operation, a
window screen maker and others.
"Parker Hannifin [an industrial coupling maker] came pretty much as
a direct result of the airport," Durkee said. "The others were here, yes,
but they've expanded because of us. Rice Lake Weighing, for example, went
from 125 employees to 500." An analysis by the Wisconsin Department of
Transportation (DOT) provides a more modest, but still impressive estimate
of the airport's total economic impact: 184 full-time jobs and $2,346,900
in aggregate personal income, counting both direct effects at the airport
and indirect effects in the larger community. It's always difficult to
measure total impact, but the Wisconsin DOT estimate credits the airport
with substantial stimulus on the local area's overall economic output.
While freight is part of the regional airport picture, airlines also
carry live bodies. Or hope to. Just south of Rice Lake in Wisconsin is
the Chippewa Valley Regional Airport, a much larger facility than Rice
Lake Regional, that can land 727s, DC-9s and military transports. But
passenger growth is low and rising very slowly: Projections for 2000 passenger
boardings are barely 2 percent higher than 1997 boardings, despite substantial
population and business growth in the region. "This airport is a diamond
in the rough," said airport manager Jerry Thiele. "There's a lot of opportunity."
Thiele argued that his airport is the "front door of the community," pointing
out that Hutchinson Technology, Silicon Graphics and other high-tech companies
located there send their executives and sales staff through the airport,
and that nonbusiness travel is also a source of potential growth.
In contrast to Chippewa's slow growth, Sioux Falls Regional Airport
projects boardings over 4 percent higher in 2000 than in 1997, and is
looking at expanding terminal capacity. The airport is served by three
major airlines and three regional carriers, but competes for passengers
with Omaha, Sioux City, Iowa, and Minneapolis.
Tourism, health, forests and agriculture
In many areas of the Ninth District, regional airports are critical to
tourism. For tourists, just-in-time delivery is not the issue, but airline
seats and reasonable fares are. If travelers can't find a seat or fares
are too high, they'll simply pick another destination, noted Michele Reese,
vice president at Winter Sports Inc., the corporate wing of Big Mountain
Ski and Summer Resort in Whitefish, Mont. Reese said that higher air prices
can be a "real limitation to how much we can grow" but the greater obstacle
is too little "lift"-too few airline seats allocated to small markets.
"It can take three weeks to get a seat on an airplane here," Reese said,
"and heaven forbid if you miss your plane." Ticket prices and availability
affect small tourist resorts in particular, but Reese argued that "it's
bigger than little towns. It's a national challenge," since airlines allocate
lift according to national market forces.
Transportation analysts point out that local airports also play important
but less-noticed roles in other sectors of the economy. In health care,
for example, airports are used for medical evacuation to metropolitan
hospitals and flying in physicians for routine or emergency treatment.
Airports are also used in forest management, to fight fires like those
raging through Montana this year, and in agriculture, as bases for crop
Obstacles to airport survival
Regardless of the actual and potential roles for local airports, obstaclesmany
of which are rooted in the economics and regulation of air transporthave
plagued their survival.
One problem is that passengers vote with their feet. Rather than pay
somewhat higher local prices, they'll drive to larger airports to take
advantage of discount fares or better connections, a phenomenon called
"leakage" in the airport industry. South Dakota's Aberdeen Regional Airport,
served only by Mesaba Aviation operating as Northwest Airlink, has lost
passenger traffic to Sioux Falls in recent years because fares are lower
there and passengers are willing to drive the 200 miles. Similar struggles
affect airports throughout the region. North Dakota's four major airports
have experienced steady growth over the last year, said Gary Ness, director
of the state aeronautics commission, but smaller airports in Williston,
Jamestown, Devils Lake and Dickinson continue to struggle as passengers
go elsewhere to catch their flights. "If you do a ticket poll and more
than 50 percent of tickets sold in a community are boarded elsewhere,
then I don't think that community is serious about support of the air
service provided to them," Ness said.
But it's a two-way street: Airlines at regional airports sometimes lack
the dependability that passengers demand. "There is a small disease in
the regional airline business called reliability," according to Ness.
"They just don't show up in time, they're late. It isn't just one carrier.
It's the same story everywhere."
Reflecting on airline service problems in Huron, airport manager Cooper
observed, "If you could bring in good reliable air service today, we could
be up to 10,000 [passenger boardings] in two years."
Part of the reliability problem is a severe pilot shortage nationally.
With growth in air travel and a mandatory pilot retirement age of 60,
the major U.S. airlines are scrambling to fill their cockpits by poaching
flight crews from regional airlines. Some regional carriers lost as many
as 40 percent of their pilots in 1999, according to the Wall Street
Journal. Service to Brookings' airport in South Dakota, for example,
was suspended last year due to the pilot shortage.
And as airlines decide where to allocate their scarce resources, smaller
markets may lose out. In July, Northwest Airlines announced it would cancel
direct flights between Duluth and Detroit as of Sept. 1 because they weren't
profitable, with just 40 percent of seats filled during the past year.
City officials resurrected a local air service committee and met with
the airline in August to maintain, in the words of a local newspaper,
"Duluth's tenuous air service."
Duluth isn't the first town to face airline cutbacks due to insufficient
demand. But some argue that the airlines themselves don't always play
fair. The federal Aviation Investment and Reform Act for the 21st Century
(AIR-21), signed into law on April 5, 2000, orders the Secretary of Transportation
to "review the marketing practices of air carriers that may inhibit the
availability of quality, affordable air transportation services to small-
and medium-sized communities" and to consider issuing regulations that
address the problem.
Practices considered inhibitory: computer reservation systems that don't
display all airports, forcing customers to fly to hubs, not spokes; gate
arrangements at airports that exclude small carriers; and code-sharing
partnerships between airlines that limit connections to other airlines.
Some air carriers also have been accused of using predatory pricing practices.
In Montana last summer, according to the Billings Gazette, United Airlines
faced criticism for low-balling Frontier Airlines, pushing them out of
the market, and then raising their fares.
Ironically, government regulations may add to the airport problem. This
June, for example, the Federal Aeronautics Administration (FAA) announced
a proposal to extend its authorityand safety requirementsto
airports with scheduled service by planes with 10 to 30 seats, a proposal
that would cost airports about $1.9 million initially and $1.2 million
annually thereafter. Other recently revised FAA safety standards for all
airports will cost $3.5 million initially and $6 million recurring annually,
costs that hit small airports hardest.
Faced with these challenges, the fate of regional airports is far from
certain. Will they go the way of corner grocery stores, and, equally important,
should they? Are they simply inefficient suppliers that don't meet a real
need? And what are the potential solutions to their troubles? The futureto
be explored in the January 2001 fedgazettewill
include the role of government subsidies, local initiatives and commercial/technological
innovations that may shape the direction of air transport in coming decades.