Airport deals with loss of two low-cost carriers

CNY Business Journal (1996+), Feb 10, 2006 by Tampone, Kevin

SYRACUSE - So far, airfare from Syracuse has not risen significantly in the wake of recent shutdowns by TransMeridian Airlines and Independence Air, although passenger traffic did take a hit, according to local officials.

Traffic in November, the most recent month for which data was available, was down 2.8 percent over 2004, says Anthony Mancuso, Syracuse aviation commissioner. TransMeridian shut down in September, but Independence Air did not close until Jan. 5, so the full effect of its departure on passenger numbers remains unclear.

Even with the drop in traffic after TransMeridian closed, yearto-date numbers were still up 9.9 percent in November, Mancuso says.

"I don't believe the numbers will change drastically," he says. "Whether or not you fly a specific airline, if the price is right, you will still fly."

Mancuso noted that Syracuse Hancock International Airport still has two airlines that fly to Washington, D.C., which was Independence's destination. Passengers can also still get to Orlando, although a connection is now necessary.

TransMeridian flew to Orlando nonstop.

Mancuso says he does not believe a connection discourages people from flying from Syracuse.

"When you get down to it, the layover really isn't that long" he says. "Is that worth an hour or an hour and 20 minutes on the Thruway in the dead of winter to get to Rochester? Maybe for some people it is. For the majority of people out there, I don't think it would be."

Mancuso also pointed out that Syracuse still hosts a low-cost carrier in JetBlue Airways. The company reported a net loss for the three months ended Dec. 31, 2005, of $42.4 million, compared with net income for the same quarter in 2004 of $1.5 million.

For the year ended Dec. 31, the company lost $20.2 million, compared with net income of $46.2 million in 2004.

Independence filed for Chapter 11 bankruptcy protection in November 2005, before ceasing operations in January. It reported a second-quarter net loss in 2005 of $98.5 million, compared with a net loss for the same period in 2004 of $27.1 million.

TransMeridian, which filed for Chapter 7 bankruptcy, was privately held and did not disclose its financial information.

Both airlines were young when they arrived in Syracuse. Independence began flying in June 2004. TransMeridian operated as a charter carrier from 1995 until 2003, when it began offering scheduled service.

Despite the failure of both carriers, Syracuse's strategy of targeting and recruiting low-cost carriers is not flawed, says Kevin Schwab, an aviation consultant for the Metropolitan Development Association of Syracuse and Central New York.

He acknowledged that the full effect of the two airlines' shutdowns in Syracuse and elsewhere is still uncertain.

"Certainly, they had a very positive impact in providing the competition necessary to get fares down," Schwab says. "The overall experience of having them here was positive. If you go back three or four years, Syracuse was one of the most expensive airports in the nation."

As was the case in many cities, the low-cost carriers helped drive down prices among traditional carriers. Even now that they are gone, their effect is still felt.

"We don't show up in those top 10 lists of most expensive airports in the county anymore," Schwab says. "The airlines have not turned around and raised rates because people are responding. Those things started to happen with the arrival of the low-cost carriers."

City officials have said they plan to continue recruiting low-cost carriers in the future, as well as press Hancock's existing airlines to add service to more cities. Specifically, they plan to target cities that passengers cited in a recent survey on Hancock's air service.

Those destinations included Boston, Orlando, Tampa, Atlanta, and Washington, D.C.