Airports set lures for non-stop flights
— -- Boston has some of the best universities in the world, a robust medical sciences industry and an increasingly diverse population.
Yet, Boston Logan International Airport doesn't have a single non-stop flight to Asia, Latin America, Africa or the Middle East, forcing many of the region's residents to connect in New York or other hubs when traveling abroad.
Officials at Boston Logan are vowing to tackle the problem, joining a growing list of airports that are offering special financial incentives for airlines to begin or expand service.
Tom Kinton, CEO of Massachusetts Port Authority, which runs Boston Logan, says high fuel prices are a key factor in the changing way that airlines are looking at service expansion. "Without assistance," says Kinton, "airlines are reluctant unless it's a slam-dunk (route)."
In recent years, U.S. airports of all sizes, including Dallas/Fort Worth, Miami, San Francisco and Fort Lauderdale, have cut landing fees and rents and chipped in money for advertising to court new flights, particularly to attractive international destinations.
Airport executives say the incentives help broaden customer choices, stimulate the local economy and, ultimately, lower fares by increasing competition.
Beyond the economic benefits, a new non-stop service to a foreign gateway enhances an airport's prestige. Direct flights to Asia or Europe are on the wish lists of nearly all major airports.
More rivalries
Financial incentives have been around for years, but airlines are seeing more of them recently as competition among airports gets more heated, says Jon Ash, president of transportation consulting firm InterVistas-ga2. "Each year in the last five or six years, it has become a more aggressive practice."
Communities are realizing that there is a lot of economic value in new international service. Airlines don't make decisions on new routes based solely on incentives, says American Airlines amr spokesman Tim Wagner. "It's no secret that airlines accept incentives, but we only do if it is a route we think has a chance of long-term success," he says.
Incentives can "tip the scale" in airline service decisions, says Gary Franzella, deputy aviation director at San Francisco International.
Optimistic that airlines would be drawn to its location and the local economy, San Francisco finished a new international terminal in late 2000, only to be hit by a dramatic industry slowdown from 9/11.
"When we invested in the new terminal, we had had some growth in international service, and we expected that to continue," Franzella says.
The airport, which competes with Los Angeles International, introduced its incentives in 2003, partly as a way to fill the terminal. They have helped, says Franzella. The incentives, which provide a 50% discount in landing fees for a year, helped bring four new routes: Air New Zealand service to Auckland; United uaua service to Nagoya, Japan, and Guangzhou, China; and Aer Lingus service to Dublin.
The total value of incentives to date is $725,000. The program continues, and the airport most recently received commitments from India-based carriers Jet Airways and Kingfisher for service to South Asia.
Paying the piper
Boston Logan estimates it will cost about $200,000 for the first year of service for every new international route it attracts.
To be eligible for Boston's new incentives, an airline must introduce at least three weekly flights to targeted foreign destinations, including Asia, Central America, South America, Africa, the Middle East and Mexico City.
The airport will reduce the landing fees by 75% in the first year and 25% in the second. A typical Boeing 747 flight pays about $2,600 per flight in landing fees. The airport will also pay for some advertising.
Patrick Moscaritolo, CEO of Greater Boston Convention & Visitors Bureau, says representatives from hotels, universities and local companies have grumbled about the lack of non-stop service to foreign cities other than the European service already in place.
Logan "really is New England's airport," he says. "It's been very Eurocentric, but the New England population is changing."
He estimates the city lost about $4 million in unrealized revenue last year from Japanese tourists who might have visited the city to see Boston Red Sox pitcher Daisuke Matsuzaka, had there been a direct flight from Tokyo.
Smaller airports have also been in on the action. Fort Lauderdale-Hollywood's incentive program has spent nearly $4 million through outlays and fees that have been forgiven.
In return, it's gained 13 new routes since 2001 that are still running, says marketing executive Stephen Belleme. Among them: Tallahassee, Denver, London and Caribbean destinations. The airport's international terminal is now at full capacity.
Fort Lauderdale has drawn some criticism of the program for being too generous.
"We were giving away money we didn't have to give away," says John Rodstrom, a Broward County commissioner whose jurisdiction includes the airport.
Airport executives late last year suspended the incentive program. They're now considering a new program for later this year that will be focused. What may emerge is a program for air service to Europe, South America or the West Coast.
Incentives have also played a crucial role in propping up airports that are steadily losing service.
As of last year, Cleveland Hopkins had lost about 13% of its flights since its pre-9/11 days. But with a mix of financial incentives and by making more space available, the airport received commitment from Continental last year to build a mini-hub, resulting in 40% more flights in the next two years.
"A large majority" of the new flights will be eligible for incentives, including waiving landing fees for six months, says Todd Payne, the airport's marketing chief.
The airport is hoping to draw more non-stop flights, particularly to the West Coast and major European cities such as Amsterdam and Frankfurt.
"We're sensitive to the numbers being down since 2001," he says. "Now airports have to stand up and promote themselves."