Airlines look to make Columbia airport profitable

Tuesday, April 1, 2008 | 7:18 p.m. CDT; updated 2:44 p.m. CDT, Tuesday, July 22, 2008
Great Lakes Aviation, top, Hawaiian Island Air, middle, and Northwest Airlink, bottom, have all bid to take over services at Columbia Regional Airport and have asked for substantial federal help in financing their proposed operations.

COLUMBIA — Columbia Regional Airport is looking for its third air carrier in as many years, and the three firms that have submitted bids to provide essential air service with a federal subsidy think they can turn a profit where others have failed.

The outgoing Mesa Airlines, operating as Air Midwest, has been unable to get out of the red since it began providing flights in October 2006 with an annual federal subsidy of nearly $600,000 a year. Even the elimination of flights to St. Louis and drastic increases in ticket prices have failed to turn things around. That’s why Mesa announced earlier this year that it would discontinue its service later this month. Mesa, however, must continue flights until its replacement begins its operations.


Great Lakes Aviation

Based in Cheyenne, Wyo. Proposes four daily flights to and from Kansas City One-way ticket cost: $74.54 Yearly passenger goal: 22,500 Airline partner: United Airlines Aircraft type: 19-seat Beechcraft 1900D Requested subsidy: $1.6 Million

Hawaii Island Air

Based in Honolulu Proposes two or three daily flights to and from Kansas City One-way ticket cost: Between $49 and $109, depending on purchase date Yearly passenger goal: Between 14,500 and 21,800 Airline partners: Continental Airlines and United Airlines Aircraft type: 37-seat deHaviland Dash-8 Requested subsidy: Between $1.3 million and $2 million, depending on the the number of daily flights

Northwest Airlink

Based in Eagan, Minn. Proposes two or three daily flights to and from Memphis, Tenn One-way ticket cost: $95 Yearly passenger goal: Between 25,000 and 29,000 Airline partner: Northwest Airlines Aircraft type: 34-seat Saab 340 Requested subsidy: Between $900,000 $900,00 and $2.2 million, depending on the number amount of daily flights

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Toward the end of March, three airlines submitted bids to the U.S. Department of Transportation to replace Mesa. All have asked for significantly more assistance from the federal government, with bids stating the need between $900,000 and $2.2 million annually to provide essential air service at Columbia Regional Airport. The airline that’s eventually chosen will be locked into a two-year deal with the transportation agency.

The federal Essential Air Service Program provides subsidies to airlines that operate in markets which are otherwise unprofitable. There are 140 communities in the program now, according to the Web site of the Office of Aviation Analysis.

The decision by Mesa to end its Columbia service put the city in a tough position, because it needs to keep a minimum of 10,000 passengers a year if it is to continue receiving roughly $1 million a year for capital improvements at the airport.

“The EAS program, if run properly, should keep us at or above 10,000,” City Manager Bill Watkins said. “Mesa is causing us substantial heartburn right now. They just didn’t get it.”

All three companies bidding to replace Mesa estimate passenger numbers above 10,000 per year.

Watkins said the effort to find a replacement for the essential air service should not be confused with the ongoing search for an airline that would fly directly to Chicago or Dallas. That’s a parallel effort that also involves MU, Jefferson City and interests at the Lake of the Ozarks.

The three essential air service bids will be discussed at the Airport Advisory Board’s meeting at noon Wednesday at the airport.

Watkins said that he also will confer with Jefferson City officials and that the city eventually will make a recommendation to the Department of Transportation, which will make the final decision.

The three submitted bids came from Wyoming-based Great Lakes Aviation, Honolulu-based Hawaii Island Air and Minnesota-based Mesaba Airlines, doing business as Northwest Airlink. Great Lakes and Hawaii Island would provide flights to and from Kansas City; Mesaba is offering flights to Memphis, Tenn.

Tom Bacon, vice president of marketing for Air Midwest, said the airline has filed notices with the Department of Transportation to discontinue its services at all the small Midwest airports it serves.

“It’s not profitable from our standpoint,” Bacon said.

Bacon said the company’s contract with the federal government carried no provisions for rising fuel costs. Jet fuel prices have risen nearly 70 percent in the past year, according to the International Air Transport Association. Bacon said the company certainly would have benefitted from a larger federal subsidy, but he was unsure whether that would have been enough to make a real difference.

Mesa has been criticized by city officials for poor service and for pricing out customers. A one-way ticket to Kansas City is more than $150, almost four times what it would cost to take a shuttle to Kansas City International.

The three airlines bidding to replace Mesa disagree with the notion that there’s no way to profit from essential air service in Columbia. Here’s a look at what each is proposing and why.

Great Lakes Aviation

Great Lakes is a small-town based airline that operates in 44 cities. Monica Taylor, director of sales and marketing, said Great Lakes would use a different approach than Air Midwest by emphasizing Internet sales and selling tickets for the cheapest rates online.

“We have been doing essential air service since the program has been around. We cater to small cities,” Taylor said. “We do one thing and do it well.”

Because of the rise in fuel costs, a larger federal subsidy than Air Midwest receives would be necessary, Taylor said, but that does not mean the government is bailing out airlines from potential losses.

“There is a common misconception that airlines are getting paid regardless,” Taylor said. “We have to meet the numbers we are forecasting. We have an incentive.”

Taylor disputes the notion that airlines cannot make money in small markets and said Great Lakes’ passenger numbers have risen over the past two years in most of the cities it serves. The key is for the airline to become part of the community by visiting with and joining the local chamber of commerce, having corporate representatives visit several times a year, and advertising and holding events that alert residents of the airline’s presence, Taylor said.

Hawaii Island Air

Hawaii Island Air is making its first attempt at expanding into the continental United States, having operated exclusively in the Hawaiian Islands under several different names since 1980. The company’s essential air service proposal includes 13 different options for serving seven different airports in Missouri, Nebraska and Arkansas. Columbia Regional Airport is included in 10 of those options. The Joplin and Kirksville airports are included in several of its proposals.

Spokeswoman B.J. Whitman said the company is interested in all the airports but offered different options to the Department of Transportation to ensure it is as competitive as possible. She said Hawaii Island Air sees Columbia as an opportunity because of the airline’s history of successfully operating services in smaller airports.

“It’s their specialty, and it’s what they do here,” Whitman said.

Whitman said the exact business plan for the airline in Columbia would be determined when the company learns whether its bids succeed and exactly which airports it will serve.

“This is an opportunity for Island Air to expand our operations beyond Hawaii,” said Les Murashige, chief operating officer for the airline, in a news release. “Our primary market is Hawaii, and we will continue to build from our home base. If awarded, this expansion will help stabilize our company, allow for growth and spread fixed costs and expenses.”

Northwest Airlink

Northwest Airlink’s proposal is the only plan that includes no flights to Kansas City. It proposes flights to Memphis, Tenn., one of the airline’s three main hubs. The other two are Detroit and Minneapolis.

Northwest representatives say it is the longest operating regional airport in the country. It was founded in 1944 and serves more than 75 cities.

Northwest Airlink’s reach is greater than other airlines because it is a subsidiary of Northwest Airlines, spokeswoman Michelle Aguayo Shannon said.

“Northwest Airlines serves 87 airports from Memphis,” Shannon said. “Kansas City and St. Louis offer service to fewer unique destinations.”

From Memphis, Northwest Airlines operates more than 230 daily flights to 88 non-stop locations. It also has flights to Canada, Puerto Rico and Mexico, Shannon said, and passengers can fly directly to Europe or Asia once they get to Minneapolis or Detroit.

“Because it’s a hub for Northwest Airlines, we have more feeder traffic coming into Memphis to support the Columbia route, which is the advantage of the hub-and-spoke system,” Shannon said.

The airline projects more passengers than either of the other two bidders. It’s goal is a minimum of 25,000 one-way passengers per year.

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Bryan Ross April 2, 2008 | 12:05 p.m.

Why does the city insist on trying to find an airline that flies non-stop to Dallas or Chicago? Last summer a study was conducted by Mead & Hunt, and reported on in the July 1, 2007 Tribune, and they found that the top 3 final destinations for Mid-Missouri air passengers was Washington DC, Orlando and Las Vegas. The study further stated that Columbia should "focus on service to Cincinnati, Detroit or Memphis as eastern hub cities and Denver as a western hub." Shouldn't we be looking at service to one of those cities instead of Chicago or Dallas, especially since Ozark Airlines showed that service to Chicago was not profitable?

(Report Comment)
Ellis Smith April 2, 2008 | 2:00 p.m.

Perhaps it's true that "all things old are new again." The city should have some record of it, but I believe that in the past there once was service from Columbia Regional Airport to and from Memphis with Northwest and/or their subsidiary. I recall having flown with them on several occasions, as I was then working in the Birmingham, Alabama area. My experiences with Northwest's present airlink have been good.

On the other hand, if we are now looking at potential airlines FOR THE SECOND TIME, does that suggest anything?

I believe the previous poster has an excellent point concerning hubs. Since the demise of TWA, St. Louis is no longer the hub it once was.

(Report Comment)
Bob Smith April 2, 2008 | 3:26 p.m.

First off as to the article Memphis DOES have service to Europe. There is a nonstop flight to Amsterdam from Memphis. Memphis is by far a better destination than KC or St. Louis. As a hub you can get to most places in just one stop, and Memphis is a place people would fly to by itself. Nobody is buying a ticket to fly from Columbia to KC or St. Louis.

As to Dallas and Chicago, the key to that would be to have either American for Dallas and Chicago or United for Chicago be codesharing on the flight. That would be in the same was as Memphis a destination that people in general could want to go from Columbia and an easy place to connect to a lot of destinations.

(Report Comment)
Airline Pilot April 2, 2008 | 7:48 p.m.

Roger that on Memphis flights to Europe. Every night at 7:20PM there is a nonstop flight to Amsterdam. Also, because Northwest is very closely tied with KLM Dutch Airlines, a passenger could book one ticket on and get from Columbia to Amsterdam to any city in Europe (or even Mumbai, India) all on one reservation.

Among regional airlines, Mesaba is a top-notch outfit. They are one of the few remaining regional airlines that is still wholly-owned by the mainline carrier it feeds. In fact, Mesaba pilots are afforded the opportunity to "flow up" from Mesaba to Northwest mainline once they have enough seniority (an incentive which allows Mesaba to recruit more experienced pilots than companies like Mesa/Air Midwest...which should make you feel safer).

There are no direct flights outside of North America from St. Louis or Kansas City. In addition, Mesaba's two competitors in this bid would likely require a terminal change in STL or MCI, requiring passengers to leave security and re-enter the airport. Which is why most people will continue to use Mo-Ex unless Mesaba gets the contract.

Overall, Memphis is a better-weather city year-round compared to MCI or STL, so you should get fewer cancelled flights and better operating performance. Mesaba also has CRJ-900 and CRJ-200 jets, and thus if the city continues to grow maybe we could get a hop to Detroit or Minneapolis, and thus even more international 2-hop flights.

I personally wouldn't want a company with zero operational experience outside of Hawaii running flights in icing conditions in a turboprop during a Midwestern winter. I doubt Hawaiian Island Air's Captains gained much icing experience while they were First Officers/co-pilots in Hawaii!

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