BIZ: EN ROUTE TO A COMEBACK
On a scale from zero to 30,000 feet, business at New Orleans’ airport is nearing an altitude of about four miles, (or 21,120 feet,) local officials say. It’s not what you’d call “flying high,” but activity is in a strong climb.
Indicators of the airport’s improving status include the startup of an airline that will bring new nonstop service to six cities, stretching from Jacksonville, Fla., to Austin, Texas. Heavy air traffic surrounding this year’s Mardi Gras and rising expectations for Jazz Fest 2007, are further signs that the clouds over Louis Armstrong New Orleans International Airport are breaking up.
Still, New Orleans has considerable distance to go in order to bring airport traffic and revenue back to pre-Hurricane Katrina levels. Airport officials say they’re focused on the mission.
“We’re constantly communicating with the airlines to keep them informed of events coming up and to make sure they know the progress of our recovery,” says Sean Hunter, interim aviation director. “Air service continues to grow month over month,” he says.
Year-end reports showed that total passengers in and out of Louis Armstrong International topped 6.2 million last year. That was about 80 percent of the total for 2005, the year Hurricane Katrina struck the city and decimated activity in the final quarter.
In comparison with 2004, which set an all-time traffic high of 9.7 million passengers, last year’s passenger count lagged by more than 30 percent.
One aviation analyst says the numbers are not surprising given events of the last 20 months.
“The situation in New Orleans, as relates to Katrina, is one the airline industry has never had to deal with before, so they’re proceeding very cautiously in terms of returning capacity to the market,” says Tim Sieber, general manager of Colorado-based aviation research firm The Boyd Group. “Air service restoration in New Orleans is going to be a process, not an event. I think they’re taking it one day at a time,” he says.
Sieber, whose firm is a consultant to Louis Armstrong International, says it’s not easy to get a clear picture of local air traffic because air travel trends around the country are changing and the airline industry at large is under pressure.
Carriers have swapped large planes for smaller jets on many routes in an effort to increase load factors and cut costs. Many have also cut the number of flights they operate in airports that are not their hubs.
At Louis Armstrong International, the pressures are even more intense as the airlines try to assess current and future demand in the wake of the Katrina disaster.
Local airline capacity, based on total number of seats available, is about 35 percent below its pre-Katrina level. Continental, American and AirTran airlines have resumed service at their full pre-storm capacity, but three carriers that left the market after the storm — Air Canada, Frontier and Midwest — have not returned.
Southwest Airline’s local service reduction is particularly troubling. The carrier is still down 50 percent from the 377 weekly departures it offered before Katrina. While it remains the leading carrier in New Orleans, with a 24 percent market share, its reduced presence is contributing to upward pressures on pricing. “Southwest is the low-fare business model,” Sieber says. “They were the rate-maker in the business.”
Locally and across the country, the airlines’ capacity adjustments have served them well: Load factors are running high and per-passenger yields are up. The flipside for passengers, in addition to higher fares, is greater difficulty in reserving seats.
For the near-term, local passengers might as well bite the bullet. The carriers will move cautiously on service expansions as they watch for evidence of rising demand. Fortunately, they do appear responsive to the local marketplace. Continental Airlines, for example, added a substantial number of seats to accommodate demand surrounding Mardi Gras and a couple of large conventions that followed the celebration. The airline also boosted its flight schedule in anticipation of the New Orleans Jazz and Heritage Festival in April.
Delta Airlines recently added daily nonstop service between New Orleans and Los Angeles. In addition, AirTran expanded its schedule to Atlanta, and Northwest increased its round-trip service to Detroit.
Meanwhile, the airport expects a boost from this summer’s startup by ExpressJet Airlines. The Houston-based carrier will offer daily nonstop service from New Orleans to San Antonio and Austin, Texas; Kansas City, Mo.; Birmingham, Ala.; Jacksonville, Fla.; and Raleigh-Durham, N.C. The additions will give the airport 121 daily departures to 38 cities and will raise the number of carriers serving local passengers to 10.
Sieber sees the new airline as a bright sign. “ExpressJet is a good indicator of the future,” he says. “Clearly they took a look at the historical numbers and the rebounding tourism and made this decision. I think New Orleans is probably a slam-dunk for them.”
While he’s confident of the airline industry’s comeback in New Orleans, Sieber says the timing is difficult to gauge. Along with the challenge of forecasting the city’s repopulation and growth in its tourism and convention business, factors unrelated to the city also come into play.
The years since 9/11 have brought about a retrenchment that left the airline industry with fewer airplanes. That has led to intense competition among cities vying for the capacity, and it adds to the challenges New Orleans faces in reinvigorating Louis Armstrong International. Among other things, it means the city must continue scrambling to recapture the level of convention business it enjoyed before August 2005.
Despite the hits it has taken, “New Orleans remains a major tourism and convention destination,” Sieber says. “Every new convention booking the city can land will be a step in the right direction.”