A surprising September surge for passenger traffic at Tucson International - Inside Tucson Business: Inside Business Travel

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TRAVEL A surprising September surge for passenger traffic at Tucson International

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Posted: Friday, October 28, 2011 7:00 am

As a play-by-play sportscaster might put it, "just like that" concerns are abating that passengers aren't responding to airlines' adding seat capacity at Tucson International Airport.

Passenger traffic at the airport was up 0.5 percent in September and while that's not a big increase, it came despite airlines' reducing seat capacity by 4.7 percent. The bottom line is the airlines filled 78.5 percent of their seats going out of Tucson's airport last month.

When airlines are looking at needing to fill 80 percent or more of their seats to be profitable, September's percentage comes closer to that than the 70.5 percent in August and 74 percent in July.

What makes the latest numbers even more remarkable is that September is typically Tucson International's least busy month of the year. That won't be the case this year, as the 280,989 passengers who went through the terminal last month was more than the 274,583 in August, which to date now stands as the slowest month of 2011.

This makes 2011 the first year since 1982 that September hasn't been the slowest month of the year at the airport. (For those reading tea leaves, it may be worth noting that 1982 was another year coming out of pretty steep recession so this year's numbers could be a positive sign about the economy in general.)

September was also one of only three months this year, that passenger traffic has been up year-over-year at Tucson's airport. January was up just under 1 percent over January 2010 and May traffic was up 0.5 percent.

Despite the positive turn, passenger traffic is down 2.3 percent this year through September.

American adds LAX flights

Here's another positive sign for passenger demand from Tucson International Airport: Effective Feb. 9, American Eagle will add a fourth daily round-trip to Los Angeles International. Airline officials said the response to the service has remained strong since the Tucson-LAX service was introduced in April.

LAX is the most popular destination from Tucson with Southwest also flying the route five times a day and United Express flying it four times a day.

Sky Harbor grows

At Phoenix Sky Harbor International Airport passenger traffic has been up for 12 consecutive months. The airport, which has released its data through August, says its numbers for that month were up 8.9 percent to a total of 3.4 million from 2010. Through the first eight months of the year, 27.5 million passengers have gone through Sky Harbor, up 6.1 percent from last year.

Flagstaff gets grant

People in Flagstaff grumble just like we Tucsonans that the only place you can go nonstop on a US Airways flight is to Phoenix. The difference is that Tucsonans have seven other airlines flying nonstop to other destinations. That isn't the case from Flagstaff where US Airways is Pulliam Airport's only airline.

The U.S. Department of Transportation has agreed to give Flagstaff an $800,000 grant to be used in the next two years as an incentive to add service to a second city, probably either Los Angeles or Denver. Flagstaff officials say passengers are paying an average fare of $58 more each way ticket when the premium should be more like $30 to $35. The incentive money could go to US Airways or any other airline Flagstaff persuades to start service.

The money was part of nearly $15 million the Department of Transportation handed out to 29 airports under the Small Community Air Service Development Program. This was one of the political hot potatoes that contributed to Congress failing to fund the Federal Aviation Administration in August. Republicans generally think the program is a waste of money.

Flagstaff was the only airport in Arizona to receive a new grant this year under the program.

Airlines' rough summer

You know it was a rough summer financially for airlines when Southwest reports it lost $140 million for the three months ended Sept. 30. The airline that has reported annual profits for 38 consecutive years, said the quarterly loss was related to a $239 million writedown because of accounting rules requiring it to record the value of fuel it bought in advance based on market value at the end of the quarter. Southwest said it would have made $122 million profit if it hadn't been required to mark down the value.

The same thing happened to Southwest in the third quarter of 2008 when it hedged its fuel buys before price drops.

American Airlines parent AMR Corp also reported a quarterly loss, of $162 million. The company also blamed the loss on fuel spending that it said was up 40 percent from a year ago. Ammerican was the target of Wall Street speculation earlier this month that was a candidate for filing bankruptcy. American officials say they are negotiating to get labor costs reduced and this week came to a tentative agreement with the Transport Workers Union. American is the only one of the so-called U.S. legacy airlines that has never filed for bankruptcy reorganization.

What happens to Southwest and American have greater impact at Tucson International Airport because the two carriers account for more than 56 percent of passengers traffic.

So far other airlines have generally reported profitable third quarters, though not as profitable as a year ago.

Airfare hikes

In the face of rising costs, airlines this week tried to boost fares for a second time in two weeks. The latest fare increase was comparatively small, ranging from $2 to $5 each way depending on the length of the flight. It was started Monday (Oct. 24 by United and Continental, which are merging, and matched that day by Delta and US Airways. Whether it sticks depends on other airlines - especially Southwest - following suit.

Rick Seaney, who runs the website FareCompare.com, said on his website that airlines have tried to raise domestic airfares 18 times this year and have been successful nine of those times.

Despite the fare increases, airlines are still facing weakened demand and have launched sporadic fare sales to counter that.

Sick of taxes?

Don't be surprised if the air-sickness bag in the seatback pocket on your next flight has a message on it asking, "Sick of Taxes?" It's part of a campaign launched this month by the Air Transportation Association protesting a proposal by the Obama administration to boost taxes related to airlines.

The proposal includes doubling the security tax to $5 each way and then increasing it another 50 cents per year to $7.50 by 2017. Obama also wants to create a $100 departure tax on all flights, except those operated by the military, emegency medical flights or planes with piston engines.

The taxes would raise $36 billion over 10 years, with $15 billion of it going to reduce the federal budget deficit.

Jeff Smisek, CEO of United-Continental, was quoted by the Houston Chronicle saying the airline industry is already taxed "more than sin," referring to the so-called sin taxes people pay on items made by the alcohol, tobacco and firearms industries.

Contact David Hatfield at dhatfield@azbiz.com or (520) 295-4237.

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