Economic Development

Grounded

If you want to fly into Rialto, California, you'd better do it soon. The airport in this city of 100,000 people, located 55 miles east of Los...
March 31, 2009
 

If you want to fly into Rialto, California, you'd better do it soon. The airport in this city of 100,000 people, located 55 miles east of Los Angeles, is decidedly modest -- just a couple of runways, a small terminal building with a little restaurant and a pilots' lounge. And it's general aviation only, meaning there's no regular commercial service. Still, private propeller planes and small jets use the airfield, which handles about 80 takeoffs and landings every day.

But not for long. By this time next year, the city of Rialto, which owns the airport, expects to shut it down. Rialto has been losing money on the facility since the mid-1990s, when nearby Norton Air Force Base was converted into San Bernardino International, a commercial airport. Rialto is still hashing out the details over the exact value of the property, but the city stands to make about $26 million in profit from selling it to a developer. The Federal Aviation Administration will net an additional $50 million, most of which will be used to help relocate businesses from the Rialto airport and improve the facilities at San Bernardino.

As Rialto city councilman Ed Scott sees it, the airport sale isn't just about profit. "This benefits Rialto because we'll no longer have a loss at the airport," Scott says. "But also, it was just the right thing to do. We didn't know how to run an airport. We struggled for a lot of years, but it became necessary for us to realize that we in the city government are just not good operators of an airport."

Not long ago, most aviation experts thought small airfields such as Rialto's would be handling more and more of the nation's air traffic. Especially after 9/11, when added security measures made flying an even more stressful affair, smaller airports anticipated an influx of travelers looking to bypass the hassle of large-airport travel. Meanwhile, growth in private-jet travel -- including corporate jets, time-share programs and air-taxi services -- was hailed as a savior of small airports.

It hasn't exactly worked out that way. The small-jet market was slammed, first by skyrocketing fuel costs and then by the economic recession. Even before bailout-seeking auto executives were taken to task for flying their company jets from Detroit to Washington, the phrase "private jet" was becoming synonymous with corporate excess. For small cities that do have commercial air service, things look even more uncertain. People have been flying less as the recession has deepened. Airlines are cutting routes to save costs. Other routes have been lost due to airline mergers or bankruptcies -- 14 carriers declared bankruptcy last year.

Losing airline service can be devastating to a city. When an airline pulls out, an airport loses revenue from gate fees and landing-rights payments. Peripheral businesses suffer, too: When no passengers are flying out of an airport, then no one is buying sandwiches or newspapers from the airport deli. If private planes stop flying, money dries up for aviation maintenance and repair shops. Other losses are less tangible and more emotional -- and probably more important. Cities tend to believe that air service is crucial for attracting new businesses. Plus, airports have long been tied to a sense of community pride. The loss of air service can be a stinging blow to civic ego. Decisions such as the one Rialto made to give up on its airport are rare: Usually, cities will do almost anything to try to keep the landing lights on.

One city that's very familiar with the fight for flights is Salem, Oregon. The capital city has struggled for years to attract and keep commercial service. After Horizon Air pulled out in 1993 due to weak ticket sales, the Salem airport languished without any commercial flights for more than a decade. In 2001, the city decided to push hard to attract a carrier. Salem spent more than $1 million on a new runway. The federal Department of Transportation kicked in $500,000, and the local chamber of commerce cobbled together another $500,000 to fund a travel bank, a prepaid fund for airline tickets.

It worked. In June 2007, Delta started twice-daily flights from Salem to its Salt Lake City hub. Salem's mayor boasted that her city was back on the map. To Alan Alexander, Salem's airport manager, the appeal of nearby air service seemed obvious. "People appreciate the convenience of a local airport that's easy to get to and where it's easy to park," he says.

As it turned out, not enough Salem travelers felt the same way. Many of them still preferred to drive an hour north to Portland, whose airport offered hundreds of daily flights -- most of which were cheaper and didn't have to start with a jag to Utah. Salem begged its residents to fly local. The airport's Web site blared, "Support your hometown airport!" The site included a trip calculator showing how much more money travelers would spend by driving to Portland. It also reminded them of the hassles of dealing with the bigger airport's longer security-checkpoint lines.

Seventeen months after flights began, Delta pulled out of Salem. Delta's planes -- 50-seat regional jets -- had been 70 to 80 percent full, on average. But Delta said the flights needed to be at 85 percent capacity to be profitable. The last flight departed in October 2008. Once again, Salem finds itself with no commercial service.

Now, the city is going back to the drawing board. Enough passengers did fly in and out of Salem in 2007 and 2008 for the airport to qualify for $1 million in new federal funding through an airport improvement grant. The airport will use the money to renovate and expand the lobby in its terminal, and to improve the taxiway used by planes to get to and from the terminal. Alexander hopes the improvements will help attract a new carrier -- preferably one known for low fares. Still, he acknowledges it'll be difficult to compete with Portland. "Airline customers are getting pretty savvy," Alexander says. "The Internet's everywhere. You can check on a lot of flights at a lot of airports in no time."

Salem isn't alone. Many of the nation's smaller cities have seen their commercial service disappear in recent months, as airlines slashed costs and the recession deepened. More than 400 airports saw their flights cut last year. And nearly 30 U.S. cities lost service altogether, including Wilmington, Delaware; Lake Havasu City, Arizona; and Boulder City, Nevada. "Smaller airports are under a lot of stress right now," says Patrick Murphy, an airline consultant based in Washington, D.C.

Alexander says Salem isn't giving up. "The community really feels like, to be a competitive city, we really need a commercial airline. We think service will return. I don't know when."

For small airports, several factors are changing the math of economic viability. One is the increasing popularity of budget carriers. "Low-cost airlines serve virtually no small communities, and they now carry more than a third of all passengers," Murphy says. "People will bypass their local communities to drive two hours to catch JetBlue or Southwest or AirTran."

Another problem is the decline of the 50-seat jet. When they were first introduced in the 1990s, these aircraft became very popular for airlines looking to serve smaller, regional markets. But rising fuel costs changed the equation. Airlines are increasingly turning to larger planes that seat 70 or 80 passengers. The newer planes use fuel more efficiently, and they increase the airlines' profit margins. "In the long term," says Murphy, "many of these smaller jets are going to be phased out." Communities that struggle to fill 50-seat planes will find it impossible to justify 80-seaters to the airlines.

And what about private air travel? Aircraft-sharing programs and the introduction of "very light jets," which seat four to eight passengers, were expected to increase traffic at small airports. "There was a great enthusiasm for that," says Murphy. "That was going to be the way business travelers were going to fly. But the whole trend is nothing like what people predicted." Private jets just haven't attracted passengers, and the recession has made these jets even less popular. Besides the added cost, businesses worry about the perception of personal air travel, Murphy says. "There's a shyness on the part of business executives to fly by private jet."

Cities do have a few ways they can go about trying to attract new carriers. An airport may reduce or waive landing fees, or it may assist an airline with local advertising costs. Improvements to physical facilities such as runways and terminals can add to an airport's appeal. And it's important to think broadly about air service. Cities tend to view air travel as it relates to their business community and business travelers. But some places are finding that a little flexibility can go a long way.

That's been the mantra in Hagerstown, Maryland, a city of 40,000 located about 70 miles west of Baltimore. After years of unsuccessfully courting an airline to serve business travelers, Hagerstown recently landed Allegiant Air, a carrier focused on delivering leisure travelers to tourist destinations such as Las Vegas or Myrtle Beach. For Hagerstown, Allegiant's arrival meant twice-a-week service to Orlando. When that route proved to be successful, Hagerstown had an easier time attracting another carrier -- a regional airline that has just begun offering four flights a day to Baltimore, where travelers can connect to nonstops almost anywhere in the country.

Nothing comes easy for small airports, however, and the situation is likely to get worse before it gets better. The modest success of a place such as Hagerstown offers some hope that lobbying an airline can work. But when the roar of aircraft engines goes quiet at the hometown airport, local officials might want to keep the Rialto option in mind, too. "It sounds almost insultingly simple-minded," says Michael E. Levine, a former airline executive who now teaches law at New York University. "But the question of whether there's going to be service to a city comes down to whether or not it makes money.

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