Southwest Airline’s decision to cease service to Branson Airport in mid-2014 appears to be another obstacle for the struggling airport, but a local aviation expert says little change will come of it.
“The airport is not going to close, and I really don’t see any changes in the near future,” said Michael Hynes, of Hynes Aviation Services. “While Branson has been a good routing for Southwest — the average load factor was 81 percent and the revenue per seat was above average — for Southwest, being average is not good enough; you’ve got to be the top tier. Moving from Branson to (Washington), D.C., or from Branson to New York makes good business sense.”
On Dec. 5, the airline announced its last flights at Branson Airport will be June 6, 2014. Southwest will also cease service at Key West International Airport in Florida and Jackson-Evers International Airport in Jackson, Miss., according to the airline.
Southwest announced, on Dec. 5, it also secured 22 takeoff and landing slots at LaGuardia Airport in New York as a part of the merger between US Airways and American Airlines.
Hynes said the vacancy left by Southwest is an opportunity for smaller airlines to come in.
“I think the presence of Southwest in Branson kept a lot of other airlines from wanting to try to come into Branson,” he said. “Indirectly, this might be a good move for the airport. Southwest has proven that certain markets exist. For (Branson Airport Executive Director) Jeff Bourk to contact another airline to step in and take over the Southwest route should not be difficult.”
Bourk declined to comment further than the official statement released by the airport.
“(Bourk) has got until June to get somebody else to step in, so that gives him plenty of time,” Hynes said.
Southwest leaving Branson Airport in 2014
Southwest Airlines will leave Branson Airport after just 15 months of service.
“Unfortunately, the level of local demand no longer allows Southwest to profitably serve these markets,” said Bob Jordan, Southwest’s executive vice president and chief commercial officer. “Southwest takes pride in becoming not only a great choice for air travel in the cities we serve, but we also become a member of the community. These decisions are never easy.”
Southwest began service at Branson Airport in March after the airline took over AirTran Airways in an acquisition, and the airline’s arrival to the airport was called a “game changer” by airport management just three months ago.
Southwest increased seat availability at Branson Airport in 2013 by 58,000 compared with 2012, and intended to continue the trend into 2014, according to Bourk.
“We are very disappointed and surprised to hear about Southwest Airlines’ decision to cease service to Branson on June 6, 2014,” a statement from the airport reads. “It appears Southwest’s decision was based on many factors not related to Branson’s performance.”
The statement from the airport lists the small station size at Branson Airport, a shrinking Southwest Airlines fleet in addition to more open gates at larger airports as factors in the decision.
Southwest spokesperson Michelle Agnew said the decision came from a look into the viability of all of the markets within the Southwest network.
“At this point in our industry, we really have to take a hard look at some of the markets and those ones that aren’t meeting our demand in revenue, seats (and) customers, and we just have to make those tough decisions some times,” she said.
Agnew could not provide specifics for revenue or enplanement goals for specific cities.
“We did enter into an agreement with the Branson Airport when we commenced service,” she said. “We did have certain expectations that came along with that agreement and at this point, we feel our long-term goals in Branson were not going to be accomplished.”
Agnew said the 2014 Southwest Airlines budget and operations call for increased activity with the same number of planes, which means each aircraft in the fleet must be put to best use to generate revenue.
“With the AirTran acquisition, in 2014 we’re going to begin to fly international routes,” she said. “AirTran has a number of Caribbean destinations as well as in Mexico. We’re not buying more aircraft, but we are trying to do more with our aircraft, so we’re serving more cities.”
A recent merger between American Airlines and US Airways created an attractive opportunity for Southwest.
“As a part of the merger, The (U.S.) Department of Justice said American (Airlines) and US (Airways) had to give up a large number of gates in (Washington) D.C., LaGuardia and Boston,” Hynes said.
This isn’t the airport’s first struggle
Branson Airport wasn’t without financial struggle, but appeared to be turning that around. The airport reported losses annually since 2010, according to online filings with the Municipal Securities and Rulemaking Board.
The airport reported $50 million in losses from 2010 to 2012, according to the filings. Losses were significantly lower in 2013 compared to 2012 after Southwest service began. The airport has posted $7 million in losses as of the end of September 2013, compared with $14 million the same time last year.
A letter to bondholders issued Dec. 5 states the bond trustee, UMB Bank, will not make the semi-annual interest payment of approximately $3.4 million scheduled for Jan. 1, 2014.
The letter reads, “The bond trustee is evaluating this very recent announcement and is in communication with management of the airport. The bond trustee is seeking bondholder participation to discuss what action may be appropriate in view of this announcement.”
A recent study by the Missouri Department of Transportation showed the Branson Airport had a $91 million economic impact on the area in 2012 and created 1,460 jobs. Branson Airport was placed fourth in economic impact among airports in the state, behind Kansas City International Airport, St. Louis International Airport and Springfield-Branson National Airport, according to MoDOT.
Branson/Lakes Area Chamber of Commerce President Ross Summers said he believes the impact on tourism will be minimal.
“We’re going to have to back up and just take a look,” he said. “It probably won’t have a huge immediate effect on tourism numbers. In relative terms, the number of people coming in through the airport strictly for tourism was small, but it had the potential to grow. Of course, we lose that potential.
“We’ve still got really good air service from the west through Frontier in Denver. We still have complete confidence in the airport. They are continually out searching for additional carriers and that effort never really stops.”