Milwaukee sparks air wars

The ‘Southwest effect’ could cut into flights, fares in Rockford.

By Thomas V. Bona

BusinessRockford.com

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Southwest Airlines has finally moved into a second Chicagoland airport.

AirTran Airways is rapidly ramping up its service in the region.

Frontier Airlines is back from bankruptcy and looking to get in on the action, teaming with Midwest Airlines.

But that’s all happening in Milwaukee, not in Rockford. And there’s some concern that Milwaukee’s gains could hurt Rockford’s efforts to draw passengers from Chicagoland and Wisconsin.

“Milwaukee serves as a good outlet for (suburban Chicagoans) if they can’t find what they want at O’Hare,” said Brett Snyder, author of the airline industry blog The Cranky Flier. “The fact that Milwaukee has developed a strong low-fare carrier presence means that Rockford’s potential catchment as a low-fare carrier hub is smaller.”

Southwest, AirTran and Frontier have long been wooed by Rockford airport officials, who say their airport is a hassle-free alternative to O’Hare. And airport officials don’t think those airlines’ growth at Milwaukee will forever keep them out of Rockford.

While Milwaukee’s airport is convenient for those in its metro area and on Chicago’s north side, it’s not as easy a trek for those in the northwest Chicago suburbs or southwestern Wisconsin, said Mike Dunn, chairman of the Greater Rockford Airport Authority board of commissioners.

“The more people that can understand they can go somewhere (other) than O’Hare for air service, that they can get in their car and drive a little further ... helps us,” Dunn said. “Then they start looking and shopping for alternatives.”

Circling around O’Hare
Chicago Rockford International Airport officials say Southwest’s move into Milwaukee, after years of serving Chicago from Midway International Airport on Chicago’s South Side, doesn’t mean it can’t come to Rockford, too.

“I just like the thought that Southwest has gotten their act out of just Midway, (that) they’ve made a move,” Dunn said. “That helps them understand that their next move would be logically to Rockford to get on the northwest end of O’Hare. ... They’re basically circling the wagons around O’Hare.”

He compares it to the multiple airports around other big cities: Southwest serves four airports in the Los Angeles region, three around San Francisco and two around New York, while AirTran serves two New York-area airports.

But that may not be a fair comparison, said Alan Bender, an airline economist who teaches at Embry-Riddle Aeronautical University. Rockford is farther from the center of Chicago than the Los Angeles and New York airports are from their respective cities.

With all the airport competition, Rockford is “between a rock and a hard place,” Bender said.

“As long as you’ve got a big city with an airport that’s got capacity, that’s where airlines are going to cluster,” Bender said. “Rockford may be just too far away to be part of such an airport system.”

Driving fare battles
Additionally, Rockford and Madison’s Dane County Regional Airport will be hurt by the “Southwest effect” in Milwaukee. When Southwest moves into an airport, it causes average fares to drop and passenger traffic to increase.

“Smaller airports in the region are robbed of passengers as everybody drives an extra hour or two for low fares,” Bender said. “It’s like the Wal-Mart effect — how does a local store survive when Wal-Mart opens? It’s by specializing and offering something different.”

Allegiant Air, the largest carrier in Rockford, has succeeded with such a niche. It flies from smaller airports to popular leisure destinations a few times a week, which keeps its costs and fares down. At Rockford, its planes are typically 90 percent full.

But the low-fare war between Southwest, AirTran and Frontier/Midwest is already cutting into its business here.

“That’s likely to drive air fares in the region down to historic lows and keep them there for the foreseeable future, which will affect our ability to make money in RFD,” said Allegiant Vice President of Planning Robert Ashcroft.

“Without a doubt we’re offering fewer flights in RFD than if the battle of Milwaukee were not happening,” he added. “And that is unlikely to change until some rationality returns to that market, which will probably only happen if one of the players throws in the towel.”

But Direct Air, which resumes flights from Rockford to Punta Gorda., Fla., Wednesday, sees an opportunity now for newer carriers. Most airlines have cut flights and grounded airlines because the recession has slashed travel demand, said Direct Air President Ed Warneck. While the competition in Milwaukee will attract many budget-conscious travelers, they also could be attracted to low prices and free parking in Rockford.

More flights, more passengers
What’s holding the Rockford airport back is not quality of the product, but the amount of it, said Richard Doherty, president of Crystal Lake Travel Agency in McHenry County.

While he offers Rockford as an option for his customers, they don’t like flying on routes that have infrequent service. If a flight is canceled with the next one a day or more away, he said, their trip is in jeopardy. So they opt for O’Hare.

“Rockford’s airport seems to have a lot of the right things, and if some of the carriers would gamble, I think they’d see the passengers come,” Doherty said.

Doherty doesn’t see Milwaukee attracting many customers from his area.

But Tim Fitz, executive director of Camelot World Travel, thinks many of his clients in the Rockford and Chicagoland area will consider Milwaukee now that Southwest is there. Midway was too far away, but Milwaukee is a reasonable distance if the price is right, he said.

Fitz, though, encourages people to consider Rockford whenever they can. He finds the winter seasonal service to Cancun, Mexico, by Apple Vacations to be particularly popular.

“People are always going to price compare,” he said, “but when you add up all the bottom-line costs, including drive time and parking, Rockford is, a lot of times, going to come out ahead.”

If not Southwest, then who?
Industry analysts don’t think Rockford will draw Southwest, AirTran or similar airlines, but have other suggestions.

“I tend to think that Allegiant or an Allegiant-style model is Rockford’s best hope,” said The Cranky Flier’s Snyder. “I am intrigued by the ExpressJet seasonal flights (from Rockford to Branson, Mo.) as well. Traditional low-cost carriers aren’t likely to go into the market.”

Embry-Riddle’s Bender thinks Rockford should return to its roots and use incentives to lure legacy airlines and their regional jets to fly to hubs like Minneapolis.

But airline consultant Darryl Jenkins said that tactic didn’t work then and won’t work now. He thinks Rockford should be happy with what it has and focus on its more successful cargo operations.

“They certainly have fought the good fight ... but they’ve spent an enormous amount of money and gotten very little return,” Jenkins said. “It’s a beautiful airport, (but) the likelihood of them getting much commercial service anytime soon is very thin. Everybody’s already looked at it.”

Not giving up
Airport Executive Director Bob O’Brien, though, said it’s up to the region to prove the skeptics wrong. People need to consider Rockford first and take into account the total cost and experience. But they also need to tell their friends and families about it.

There are 2.5 million people within an hour of the Rockford airport and 8.4 million within 90 minutes, he said. Moreover, there are almost 100 million passengers getting on and off at Chicago-area airports now; if Rockford can nab just 1 percent of them it would have 1 million passengers.

And while that’s a long way away, the airport has gone from virtually no passengers and the 630th-busiest airport in the country in 2002 to 220,000 passengers and the 214th-busiest airport last year.

“I think people west and south of Milwaukee will come to RFD as we have products,” O’Brien said.

“I understand what people are thinking when they reach the natural conclusion that, ‘Oh no, (Milwaukee) got it, we won’t,’ but I simply don’t believe that,” he said. “I’ve talked with Southwest, I’ve talked with Frontier, I’ve talked with AirTran about triangulating the area. ... I’d say they’ve got two-thirds of it accomplished.”

Contact staff writer Thomas V. Bona at 815-987-1343 or tbona@rrstar.com.

MORE ROCKFORD AIRPORT NEWS
Graphic: Air wars: Milwaukee may be a threat
Graphic: Air passenger traffic up in October
Nov. 12: Longest-tenured airport commissioner steps down
Nov. 4: RFD traffic rises; first Branson flight full
Oct. 20: Direct Air stays positive about RFD
Oct. 11: UPS wants to be region's recruiting tool
Oct. 9: RFD doubles monthly passenger totals
Oct. 8: Feds defend RFD stimulus grant
Sept. 30: RFD seeks grant to lure more service
Sept. 22: UPS to deliver same amount of holiday work
Sept. 21: Rockford airport gambles on Branson flights
Sept. 15: Rockford airport starts Sept. strong
Sept. 9: RFD passenger volume continues to climb
Aug. 14: RFD hits million-passenger milestone
Aug. 6: More Allegiant flights boost RFD numbers

ON THE WEB
The Cranky Flier blog
Chicago Rockford International Airport
General Mitchell International Airport
Dane County Regional Airport
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