September 3, 2014
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A jetBlue effect?

When jetBlue initiates service from Green Airport to Florida this afternoon, there’s sure to be a lot of hoopla – as there should be. jetBlue has been on the Rhode Island Airport Corporation’s (RIAC) list to be enticed to the Ocean State for years. Its reputation for quality service and low fares is just what Green needs to build traffic. And traffic is the lifeblood to the airport.

Traffic is also critical to the airlines, so one would think the two are compatible and that the business is as simple as adding flights and filling planes. That it would put cars in RIAC parking lots, bring airport concessions plenty of business and fill up area hotels and restaurants; something that benefits everyone.

That’s what happened in 1996 with the new terminal, later named for Governor Bruce Sundlun who charged ahead with the two-tier $210 million facility and cleaved state airports from the jurisdiction of the Department of Transportation, despite his critics. Southwest Airlines brought its discount fares to Rhode Island and soon Green became the nation’s fastest growing airport. Monthly, RIAC would report double-digit passenger growth from the month for the previous year and it seemed the terminal, designed to handle 6 million people annually, would soon be at capacity.

Then everything changed with 9/11.

Green Airport has still not seen the traffic of the pre-9/11 days and, in fact, the slide in passenger traffic continues. Last month’s count, a decline of 13 percent, was especially gloomy.

Hurricane Sandy canceled hundreds of flights across the northeast and was a contributing factor, but, as acting RIAC director Peter Frazier points out, there are some other underlying factors at work aside from the storm. In a word, it’s the economy.

Businesses have cut back, meaning not as many people are flying. The same is true of vacation travelers.

The airlines have trimmed operations to reduce costs and maximize profits from those who choose to fly. We’ve seen it here. Smaller planes with fewer seats have taken the place of the larger ones; unprofitable service has been cut from the schedule; baggage that once flew for free is an added expense; and airplanes are packed.

Green’s ability to grow is limited by the number of seats. Without more seats, regardless of how many people want to fly, there are only so many tickets.

So, the fact that jetBlue is bringing in three additional daily flights to Green are a plus. Will it mean a jetBlue effect the way Southwest rapidly became Green’s dominant carrier?

We wish that it would. If that were to happen, as it did in the ’90s, it would mean improved business and more jobs, not only at the airport but also to related businesses throughout the state, in a matter of months.

Such expectation, unfortunately, is misplaced. The airlines, like businesses everywhere, have learned to take small steps, rather than leaps, in this recession. We doubt that jetBlue’s presence in this market will trigger a price war that would drive down fares and pump up demand to the point where airlines are adding flights and capacity.

What it does mean, as Frazier aptly pointed out, is that it sets the stage for when the economy turns around. jetBlue will be here. It is a player and that bodes well for Green and Rhode Island.


Comments
3 comments on this item

It is unfortunate that T. F. Green could not have greeted JetBlue with a modern, safer longer all weather main and crosswind instead of an airfield from the 1960s. We need to remove this tun-off to air carriers who now slam on the brakes and roar the reverse thrust to stop before the fence and must take off "pedal to the metal", a negative even in a good economy. High time to get the runway improvement project moving.

Latitude41:

Unfortunately RIAC had to "slam the brakes" on the long-needed safety improvements and environmental requirements at the airport it leases from the State of Rhode Island due to extraordinary fiscal incompetence over the years - like building an almost useless $300 million train station borrowing over $12 million to do so just this year - two years after it was opened for service. Other stupid moves were the buying up of residential properties at 40% to 50% over the market value for the same and buying a cell phone lot for over $1 million while leaving acres of cleared unused property on Post Road that it could have freely used for this purpose. This past year RIAC booked an $8 million net loss and there is no end in sight for future losses. It is no accident that RIAC has yet to identify the source of capital required to build the required glycol plant and safety improvements. The situation has become so bad that even Buddy Cianci -- a previously unwavering booster of airport expansion who is said to own commercial property on Airport Road -- has begun to question whether the airport can ever "come back."

In the meantime EDC - RIAC's parent - is suing the RIAC financial planner for its role in 38 Studios. How can EDC extracate itself from this other mess to position RIAC for future financing when the bond rating agencies have already said RIAC cannot borrow another dime????

I don't think you get how dire the capital situation is at RIAC. Think about this point - RIAC only has two years to complete the safety improvements and environmental actions. Yet it seems to have done nothing to solve the capital requirements puzzle to do the same. It would not suprise me to see EDC (run by the governor) go to the General Assembly looking for general obligation bonds to build this required structure at T.F. Green. If that happens, RIAC should be disbanded because the only reason for RIAC in the first place was to provide a conduit to raise capital funds for the airport. That move would free up enough funds in executive salary savings to pay the juice on the required improvements and eliminate the need for general obligation bonds.

Keep pushing for the improvements. And don't forget to call for the elimination of the cash drain which includes the overpaid RIAC staff.

RIAC has ALL READY cut corners. They would have preferred to complete the ORIGINAL plan for the safety improvements: acquire Airport Plaza propertries, relocate Airport Rd., & install required safety measures by the FAA by the 12/31/15 deadline. However, upon receiving their letter of funding request response for both projects within the last 2 months from FAA, RIAC KNEW they were going to have a funding problem. So they will shortcut the safety improvements & HOPE the remaining FAA funds will allow the runway expansion. With MOST government projects, I would anticipate an UNFORESEEN increase in expansion costs; this will result in RIAC increasing user fees or requesting RI officials to authorize bonds, or both.

I also expect a delay in completion in the final completion of the main runway expansion/relocation of portion of Main Avenue(maybe early 2018?)

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