Why using a regional airport can make a difference

The year was 2007 and just about anyone who needed or wanted to fly out of West Michigan recognized there was a problem. Airline tickets cost too much, way too much.

For some reason, it was cheaper to drive to Detroit or Chicago and fly from either of those cities than to leave from an airport closer to home -- even if you paid to park your car overnight in one of those cities.

A number of business leaders decided something had to be done. They approached Dick DeVos and asked if a low-cost carrier could be convinced to come to West Michigan.

He didn’t know, but finding the answer to that question started a process that ended up not only bringing in a low-cost carrier but brought down the price on all carriers of flying out of one West Michigan airport -- at the same time creating what could be a model for how to measure and improve air service for a region.

Before we go any farther, let’s address the question: West Michigan? If you live south of Allegan you probably think West Michigan means Grand Rapids and its suburbs. And Southwest Michigan means Kalamazoo and neighboring cities.

In the process that unfolded, West Michigan took on a much broader description: Hold up your hand as if you were showing someone where you live. Draw a line down the middle. Everything west of that line to the water of Lake Michigan -- that’s the West Michigan we’re talking about and it has a population of 2.5 million.

Why is it important to identify West Michigan in this way?

"The airline industry makes decisions based on markets, not airports," says Dan Wiersma, executive director and treasurer of Regional Air Alliance. It’s a big piece of the puzzle that is airline price structures.

Wiersma was tapped in 2008 to look into ways to reverse what was happening with airline ticket prices in the area. At the time, neither he nor De Vos knew anything about the airline industry or how it set rates. It took them a year to deeply immerse themselves in the details necessary to sort out what was happening.

What they confirmed was the area did indeed have a problem.

Commercial Air Fares at Gerald Ford International Airport were ranked the second highest in the United States.

The numbers of commercial flights had been decreasing for years.

The numbers of available seats were dropping as fewer flights were serving the market.

At least 30 percent of the region’s flying public were deciding to use another airport in order to avoid ticket prices that were as much as 36 percent higher than what they could find elsewhere. What that meant was nearly 365,000 potential air passengers were taking their wallets to another airport in order to avoid paying what was costing them $100 million in higher air fares.

The Regional Air Alliance of West Michigan formed to try and turn the situation around.

Two Southwest Michigan companies -- MPI Research and Treystar -- understood what the Regional Air Alliance was trying to accomplish and signed on as supporters. They are part of the unique private-sector led initiative.

Specifically, the alliance wanted to improve the passenger experience of West Michigan air customers in a way that could be measured. The alliance also wanted to measure and improve how Gerald Ford International Airport was operating; to quantify the value that air service offers West Michigan; to identify ways to add airline service by legacy air carriers and help them grow and identify and recruit a low-cost air service provider.

Wiersma didn’t want to reinvent the wheel, so he set about looking for a model for getting such things accomplished. He couldn’t find one. With the Regional Air Alliance of West Michigan they actually were inventing the wheel.

As his work led him to meet with airlines, one thing Wiersma discovered is that airlines are used to mayors, city administrators and economic development officials lining up in their lobbies, waiting for a chance to plead their case for their airport. Without an airport a community is viewed as noncompetitive in the world of business, so the line of those hoping to keep their airports busy by recruiting new airlines is long.

When Wiersma visited airlines, he did not represent a particular municipality or a given airport. Instead, he had information about the region as a whole. Much of it painstakingly ferreted out using Freedom of Information Act requests and some put together by consultants hired to explore new ways of measuring what had been seen as intangibles. What resulted is that airlines listened when he came before them.

"We have a fundamentally different message," Wiersma says. "Not that we need them (the airlines), but that our community offers an opportunity that we think is compelling for them."

At first the airlines simply explained how they set prices based on their whole network and that reducing prices for one market was not possible.

He continued his hunt for a low-cost service, using as a selling point the commitment to an alignment of the interests of passengers, air carriers and airports. "West Michigan has become the poster child for best in class commercial air service," Wiersma says.

The low-cost carrier AirTran liked that message and decided to come into the West Michigan market in January 2010.  

Frontier Air followed. Soon each of the major carriers were lowering their ticket prices for passengers leaving out of Grand Rapids to stay competitive. (AirTran has since been acquired by Southwest Airlines and the alliance is waiting to hear what that will mean for local air service.)

Lower prices also became more possible because one factor airlines use in establishing rates is the number of people getting on airplanes. As ticket prices dropped the numbers of people flying rose as people previously priced out of the market began booking flights. Meanwhile, people who had been driving to far-flung airports were now flying out of Grand Rapids again.

Surrounding West Michigan airports have seen fare prices rise as they have correspondingly dropped in Grand Rapids. Wiersma says that is simply how the airlines set prices. As the number of people getting on planes rises the price of tickets drop in one area and go up somewhere else in the network. He says he’s been told by airlines that even as numbers of passengers at neighboring airports fall there will continue to be service to those airports, though those passengers may pay premium rates.

Discussions with area businesses emphasize the importance of low-cost air fare to the economic well-being of the region. Wiersma says it often comes up, frequently raised by businesses trying to attract younger workers who expect to have the ability to fly often and cheaply.

An area the alliance has just begun to explore is tourism and how regional airports could be best used as tourists are encouraged to visit West Michigan.
 
"We’ve never had a meaningful attempt to attract tourists flying into the area," Wiersma says. "The potential is staggering."

Kathy Jennings edits Southwest Michigan's Second Wave. She is a freelance writer and editor.

Photos by Eric Holladay.



Dan Wiersma of Regional Air Alliance of West Michigan.
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