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Airport survey doesn't fly -- yet

Era chides city for not asking carrier for data

Posted: Friday, September 06, 2002

An air travel marketing survey proposed by the Kenai Airport Commission has Era Aviation crying foul and accusing the city of sticking its nose into private sector issues where it does not belong.

The survey is the brain child of the commission and airport manager, who have been charged by the council to come up with ways to better market the airport and help it develop economically. The survey would cost $20,000, which would come out of the airport's operating budget, not the city's general fund. The money would hire a firm from Oregon, Sixel Consulting Group Inc., to conduct the proposed three-phase project.

The first phase would be an analysis of air fares between Kenai and Anchorage compared with industry norms nationwide. According to the survey proposal, this information would be gathered from travel agencies in the Kenai-Soldotna area. The second phase would determine the travel habits of the local population.

These two phases would be research elements, gathering information for the third and most important phase, which would explore possible marketing strategies in the form of an Air Service Development Master Plan. The point of the plan would be to give the commission information on what marketing avenues it should explore, including soliciting another air carrier, advertising, pursuing air service development grants and bringing in other airport-related businesses.

The proposal was scheduled to be voted on by the city council at its Wednesday meeting. Before the vote, airport commission member Dan Van Zee urged the council to support the proposal.

"On the Paul Harvey radio show, he said we have the highest air fare for passenger mile in the nation," he said. "I'm sure you'll agree we don't need that kind of recognition."

A full-fare, one-way ticket from Kenai to Anchorage is $87. Round trip is $174. A ticket purchased seven days in advance in $77 one way and $140 round trip.

Van Zee said the survey would be a good place to start in reversing the trend of lower enplanement rates and in boosting airport marketing.

Paul Landis, senior vice president of Era Aviation, addressed the council next. He listed several points of contention with the proposed survey. The first was that Era was not invited to be part of the survey.

"If you have a problem with Era, let's sit down and talk," he said. "I guarantee we can do it much better personally than anybody can. ... We have been actively studying the market day in and day out for the last 19 years. Why would you spend $20,000 before you can talk to the carrier in the market? I'll give you that information for free."

Landis did not approve of the survey's tactic of gathering information essentially about Era, like air fares and spillage rates (how many people are driving to Anchorage instead of flying, for instance), from travel agencies. Less than 35 percent of tickets are done by travel agents, Landis said, while he could provide the commission and council with information about spillage rates per year, the state of the industry pre- and post-Sept. 11, the cost of a new aircraft, the cost of upcoming security measures and other subjects.

"The omission of Era in this process strikes me as nothing but adversarial," he said. "After 19 years, we should at least give it a try."

While Airport Manager Rebecca Cronkhite said the Era station manager in Kenai was made aware of the proposed survey, she agreed Era was not asked to contribute information. One reason Era was not involved was because the commission wanted an unbiased, outside perspective on the air travel situation, she said. The other reason was because one of the goals of the survey was to solicit another air carrier into Kenai.

"I didn't feel it was appropriate to ask Era for confidential records when we intended to use that information to go to other airlines who compete with Era to solicit them to come to the (Kenai) market," Cronkhite said.

Landis took offense to the council involving itself in air fares and soliciting competition in the first place.

"Trumpeting this to the community is almost like declaring an act of war on a local business," he said. "(In) what other industry have you tried to bring in another business into the community? ... I don't believe that a community council should be in the business of subsidizing an air carrier."

According to Landis, Era's current fares are due to many industry factors that have caused operating costs to increase. If the rates are too high and a market exists, another carrier will come in on their own, he said.

Two members of the audience echoed Landis' arguments.

"I think the city needs to be extremely careful trying to control private enterprise, "said Cherie Brewer, president of the Kenai Chamber of Commerce Board of directors. "It's not the city's problem if Era's losing passengers, it's Era's problem."

Kenai resident Blaine Gilman argued government's role should be small and questioned how beneficial the survey would be.

"I don't think you're going to get much for $20,000," he said. "I just don't think it's money well spent. Maybe what you can do is go talk to this gentleman from Era and explain your problems. It seems strange to me that there is no conversation with the local carrier to see if there's not some other ways tickets can come down."

Kenai Mayor John Williams said the city's interest in Era's rates is largely due to public concern.

"There are some factors here that need answered," Williams said, for example why it costs more to fly from Kenai to Anchorage than it does to fly from Anchorage to Fairbanks. " We are often approached by people saying 'why can't you figure this out?'"

Another reason for the city's involvement is its economic interest in the airport.

"The city developed that airport into a multi-million dollar facility," Williams said. "It is the responsibility of the city to see to it that that airport grows and goes. If it weren't for that airport, the city wouldn't be in the economic situation it is in now. We challenged the commission and ourselves to grow and earn more, and we intend to do that."

Williams, council member Amy Jackman, Van Zee and others refuted Landis' charge that the main purpose of the survey was to bring in competition in response to Era's raised rates.

"We've been looking at a broad variety of issues," Williams said. "This study is not a singular issue pointed at Era Aviation."

Landis in turn pointed out that the memo from the airport manager to the city manager introducing the proposed survey was titled "Proposal for Air Fare Study," that the purpose of the first phase of the study is to gain fare information and that the first "whereas" listed on the ordinance document stated "the city is concerned with the high cost of air travel and decreasing enplanements at the Kenai Municipal Airport."

"How does that not sound like you're coming after Era?" he asked.

Williams again responded that air fares and solicitation of new carriers are a part of the project, not the entire goal.

In the midst of the discussion, council member Pat Porter made a motion to table the ordinance until the council and commission could meet with Landis and decide what the proper course of action should be. Tableing the ordanance means the councle does not vote on it at that time, but it can be brough back in a later meeting.

Jackman urged the council to go ahead with the study, saying the airport might miss out on grant opportunities and that the city and commission should explore all options available.

Council member Jim Bookey spoke against the ordinance. Bookey said he believed a survey is needed, but wasn't sure this is the right one.

"I was seriously concerned with this ordinance when I read it," he said. "I have a hard time with $20,000. ... I'm private sector hard-core. I fully believe the fair market value will balance out. I stand here and shiver when think we are going to get involved in this."

The council ultimately voted five to one (in council member Joe Moore's absence) to table the ordinance. Williams, Bookey, Porter and Duane Bannock voted to table the ordinance, while Linda Swarner and Jackman voted against the motion to table.

Landis said he would be willing to meet with the council and commission in an open-minded discussion to talk about the factors contributing to air fares and other matters.

"Will I participate in helping the city attract another carrier to this market? No. Will I help the city understand Era, yes," Landis said.



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