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Kenai survey hits turbulence over air fares

Posted: Friday, October 18, 2002

The topic of air fares largely dominated the conversation at a meeting Tuesday between the Kenai City Council, the city's airport commission and representatives from Era Aviation.

The purpose of the meeting was for the three groups to discuss the content of the air travel marketing survey the city plans to conduct. In its original form, the survey consisted of three phases. The first phase would be an analysis of air fares between Kenai and Anchorage compared with industry norms nationwide, the second phase would determine the travel habits of the local population, and the third phase would explore possible marketing and development strategies for the airport in the form of an Air Service Development Master Plan.

Paul Landis, senior vice president of Era Aviation, attended the Sept. 4 council meeting where the council was slated to vote on the proposed survey and voiced his discontent over the survey. Council members postponed voting on it until they and Landis could meet and discuss the matter further.

In the Tuesday meeting, many of the same issues discussed in the Sept. 4 council meeting were rehashed. Landis first refuted the accusation that came up during the council meeting that Kenai to Anchorage rates are the highest in the country.

"The thought that Kenai has the highest air fares in the nation simply isn't true," Landis said. "... You never had the highest fares in the nation and we never intend to have the highest fares among our stage length."

Landis brought fare comparison information from an Era analysis that ranked the Kenai to Anchorage route with other routes in the country of similar mileages, also referred to as stage lengths. The information showed that of the eight routes listed, Kenai had a fairly consistent and lower air fare rate than four other routes.

Landis attributed past increases in Era rates for Kenai routes to increased operating costs and the decline of the airline industry in general.

"It's bad times for airlines ... the affects of the industry are felt down to all of us," he said, also mentioning that Alaska Airlines, with which Era is affiliated, did turn a small profit this year.

"... You can't look at air fares without looking at the cost associated with it."

The argument over the purpose of the survey came up at this meeting at well, with Landis charging that the sole purpose of it is to solicit competition for Era.

"It keeps coming back to this, it's got to be that (the survey) is not all about attracting competition," he said. "This is about air fares and nothing else."

The council, airport commission and airport manager maintained the intended purpose of the survey is to come up with strategies to market and develop several areas of the airport, including attracting advertising, pursuing air service development grants, bringing in new airport-related businesses and soliciting other air carriers to create competition and lower air fares.

"It is a study of overall operation of the airport," Kenai Mayor John Williams said. "... I don't mind telling you I'd like to see competition in here. I think competition would be good for the whole community, (But that's) not the full point of the study."

Council members Pat Porter and Jim Bookey told Landis that they did not agree with the part of the survey that endorses soliciting another air carrier and that they would have sent the survey back to the airport commission to be redone if the issue hadn't been tabled at the Sept. 4 meeting.

"(The survey) would have been dissected and sent back to the commission, but we didn't get that far," Bookey said. "It's unfortunate how the memos came out. We didn't need to go there. I don't want to go out and get competition to compete with you, just like I don't want the city to go out and get competition to compete with me."

The discussion turned to whether an air fare study should be included in the survey.

Airport commission member Dan Van Zee, council members Amy Jackman and Joe Moore, airport manager Rebecca Cronkhite, and Williams spoke in favor of including a study of air fares and gathering other information about the travel habits of the local population, including how many people drive rather than fly to Anchorage and where people's final and original destinations are when they fly to or from Kenai.

Van Zee argued that gathering this information will make the airport eligible to apply for FAA development grants and will be helpful in marketing the airport in general. Cronkhite added that there has been some concern about Era rate increases among local citizens. Williams said information about air fares and people's travel habits does have a major bearing on the travelers who come to Kenai and that there should be a discussion of air fares in the survey.

Landis disagreed.

For one thing, he said studying passenger habits to find out where people are coming from and going to will not work because of the growing use of e-tickets, which makes it difficult to track that information.

Cronkhite agreed that the more e-tickets that are sold, the harder that information is to track, but if the air fare survey is done soon, accurate information can still be gathered.

Landis also said studying air fares is pointless because even if rates are lowered, that by itself won't draw more people to the airport.

"The air fares aren't the problem, and if they are the market will take care of itself," he said.

Bookey, Porter, and council member Duane Bannock said they were against including a fare study in the survey.

"Pricing is what pricing is," Bannock said. "Lower priced airlines have come and we didn't fly on them, that's absolutely a fact. I'm not real interested in spending a whole lot of money tearing apart air fares. I am interested in marketing the airport."

No consensus was reached at the meeting on whether an air fare study will be included in the survey. The commission will discuss the matter at future meetings.

Before leaving the meeting, Landis said he would make time available to continue to discuss the matter with the council and commission.

"We've had some difficult discussions here tonight, give yourself a pat on the back for the good work you've been doing here," he said. "I apologize if my bluntness has offended anyone. We will continue to work with you."

Landis was thanked for attending the meeting.

"Era is a customer of our town and we need to treat them that way," Porter said after Landis departed. "They're a customer and they can go somewhere else."

Once Landis left, Henry Knackstedt, chair of the airport commission, and Moore suggested the air fare study hit a nerve with Era, possibly because the company was afraid of what the study may reveal.

"We scared Era enough to come down here," Knackstedt said. "Something about it bothers me. I'm thinking maybe we were doing the right thing (in supporting the fare study)."



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