Today was a big day.
Today we finally learned from the airlines themselves that not only would a shiny new terminal not attract flights, it might cost us some of the non-stop service we now enjoy.
Ron Ricks and Bob Montgomery, the two executives at Southwest Airlines in charge of airport relationships and more or less deciding where Southwest flies or doesn’t fly, spoke today at the Mayor’s Airport Terminal Advisory Group on behalf of all the airlines that serve KCI. They testified what we pointed out last Spring: Terminals don’t attract flights, demand and anticipated profits attract flights. They also cited the recent problems in Sacramento saying that their recent billion dollar terminal project, that has resulted in airlines cutting flights to Sacramento, was a case study in “what not to do.”
This reality-check comes after several years, several million dollars and multiple single-terminal proposals presented by the Kansas City Aviation Department, apparently without input or indifferent to input from the airlines who would actually use and pay for them. Southwest, we now learn, is happy with KCI in its current configuration. And while they concede that some improvements could be made, they are relatively minor, not things their customers are demanding and could be made for a few million instead of a billion should we decide to do so. Other amenities promised with a new terminal such as new restaurants have already been added. TSA Pre✓™, something we were told would not be possible in the existing terminals, has been operating smoothly since late last year.
Kansas City currently enjoys exceptional air service for a market our size with about 50 non-stop destinations of which Southwest accounts for half. So how would a new terminal put that non-stop service at risk? Currently the fees KCI charges airlines per passenger are among the lowest in the country. Were we to spend a billion or so on a new terminal, a large chunk of that expense would be passed along to the airlines. The per passenger fee would rise dramatically and since ticket prices are based on consumer demand, the airlines can’t simply pass that fee along. It comes out of profits. At that point, Southwest has to consider whether or not a market like Memphis, who just lost a hub and is agressively trying to attract replacement service, is a more profitable place than KCI to hub that Oakland to Orlando flight or that LA to Baltimore flight. You see, the reason we are a connection stop for Southwest is because we are a profitable place for Southwest to land. Period. Remove those profits and they’ll remove those flights.
The next ATAG meeting will feature members of the business community testifying about their needs concerning KCI. Among them will surely be additional non-stop service. Pete Fullerton, President/CEO of the Kansas City Economic Development Council said as much in a Kansas City Business Journal article last year. But today we learned that last year’s mantra from single-terminal advocates of “build it and they will come” might be better stated as “build it and they will leave.” Just ask Sacramento.
Reality has finally landed at our KCI discussion. Let’s hope it has a long layover.