The National Academies

ACRP 03-29 [Completed]

Effects of Airline Industry Changes on Small- and Non-Hub Airports

  Project Data
Funds: $300,000
Research Agency: GRA, Incorporated
Principal Investigator: Dr. William Spitz
Effective Date: 10/16/2013
Completion Date: 8/31/2015


Air service at small- and non-hub U.S. airports has changed significantly since the onset of the recent recession.  Some of the most significant changes include the following:
  1. In general, there have been service decreases at small- and non-hub airports accompanied by a shift or decline in overall airline seat capacity.
  2. Airline consolidation coupled with an increase in disciplined management of seat capacity, particularly for domestic service, has helped to minimize costs while exerting increasing, upward pressure on airfares. This emphasis on managing seat capacity has resulted in rigorous evaluations of individual routes to maximize airline profits and eliminate “unprofitable flying,” leading to increased passenger load factors averaging more than 80% for many airlines. 
  3. Fuel costs per enplaned passenger have continued to increase with major impacts on airline profitability. It is not only the increasing costs but also the volatility of crude oil prices that have forced airlines to develop new strategies to increase revenues and reduce costs—strategies which have, in turn, affected airline service at nearly every U.S. airport.  In response, there has been an increased emphasis on fuel efficient aircraft, including a shift from short-haul to long-haul capacity to increase overall profitability. This emphasis on increased fuel efficiency has led to a change in fleet mix with decreased use of smaller, regional jets in favor of larger, newer aircraft—a change that has had and will continue to have an impact on availability of service to small- and non-hub airports.
These evolving conditions raise questions about the potential long-term effects of the changing airline business model on future travel demand, traveler behavior, and levels of service into primary as well as smaller markets.  The reduction in service at small- and non-hub airports can be especially severe, affecting local economies that rely on access to the air transportation system. 


The objectives of this research are to (1) identify and quantify impacts, on small- and non-hub airports and the communities they serve, of changes in commercial service resulting from airline consolidation, fleet realignment, and other factors; and, based on this impact analysis, (2) develop strategies for maintaining or achieving desired commercial service at these airports in response to changing market conditions and airline business plans. The definition of small- and non-hub airports should conform to the Federal Aviation Administration’s “Airport Categories.”

In this analysis, “impacts” should include, but not be limited to, an assessment of changes in commercial service, enplanements, infrastructure requirements, community economic impacts, and airport revenues and costs. Commercial service measures could include frequencies, number of seats, fleet mix, number and type of non-stop and connecting destinations, number of carriers, and fares. 


The research plan encompasses tasks required to develop strategies for addressing the impacts of changes in commercial airline service at small- and non-hub airports; and this plan addresess a broad range of issues and needs that affect these changes.  In a broad sense, the work plan includes, but is not limited to, the following components:
  1. A base of knowledge of current conditions on which to evaluate and structure strategies for airports to address changes in commercial service at small and non-hub airports:
    1. A targeted review of literature and other available resources related to airline industry changes and the impact of these changes on small- and non-hub airports (see Special Note B).
    2. An assessment of changes in commercial service at small- and non-hub airports from 2007 to the present. Are these changes proportionate to those experienced throughout the industry? In particular, how much capacity has been lost at small- and non-hub airports? Are there examples where the development of new service has stimulated demand? 
  2. A process to elicit airline perspectives on causes and impacts of airline industry changes on small- and non-hub airports, including an identification of those factors airlines use to make scheduling and fleet decisions.
  3. Case studies of airports that have used innovative strategies to maintain desired levels of service.  These case studies should include, but not be limited to, evaluating alternative financing, marketing, and intermodal strategies. These case studies may provide an identification and assessment of the following characteristics or conditions:
    1. Market conditions at small- and non-hub airports that have supported additional commercial service.
    2. Incentives that have contributed to the successful expansion of commercial service at small- and non-hub airports as well as those that have failed.
    3. Collective airport strategies that have been or could be applied in achieving commercial service in regions served by multiple airports.
  4. A set of strategies that small- and non-hub airports can use to maintain connectivity to national and global markets, which may include intermodal options, incentives to attract commercial airline service, and specific approaches related to community and regional economic development. 
  5.  Assessment of possible near- and long-term strategies and how these strategies may vary as a function of specific airport characteristics.
The research plan also includes appropriate checkpoints with the ACRP panel: (1) a kick-off teleconference meeting (held in mid-October, (2) one face-to-face meeting to review the interim report, and (3) web-enabled teleconferences tied to panel review and ACRP approval of other interim deliverables as appropriate throughout the research program.

The final deliverables include a comprehensive report that documents the entire research effort and other deliverables as described in the research plan. Deliverables also include an executive summary that can be used to present key issues and conclusions to critical stakeholders.
STATUS: The Final Report has been released as ACRP Report 142.

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