It’s been a rough two years for Bob Hope Airport, where a precipitous drop in the number of passengers using the regional airfield has meant a worrying drop in revenues.
Fewer passengers mean fewer receipts at parking lots, concessions and other revenue-generating enterprises that fund operations and pay for badly needed infrastructure upgrades.
Assuming what’s good for the airport is good for the airlines, the solution seems simple.
“If the airlines reduced their rates at Burbank and made it more competitive, there would be more passengers and we’d be in better shape; there’s no mystery to this,” said Terry Tornek, a member of the Burbank-Glendale-Pasadena Airport Authority.
The problem is, it’s not that simple.
In a discouraging fact of life highlighted this week by a report commissioned by the airport authority, what’s good for the airlines isn’t necessarily good for Bob Hope Airport, and in fact, what’s good for the airlines can put the two parties on two very different business models.
For the airport, the goal is to simply attract as many passengers as possible — more people using paid parking garages, more occupied seat fees to charge airlines, more concessions sales at the terminal.
For airlines, however, the most important goal is to deliver the highest return for shareholders, said Jack Penning, director of market analysis at Sixel Consulting Group, which compiled the report.
“They’re trying to drive the highest amount of revenue per flight versus the lowest cost per flight,” Penning said. “That balance doesn’t always lie in accordance with what’s best for an airport.”
That means flying fewer, fuller flights in smaller planes — not good for an airport trying to get more passengers through its terminal.
The situation was compounded in February 2012 when American Airlines pulled out of the airfield, taking with it about 7.5% of the total passengers.
A month later, airport Executive Director Dan Feger said they were facing “the most difficult budget year we’ve seen.”
More than a year later, it’s only gotten worse. In the first two months of this year, 575,717 passengers used Bob Hope Airport, down 10.4% from 642,789 during the same period in 2012.
Tornek said the source of the problem is simple: Higher fares in Burbank are driving fliers to Los Angeles International Airport.
For example, on March 31, a flight to Las Vegas was $120 out of LAX on multiple carriers. That same flight on the same carriers out of Burbank was $230.
“It’s not about calling out the airlines and trying to pick a fight … but I think it’s clear that the interest of the airlines and the airport don’t precisely align,” Tornek said.
Priorities diverge even at the most basic metric — the number of passengers. Because the airlines charge higher fares to fly out of Burbank, they can afford to shrug off flights that aren’t at capacity, and they do, often.
Flights departing Burbank are on average only 70% full — or about 2,500 empty seats per day, according to Sixel’s report.
Airlines still make money from the higher ticket prices and because lighter jets use less fuel.
Another constraint is Bob Hope’s voluntary curfew, which stipulates that morning flights shouldn’t leave until 7 a.m. Since carriers generally plan their first flights for 6 a.m., Burbank passengers can’t make the first slate of connecting flights at hubs such as Seattle and Denver.
Going forward, the airport’s path to success may involve attracting ultra-low-cost carriers, such as Allegiant, Frontier and Spirit, which sustain themselves on frugal travelers currently avoiding Burbank, Penning said.
Penning said that by keeping down fees charged to airlines, the airport is doing what it can. Bob Hope is by far the cheapest airport in the L.A. region for airlines, charging $1.97 per seat, versus around $14 per seat at LAX.
“I think you will see the airport chosen over time by the ultra-low-cost carriers,” Penning said. “It makes a lot of sense for them to use Burbank as L.A. instead of LAX.”
Airport spokesman Victor Gill said the airport is always pitching to new carriers, although he couldn’t disclose names.
But he agreed that the challenge for the airfield is clear.
“The airlines and the airport don’t necessarily have the exact same equation for success,” he said. “In the past, it was the more the merrier, but now ... we are not having the same number of bodies going through the airport.”