Published: 7/8/2012 - Updated: 10 months ago

Other airports boom as Toledo's nose dives

Results revive questions on management

BY IGNAZIO MESSINA
BLADE STAFF WRITER

When Vision Airlines pulled out of Toledo Express Airport last month and became the eighth carrier in less than a decade to give up on the small, sometimes desolate airport in western Lucas County, questions were raised again about the viability of the airport and whether it needs a leadership overhaul.

Passenger traffic at the airport, owned by the city of Toledo and operated by the Toledo-Lucas County Port Authority, has been in a nose dive.

Traffic declined in 2011 for the eighth straight year and is expected to be down again this year. The past three years were record lows for the 56-year-old airport.

A survey by The Blade found that Toledo Express had the lowest passenger volume among area regional airports save for Youngstown. The Dayton, Akron-Canton, Fort Wayne, Ind., and Flint, Mich., airports bested Express by hundreds of thousands of passengers yearly.

For years, the refrain from port authority officials about sluggish passenger statistics was to blame the proximity of Toledo Express to Detroit Metropolitan Wayne County Airport, but the Akron-Canton Airport is closer to Cleveland Hopkins International Airport and it's booming.

"We run the airport like a business," said Rick McQueen, Akron-Canton Airport's president and chief executive. "We don't look at us as being a public entity, but instead a business where they are tenants of ours and they appreciate that we operate like a business."

That's the kind of spirit and attitude some say is lacking at Toledo Express.

Former port board member R. Michael Frank, a Toledo attorney, has called for a major shake-up, with the airport taken away from the port authority and given to a dedicated airport authority.

Toledo Mayor Mike Bell, who makes appointments to the port board, said it may be time to explore a change in who runs the airport.

"For many years, we have all attributed the failure of passenger service at Toledo Express on its proximity to Detroit Metropolitan Airport," Mr. Frank wrote in a letter to Opie Rollison, port board chairman. "How then does one explain the self-sustaining success of Flint and of Akron-Canton? One possible explanation is that Akron-Canton and Flint are each governed by a separate airport authority."

Mr. Frank said Friday that his proposal is based on research into Akron-Canton's success. "It seems to me the board ought to consider the success of Akron-Canton … something needs to change, and that is one alternative that appears to be successful," he told The Blade. "They are close to Cleveland Hopkins Airport — as close as we are to Detroit — and they are successful."

Financial woes

Toledo Express has experienced multiple disappointments with passenger and cargo businesses. BAX Global Inc. last year closed its U.S. air hub at the airport and eliminated 700 jobs. That sent Express into a financial tailspin and put it in the red after more than a decade of profitability, Port Authority President Paul Toth said.

In February, FlightSafety International announced it was shuttering its pilot-training center at Toledo Express and consolidating its functions with its Columbus facility. The closure affected 57 full-time employees.

Because of the loss of BAX, landing-fee revenue collected at the airport went to zero in 2012 from $1.125 million in 2010.

The airport had a surplus of more than $1 million in 2008. The surplus fell to half that in 2009 and bounced back to $616,487 in 2010. The airport had a deficit of $238,571 last year; this year, the airport is projected to lose $705,972.

Board member Nadeem Salem said the group has talked about a separate airport authority, but said that discussion needs to be conducted with the city because it owns the facility.

"It's definitely a drain, and those dollars are being made up by the port authority by the other sides of our operations," Mr. Salem said.

Mr. Rollison said he does not support placing the airport under a separate authority "for the primary reason that the airport authority would have no other financial support other than a levy.

"If a levy was not available, it wouldn't be able to operate," he said.

He said there's no reason to believe Toledo Express would do better under an airport authority.

A. Bailey Stanbery, another port board member, said he also is not in favor of taking the airport away from the port authority.

"Paul Toth is working very much with discount airlines to come in here," Mr. Stanbery said.

Mr. Toth tried to assuage concerns that the airport is a lost cause. Nothing could be further from the truth, he said.

He said he is asked "at least once a week" if Toledo should give up on passenger travel — relinquishing it all to Detroit Metro — and solely concentrate on cargo.

"The response is always, ‘You need to understand how airports are funded, how grant funding comes,'?" he said. "The funding that we get to maintain that airport, which supports 1,400 jobs and $100 million worth of economic impact at the Air National Guard, it supports Toledo Jet Center with 40 to 60 jobs, it supports National Flight Services — there is a lot of employment out there that that airport supports."

He said federal funding for airports is driven by, and dependent upon, passenger traffic. A $10 million runway reconstruction project, for example, will be funded up to 95 percent by the Federal Aviation Administration. But that would not be the case without some passenger traffic, Mr. Toth said.

"We believe we can maintain some level of service. We don't have visions of grandeur."

Asked about low passenger volumes, Mr. Toth also pointed north to Detroit and the resistance from local companies to using Toledo Express exclusively. "It's no secret Detroit is the 8,000-pound gorilla 45 minutes from Toledo," Mr. Toth said.

Last regular airline

Toledo's remaining regular airline service is provided by four weekday round trips — fewer on weekends — by American Eagle to Chicago's O'Hare International Airport. Allegiant Air has nonstop flights several times a week to Orlando/Sanford and St. Petersburg/Clearwater, Fla.

The ability to fly from a small airport to Chicago every day, or to Orlando twice a week, is often outweighed by the extreme inconvenience for travelers going elsewhere.

Susana Youngsteadt was on vacation with her husband on the West Coast last month when they got a call to get to Toledo. Her mother didn't have much time to live.

The couple flew from Portland, Ore., to Seattle, to Chicago, to Toledo Express Airport. Seventeen long hours later, the Youngsteadts were in the Toledo area to see Ms. Youngsteadt's mother before she died.

"We had to get back so we did what we had to do to get here," Mrs. Youngsteadt said.

Getting to Toledo was arduous, but getting home to Winter Park, Fla., from Toledo was a breeze. They took Allegiant Air's nonstop flight to Orlando-Sanford Airport.

It leaves only two days a week, but the schedule suited the couple, along with a long line of other travelers the same day.

Despite the drop in passenger traffic and cargo business and the recent departure of Vision Airlines, Mr. Toth is not seeking a new strategy for the airport. "There is only one strategy. You have to realize what you've got, and you go out and market yourself accordingly," he said.

He plans to continue operating Toledo Express and marketing it the same way.

Service declines

Several airlines have come and gone from Toledo Express over the past two decades, including AirTran Airways and Delta.

By 2000, AirTran helped bring Toledo Express out of a slump. Nearly 60,000 people used the airport in October that year — a 39 percent increase from the same time in 1999.

Last year, 145,050 passengers got on or off planes at Toledo Express — a 16.87 percent decline from the previous year.

AirTran pulled out of Toledo in 2004, saying higher-fare business travel was insufficient. Delta dropped its Toledo-Atlanta service soon thereafter.

In 2009, start-up carrier JetAmerica announced, and sold tickets for, flights between Toledo and Newark, N.J., as well as other routes. The port authority spent $120,000 to promote JetAmerica. But the arrangement fell apart before the first flight.

The carrier failed to obtainthe necessary landing and take-off "slots" at Newark Liberty International Airport.

Unhappy tenants

Besides struggling with dropping passenger numbers, the port authority has had strained relations with its major tenants — fixed-based operators National Flight Services, Grand Aire, and TOL Aviation Inc., which provide fuel services at Toledo Express and facilities for small planes and corporate jets.

Thomas Wiles, owner of National Flight Services, the largest fixed-based operator with 87 employees, suedthe port authority. He's considering moving his entire operation to Texas.

"It is the second time I have had to do it in roughly 50 years," Mr. Wiles said. "We are the number-one FBO, we employ the most people, and those guys are trying to run us off this airport and they are succeeding. I am getting ready to move the lion's share of the stuff to Texas because no one cares if we stay here or not."

He declined to say what airport he is considering moving to.

"I haven't signed the deal, but they are paying us $400,000 to move there," Mr. Wiles said. "I think Toledo is a great place to be if it had some leadership. … The reputation of Toledo [Express] is that it has failures with the FBOs on the airport."

Mr. Wiles is not the only FBO owner displeased with the port authority.

In a letter last month to the airport Director Steve Arnold, TOL Aviation President Richard Nensel complained about receiving a ticket from airport police after being accused of violating Homeland Security rules. He's called for the same kind of major change that Mr. Frank suggested.

"As a former friend of several years ago told me many times, an entrenched ‘culture,' especially established in a governmental body, is almost impossible to correct unless that body is dissolved and a new organization is formed," he wrote in a June 15 letter. "Maybe that is now true with Toledo Express Airport. The business format that exists now has not worked for years at this airport and the airport … continues to slide downward."

Eric Barnum, a veteran pilot and owner of Crow Executive Air, based at Toledo Executive Airport — the former Metcalf Field — in Lake Township, credited the port authority for maintaining Toledo Executive and Toledo Express, but criticized it for relationships with the FBOs.

"Some relations have been by and large pretty good," Mr. Barnum said. "As far as the relationship with the leasing policies and rules and regulations and protection of businesses on those airports, I think they have taken a direction not conducive to the health of those businesses. … Without the port authority offering the proper lease terms and proper lease protections from competition, then it is very difficult for those operators to want to spend money or make any money."

Bucking a trend

Fighting the trend of declining passenger volume at regional airports, the Akron-Canton Airport over the past 16 years went from sleepy to one of the fastest-growing in the nation.

That success can be traced to its management.

Mr. McQueen said keeping costs low for the airlines, with some of the lowest landing fees in the state, along with airline competition with Cleveland, has helped drive down airfares, which contributes to its success.

The cost per passenger at the Akron-Canton Airport is $2.75, said James Krum, contracts and finance manager for the facility.

Toledo doesn't charge a landing fee for the Chicago flights, port authority spokesman Holly Kemler said.

"We charge Allegiant a flat $5 per passenger for use of the airport, which includes terminal, apron, and airfield costs," she said. "Also, we have offered airlines such as Allegiant a reduction in fees in return for an increase in service, such that if they increase flights or passengers by 30 percent, they get a responding 30 percent decrease in per-passenger costs."

In the case of American Eagle flights from Toledo to Chicago, the port authority pays the airline $12,500 a month for the additional flight the carrier added in September. That was a one-year $150,000 commitment to add a fourth daily flight on Sunday, Wednesday, Thursday, and Friday, Ms. Kemler said.

The carrier has since added flights on Monday and Tuesday, so the fourth flight now operates every day except Saturday — typically a slow business-travel day.

Akron-Canton's focus on keeping costs down has paid off with the lowest airfares in Ohio on average, Mr. McQueen said.

A round trip to New York's LaGuardia Airport leaving June 29 and returning the next day cost $239 on AirTran from Akron-Canton, compared with $409 on US Airways from Cleveland Hopkins.

It is almost the opposite experience when comparing fares at the Toledo and Detroit airports.

A Toledo-to-Chicago flight on American Eagle leaving July 14 and returning the next day costs $365. The same trip on Spirit Airlines from Detroit costs $150.

Fight for business

Kristie VanAuken, Akron-Canton's chief marketing and communications officer, said the airport is in a dogfight with other airports for business.

Even in 2009, when most airports posted double-digit losses, Akron-Canton was down by less than 2 percent.

"Here at Akron-Canton, we have always known who we are, and we are not critical on any airline's route map, so we have to be hungry," Ms. VanAuken said. "When you are a small airport in a large metro area, airlines have options. … They can land anywhere they want to serve northeast Ohio, and we are all competing hard, and costs do matter because we know that we are going to have to fight like dogs and to continue to grow. Part of that is offering low cost. We have the lowest operating cost of any airport in the state, so we can go proudly to any airline."

On top of that, the airport has an aggressive program to keep passengers and employees happy — even to the point that it promotes a Cinnabon store that operates in its counter area.

Additionally, the Akron-Canton concourse has a play area for children, a work area for business travelers, and spots for charging laptops or cell phones. At the same time, it offers more convenient parking and a shorter walk to flight gates than does Hopkins, which is closer to Akron-Canton than Toledo is to Detroit.

Akron-Canton also has a low-fare carrier, AirTran, which is 55 percent of its passenger business. Southwest Airlines is to begin service at Akron-Canton on Aug. 12.

"We have 15 daily departures. We moved 80,000 people last month on AirTran alone," Ms. VanAuken said.

Akron-Canton is not run by a port authority, or by a city government, as is the case in Dayton. It is governed by an airport authority with members drawn from Summit and Stark counties.

It is the only airfield in Ohio governed by an airport authority, which is permitted by Ohio law.

Success in Dayton

Dayton International Airport's passenger service has more than 2.5 million travelers and dwarfs Toledo and Akron-Canton.

"I think this year we are up 2 percent in seat capacity and this year the industry reduced by 2 or 3 percent," said Terrence G. Slaybaugh, director of aviation for Dayton. "A lot of it depends on the marketplace and whether or not the airlines can fill up seats."

Dayton also competes with its neighbors.

"There are four airports within driving distance to almost all of our market, so people have choice and they can go price out," Mr. Slaybaugh said. "That has helped us in that we are pretty competitive.

The Southwest buyout of AirTran is expected to be good for Dayton, similar to Akron-Canton. The airline is to begin service from Dayton on Aug. 12 with a daily round-trip flight to Denver.

The Youngstown-Warren Regional Airport steadily lost thousands of passengers from 1999 to 2003 but has been in an upswing in recent years.

"We had flights to Detroit, Chicago, Pittsburgh, Cleveland, all pretty local, but the airport had quite a few flights back in the 1990s," said Dan Dickten, director of aviation. "DOT [U.S. Department of Transportation] came out with a 70-mile rule where if you were close to a major hub airport, you were no longer able to receive Essential Air Service funding. We lost everything in 2004 since we were too close to Pittsburgh."

Since 2003, Youngstown passenger service has shot back up from fewer than 20,000 people to about 80,000 projected for 2012.

Change in strategy

Considering Toledo Express' troubles, plus the crushing blow that came from losing BAX Global, Jerry Chabler, chairman of the port authority's board of directors' airport committee, said it is time to change the strategy.

"I want to make it abundantly clear as the chairman of the airport committee, I am not giving up on retention and obtaining new air service," Mr. Chabler said.

"It is an airport and we want to use it as an airport — it is a great facility with the rail, the turnpike, and a whole lot of land available for development. In light of what has happened to the airline industry, as a result of deregulation. … I think it might be time for us to start thinking outside of the box."

Mr. Chabler said he did not think a separate airport authority would be needed, but he was not specific about what needed to be done differently at Toledo Express.

"I don't rule out an airport authority, but I need to know more about it," he said. "Everything at this point is on the table as it relates to passenger service."

Contact Ignazio Messina at: imessina@theblade.com or 419-724-6171.