Austin Bergstrom: Staying strong

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Network USA is heading to Austin Bergstrom, with the airport seeing passenger levels returning to pre-recession levels as the city's robust economy helps sustain it during the tough times, writes Lori Ranson

Traffic at Austin Bergstrom International airport is set to near its pre-recession 2007 peak of 9 million passengers in 2011 as network and low-cost carriers grow their presence in the market to support Austin's robust economy.

Airport executive director Jim Smith expects the 2010 passenger count to reach about 8.6 million before regaining pre-downturn strength this year. Key to the rebound is an economy that has remained strong compared with other cities, says Smith.

Austin is already well known as the headquarters of technology giant Dell, but American Airlines' station general manager in Austin, Craig Richey, also highlights its growing prominence in the entertainment business, describing the city as the "third coast" of the US film industry. American operates Austin-Los Angeles thrice-daily, and United-Continental will begin flights in the market in March.

It was able to keep traffic levels relatively stable during the downturn by convincing low-cost carriers to take up routes abandoned by network carriers as US legacy airlines consolidated traffic into their hubs, says Smith.

Alaska Airlines launched flights to San Jose, California after American cut the route. Austin's largest carrier by market share, Southwest Airlines, now also serves the route. While American dropped the market, it still benefits from codesharing with Alaska on Austin-San Jose flights, and its overall capacity in Austin is slightly up year on year, says American.

American's cornerstone strategy to funnel most of its traffic to its hubs, unveiled in September 2009, resulted in new flights from Austin to the carrier's hub at New York JFK International airport, says Richey. Austin's role supports this cornerstone process, and American has flights from Austin to all its major hubs - Dallas, Chicago, New York and Los Angeles - apart from Miami.

American served Miami from Austin a decade ago, says Richey, but at the time "it didn't seem to work right". But it remains on its radar. "I don't know when or if it will happen. I certainly think it is worth looking at," he says.

Smith admits that at first it was slow going to gain a new non-stop service to Austin after the recession. Most of Austin's recent outreach to carriers has sought to ensure "people remember who we are and where we live", he says.

Smith is particularly interested in the potential Southwest's acquisition of AirTran could create for Austin to broaden its reach on the US East Coast. DOT data shows that from October 2009 to September 2010, eight of Austin's top 10 destinations airports were located west of the Mississippi.

Atlanta was seventh on the list and passenger numbers on the route grew by almost 8% over that period. Delta dominates the market from Austin to its hub in Atlanta with 39 weekly flights, but once Southwest completes its deal for AirTran, the combined airline's reach from Atlanta will strengthen. This could create opportunities for Austin to further enhance its offerings on the East Coast, says Smith.

LONG-HAUL AMBITIONS

Direct long-haul international service remains on Austin's wishlist, says Smith, but while "we are on the radar screen", the numbers "clearly aren't a slam dunk at this point in the game".

To an extent, says Smith, securing international service is now tied directly to the business strategies of the three global alliances and the related joint ventures. From an airport's perspective, that means fewer entities are making decisions about new routes, says Smith, who adds: "The jury is still out on how that affects airports."

Cancun is Austin's only international destination, as Delta and United-Continental are both launching flights to the Mexican resort destination this month.

Mexican low-cost airline VivaAerobus served Cancun and Monterrey from Austin for about a year before the H1N1 virus outbreak forced it to end the service.

VivaAerobus operated from an ultra-low-cost terminal leased by GECAS. The strategy behind the terminal was to attract airlines such as VivaAerobus and SkyBus offering a no-frills service. "We knew we wouldn't be on their radar screen without some differentiator," says Smith. The airport knew it was a risky venture, but GECAS leased the land from the airport and incurred the capital expense of constructing the facility. In true no-frills fashion, the terminal had no jetways, and airline tenants had to share gate-hold areas and ticket counters.

Since VivaAerobus stopped serving Austin, the airport has taken over the GECAS lease on the terminal. Although it is now being used for storage for the airport, the Transportation Security Administration and US Customs and Border Protection, Smith believes that should similar opportunities to the VivaAerobus arrangement crop up, "we have an asset".

Network USA's host remains confident that Austin's economy will protect the airport from the fate smaller markets have suffered during the economic downturn. "We are fortunate to represent a community where things are going well," says Smith.