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Business Observer Friday, Sep. 4, 2015 3 years ago

Take flight

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Good times are roaring at St. Pete-Clearwater International Airport. Yet worry lurks.
by: Mark Gordon Managing Editor

Executive Summary
Organization. St. Pete-Clearwater International Airport Industry. Airlines, travel, tourism Key. The bulk of the airport's business comes from one airline — an advantage and a risk.

In April, after 21 years in senior operations and administrative roles, Tom Jewsbury was promoted to the top spot at St. Pete-Clearwater International Airport.

It was more than a pinnacle career moment. It also made Jewsbury a sought-after executive in the nationwide network of airport directors. Jewsbury's peers tagged him for advice — and still are five months later — because his airport is a national leader in passenger traffic increases and added flights.

“This is the envy of a lot of airport directors,” says Jewsbury of all the activity at St. Pete-Clearwater, which uses the call letters PIE. “There is a lot going on here.”

The goings-on include:
St. Pete-Clearwater ranked first nationally in a report, compiled by the Wall Street Journal, data firm masFlight and airline schedule company OAG, that looked at flights added per airport since 2011. The survey, published in a Journal article in July, shows PIE had 126 flights in the third week of July, a 93.9% bump from 65 flights in third week of July 2011.

The airport set an all-time monthly passenger record in July, with 173,743 fliers, up 50% from July 2014;

Passenger traffic in 2015, says Jewsbury, is up 31% in the first seven months over the same time frame last year. Airport officials project the airport will surpass 1.7 million passengers this year, which would be a record;

At least 65% of the traffic is inbound, and a bulk of that is people coming to town for vacation and leisure.

With the recent addition of Appleton, Wis.; Scranton, Pa.; and Kansas City, PIE now has service to 47 nonstop markets, including nine new ones for 2015. Other markets include Knoxville, Tenn.; Ashville, N.C.; and Grand Rapids, Mich. “There are indications that we could see more cities by the end of the year,” Jewsbury says.

But the boom comes with a looming anxiety in the lack of business diversification: An overwhelming majority of the flights in and out of PIE, 95%, are on Las Vegas-based Allegiant Air. Allegiant, with a model to serve secondary markets overlooked by larger carriers, is a national leader in low cost air travel, where frills are forbidden. If Allegiant Air, due to myriad possible factors, ever were to fail, then PIE is in trouble.

While publicly traded Allegiant, a company that's gone 12 years without posting a quarterly loss, is a Wall Street darling for its business model, the airline has had some negative moments. Highly publicized ones include several flights called back for maintenance issues in July and August and tumultuous negotiations with unions that represent its pilots.

Airport officials are acutely aware of the diversification issue. The only other commercial airlines to fly out of PIE are Sunwing Airlines, with service to Toronto, Ottawa and Halifax, and Beau Rivage/Sun Country, with service to Gulfport-Biloxi, Miss. On a national scale, PIE is Allegiant's third-largest airport for flights, behind McCarron International in Las Vegas and Orlando Sanford International.

“That's why we continue to look at new service,” Jewsbury says. “We are always looking for new airlines and routes.”

Tight hold
The relationship between PIE and Allegiant is somewhat symbiotic, in that one reason Allegiant can keep fares low is the cost per passenger mile to fly out of the airport is $1.60. By comparison, Tampa International Airport posted a cost of $5.23 per passenger mile in fiscal 2014, according to a Moody's report on the Hillsborough County Aviation Authority. Cost per mile is a key gauge of an airline's profitability.

PIE spokeswoman Michele Routh says the airport keeps costs low because it operates under a “pay as you go” philosophy, with no debt.

And St. Pete-Clearwater International isn't the only airport on the Gulf Coast to face the challenge of over-reliance on Allegiant. Every flight in and out of Punta Gorda Airport in Charlotte County, where passenger traffic has doubled in the first seven months of the year compared with 2014, is on Allegiant.

“Clearly there is risk in this,” says Charlotte County Airport Authority Executive Director Gary Quill. “It's always present in my mind, no doubt about it.”

Quill says the strategy at Punta Gorda, similar to St. Pete-Clearwater, is a matter of circumstance — not necessarily blind allegiance to one airline. Both airports, for one, are in the shadow of significantly larger airports, in Southwest Florida International in Fort Myers and Tampa International. Those larger airports have a tight hold on major airlines.

Another factor that forces the airports into an all-Allegiant, all the time approach, says Quill, is big airline industry economics. The trend there, from carriers such as Delta and American, is to fly long and only to large airports to maximize profits. Proof comes in a recent study from aviation consulting firm Boyd Group International: From 2007 to 2014, states Boyd, there was a 15% drop in scheduled domestic flights, mostly at non-hub airports.

A report on small community air service from the MIT International Air Center for Transportation found the same issue. “While the large-hub airports have been spared from much of the brunt of airline service reductions,” the MIT report states, “smaller airports have seen a much more severe decline in service.”

That brings Quill and Jewsbury back to Allegiant.

“Cleary the airline industry is evolving, and the airport industry has to evolve, too,” says Quill. “I'm happy we found a niche here, and I think we will succeed. But there are an awful lot of small airports in the country struggling right now.”

'Keep growing'
Jewsbury's other mission in his new role at the helm of St. Pete-Clearwater, beyond attracting airlines, is improving the actual airport.

Some work is away from passenger interaction, like a project, aided with $5.7 million in federal grant money, to demolish, remove and replace the pavement where airplanes park.
Other projects will be more visible, including ongoing work to add up to 1,000 parking spaces. An $8 million to $10 million terminal expansion that can also alleviate a passenger space crunch is in the design phase, adds Jewsbury. “The big thing for us is parking,” says Jewsbury.

Jewsbury, who grew up outside Rochester, N.Y., initially got into air travel so he could be a pilot. A graduate of Embry-Riddle Aeronautical University in Daytona Beach, he gave up on that dream because he had corrective lenses and couldn't pass some tests.

Jewsbury instead got into the administration side of the industry. He worked in operations for Dane County Regional Airport in Madison, Wis., for four years, and in 1994 he was named an operations supervisor at PIE. He was promoted several times, and earlier this year was named director when the previous airport chief, Noah Lagos, retired. Lagos oversaw PIE for 11 years.

The airport grew significantly under Lagos, including the debut of Allegiant, which took place in 2006 with a dozen destinations. Lagos, along with Jewsbury, also supervised a major terminal renovation project in 2010 that included the airport's first passenger loading bridges.

The airport's history dates back to 1941, when it was built for a military training base. After World War II the federal government gave the airfield to Pinellas County, so it could operate a commercial airport. It was originally called Pinellas International Airport, which is how it got its PIE call letters.

More transformation at PIE could be in the offing: Airport officials are about to embark on a major upgrade of an airport master plan that could define how the facility grows long term.
“We'll have to look at a significant financial investment,” says Jewsbury, “if we want to keep growing.”

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