Wednesday, May 22, 2019

San Antonio International Claims a Soaring Success, but the Numbers Offer a Grounding in Reality

Posted By on Wed, May 22, 2019 at 9:15 AM

click to enlarge BRYAN RINDFUSS
  • Bryan Rindfuss
Editor’s Note: The following is City Scrapes, a column of opinion and analysis.

“San Antonio International Airport is flying high,” declared the headline of a press release sent out earlier this year by the City’s Aviation Department. The release brought the announcement of a “record-breaking year” in passenger volumes — an “unprecedented milestone for an airport of its size.” The news here was that San Antonio International had seen more than 10 million passengers in 2018. Aviation Director Russ Handy chalked up the surge in air traffic to “hosting wonderful events like the NCAA Men’s Final Four” as well as the airport’s “great relationship with air carriers.”

The 2018 passenger total amounted to just over 11% growth from the year before. And, for some, including the chair of Mayor Ron Nirenberg’s Airport System Development Committee, it stressed the imperative to expand and improve the airport to keep up with its growth. But a quick look at the numbers behind the press release tell a rather different story.

San Antonio International’s 2018 increase in passenger enplanements — the standard industry metric of passenger activity — did indeed amount to 11.2%, a notable boost from the 4.9% it incurred from 2016 to 2017. But that growth was far from the same for all air carriers serving San Antonio. Southwest, our dominant carrier with some 40% of the total passenger volume, experienced growth from 2017 of just 7.3%. For American Airlines, the annual increase was 9.8%. And for Delta, the passenger growth came to just 2.9%. One carrier really drove the airport’s “record breaking year.” That was Frontier Airlines.



Frontier’s year-over-year increase in passengers amounted to 133% — more than doubling its 2017 performance. Without the Frontier business, the airport’s passenger growth amounted to a more modest 7.8%. And the performance of Frontier, known as an “ultra low-cost carrier,” exemplified the nature of San Antonio’s air-service demand. What Frontier offers are cheap flights: $39 round trips to New Orleans, $107 to Orlando, $127 to Las Vegas. Those aren’t the nonstop flights sought by local business leaders to connect San Antonio to the booming tech centers of the West Coast, or major East Coast urban centers such Boston and Washington, DC. They’re flights designed for leisure customers looking for inexpensive trips, albeit flights with lots of add-on fees and expenses. And on other Frontier routes connecting San Antonio with Cleveland, Omaha, and Tulsa, there’s also the appeal of hauling tourists to the wonders of San Antonio.

But Frontier didn’t come to San Antonio simply because it assessed our community as a prime market opportunity. It came in large part because the city offered a host of incentives under the local Air Service Incentive Program. Frontier was eligible for landing fee waivers, terminal rental waivers and up to $200,000 in direct marketing dollars. In describing the program, the Aviation Department compared our incentive program to those in Austin, San Jose, Raleigh/Durham and Orange County, and argued that San Antonio International “has more aggressive incentives than most airports on marketing, building rentals and airfield fee waivers.”

Aggressive as it may be, San Antonio’s incentive deals have had a very different result from those in other cities. In her 2016 article in the Journal of the American Planning Association, “Incentivize It and They Will Come?”, University of Pennsylvania Professor Megan Ryerson compared San Antonio’s incentive efforts with those of Austin.

“Austin was able to use their [incentives] to connect to high-value, highly sought-after destinations, including a nonstop British Airways flight to London’s Heathrow Airport,” she noted. “Austin now offers incentives for routes to Amsterdam (Netherlands), Frankfurt (Germany), London, Paris (France), and Tokyo.”

Then there was our community: “The new San Antonio routes, in contrast, were on low-cost airlines to Guadalajara and Mexico City (Mexico), likely to facilitate tourism but not instigate local business development.”

Then there’s the larger problem with subsidies. They may persuade an air carrier to enter the San Antonio market or add a nonstop flight. But if the demand isn’t there, the service will stop, the airline shifting its resources to a better, more profitable market. Air Canada said in February it would end nonstop service from San Antonio to Toronto. Frontier announced that it would drop 16 nonstop flights. The subsidies were obviously not “aggressive” enough to change the market reality here. It’s a problem the city has encountered with a whole host of other subsidy deals. They might come, but will they stay?

And as for “flying high” with our 11% increase in business last year? Austin’s growth in passenger volume from 2017 came to 13.6% — flying just a bit higher.

Heywood Sanders is a professor of public policy at the University of Texas at San Antonio.

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