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Some Airports Struggle as 2009 ends

Our regional airports are showing varying degrees of improvement as this recession starts receding. Boston’s Logan Airport had a banner year in 2009 as they landed low-cost bellwether Southwest Airlines. Immediately, speculation centered on the fortunes at Providence and Manchester, which Southwest used to serve the ‘Boston’ market. To its credit, Southwest will likely remain strong at both the Rhode Island and New Hampshire airports in the face of the new service at Logan. One need only look to the San Francisco Bay area, where Southwest happily serves three airports within a ten-mile radius. The airline remains steadfast at San Jose and Oakland despite new service within the past two years at San Francisco International Airport.

2009 was a very tough year for Manchester Airport in New Hampshire. More traffic was lost there than at any other airport in the region, thanks to sharp pullbacks created by the Delta/Northwest tie-up. United Airlines and USAirways have both severely scaled back operations at MHT. This leaves Southwest as the incumbent king of the hill. The good news is that Southwest remains bullish on Manchester. The bad news is that the carrier rules the roost there, which creates a rather ominous imbalance.

This ‘imbalance’ has implications. Manchester Airport has infrastructure that needs to be paid for in the form of bond payments. Declining airline traffic means declining revenues. Fewer passengers mean less parking and concession revenue, not to mention lower landing fees. Manchester Airport could struggle a bit to pay its bonds, which you’ll see in the form of lower bond ratings.

Manchester Airport has pretty much completed its infrastructure expansion. Runways have been lengthened and re-done; there are new instrument-landing systems (ILS) in place; the new terminal has already been built and expanded; the parking garage is one of the largest in New England. But everything still needs to be paid for, and operating revenues take a hit when passenger traffic collapses. 2009 was not a good year at Manchester.

One airport that had a great 2009 was Portland Jetport in Maine. JetBlue and Airtran are two low-cost airlines that have helped Jetport traffic skyrocket since 2008. Located near the seacoast, Portland is seen as a rather ‘seasonal’ airport with traffic peaking between Memorial Day and Labor Day. In fact, the third quarter in 2009 was its best ever, with 565,208 passengers passing through the Jetport from July to September. This topped the previous high-water mark in 2008. Interestingly, gains at Portland are coming as Manchester loses traffic. Do the Manchester and Portland markets overlap? 75 miles apart, you wouldn’t think so. But the lure of certain airlines will encourage passengers to travel over the roads. You’ll see a fair number of Maine license plates in the Manchester Airport parking garage, typically accounting for passengers flying Southwest Airlines (which doesn’t serve Portland). Similarly, you’ll see a handful of New Hampshire license plates up at the Portland Jetport belonging to people who want to fly JetBlue and Airtran (which don’t serve Manchester).

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