K.I. SAWYER - After marking the lowest passenger volume in more than a decade in 2012, Sawyer International Airport officials expect the number of people flying into and out of the Upper Peninsula's largest airport to begin improving this year.
Since 2000, total passengers at Sawyer gradually rose from 88,791 to a peak of 133,681 in 2007 before falling four of the last five years to hit 76,001 in 2012.
At the U.P.'s six air service airports, including Sawyer, the 2012 passenger total was 213,808, which was down 32,157 passengers from 2011, with Sawyer's 28,984 fewer riders accounting for 90 percent of the decline.
Workers unload a plane that arrived at Sawyer International Airport on Thursday. Passenger volume at Sawyer hit its lowest point in more than a decade in 2012, but with new flights added by air carriers, Sawyer airport management expects the decline to begin turning around this year. (Journal photo by Matt Keiser)
Officials have cited several factors influencing the drop, ranging from airline restructuring, fuel prices and the economy to airport subsidies, schedules, destinations and ticket prices.
Through February this year, Sawyer passenger counts were tracking slightly behind 2012, with January down and February up, producing a two-month total of 11,291 compared to 11,849 last year.
However, with the recent news American Eagle will add new midday flights to Chicago in June and Delta Connections adding a midday trip to Detroit earlier this month, airport officials said they believe the downward passenger count trend will begin to reverse.
"Do I think we're breaking records? No," Sawyer manager Duane DuRay said. "But I think that we're going to go back on the climb, proving that we are a good airport serving the Upper Peninsula as a region, not just Marquette County."
In a recent study, policy analyst Fred Kotler said Sawyer's passenger decline can be attributed in part to Delta and American eliminating flights from their schedules over the past couple of years, including Delta service to Minneapolis.
"Destination is a big one," DuRay said. "Iron Mountain now has Minneapolis. We don't have Minneapolis."
Part of the drop in ridership is related to the recession.
"The overall economy has hit," DuRay said.
Despite the decline since 2008, Kotler said Sawyer has annual passenger boarding counts exceeding 20,000 - "considered a strong marker for non-hub airports."
At the other U.P. airports, ridership through February was mixed, according to the Michigan Department of Transportation.
The Delta County Airport in Escanaba and the Gogebic-Iron County Airport in Ironwood posted decreases, while there were more riders at Chippewa County International Airport in Sault Ste. Marie and Houghton County Memorial Airport in Houghton. At Ford Airport in Kingsford, figures for February were not available, but January's passenger count was down from 2012.
The airline data firm OAG said ongoing financial instability in the United States contributed to the total number of airline seats available reaching its lowest level in a decade in January, 12.5 percent lower than pre-recession levels from January 2008.
"The fall in seat capacity within North America is reflective of the depressed consumer and business confidence in the region, which is intrinsically linked to the financial backdrop in the United States," said John Grant, OAG executive vice president.
DuRay said the capacity drop translates to higher ticket prices.
Kotler said higher than average fares and limited or inconvenient schedules at small airports can negatively impact passenger volume. Travelers may instead decide to drive to a hub airport for a greater choice of carriers, better schedules and more favorable fees.
"The option may be especially attractive when two or more persons travel together: driving may be shared and there is a particular incentive to keep the overall airfare costs lower," Kotler said.
Roundtrip Delta fares to Atlanta were compared by Kotler in October, purchased 18 days in advance of travel. Sawyer cost $963.20, Escanaba was $881.60, Green Bay cost $567.20 and Milwaukee was $318.10.
In a recent newspaper column, Amy Clickner, CEO of the Lake Superior Community Partnership, said there are other expenses involved.
"While it is enticing to drive to an airport that offers cheaper airfare, when considering all costs such as gas, additional overnight costs and the extra time, costs often equal out," Clickner said. "Also, it is possible to find flights from Sawyer at a lower cost by planning your trip well in advance and being flexible about travel dates."
Kotler figured roundtrip driving costs from Marquette to Green Bay at $190.30 and $323.40 to Milwaukee. From Escanaba, he quoted $122.10 to Green Bay and $255.20 to Milwaukee.
Kotler characterized passengers driving to other locations to fly as a "potentially serious problem for small airports."
"A loss in passenger volume makes it harder for airports to attract and retain carriers and this can lead to counter-productive outcomes: Upward pressure on fares as compensation for declining revenue and a further erosion of service," Kotler said. "Sawyer is not immune from (passenger) leakage, even though the closest medium hub offering service from a low-cost carrier (Southwest) is nearly 300 miles and five hours drive time distant."
Last year, the airports at Sault Ste. Marie and Houghton had passenger increases, while ridership at the other four U.P. airports dropped. There were 39,125 passengers at the Chippewa airport, up 1,996 over 2011. Houghton had 51,850 riders, an increase of 5,208 over the previous year.
Management at the airport at Sault Ste. Marie said 75-80 percent of boarding passengers there are Ontario residents who may find the airport closer to home, save on Canadian air travel taxes and avoid congestion and customs delays at the Toronto airport.
Escanaba had 25,363 passengers, which was a drop of 1,192. Iron Mountain was down 7,583 riders to 16,388 and Ironwood declined 1,602 passengers to 5,081.
Overall, the U.P. airports total passengers in 2012 represented .006 percent of the statewide total of 36.8 million riders. Statewide, ridership fell by 468,091 last year compared to 2011.
Passenger volume in the U.P. increased from a total of 119,096 in 1993 to 171,097 in 1999 and 244,230 in 2005 and 245,965 in 2011 before sliding to 213,808 last year.
Despite anticipation of higher passenger counts at Sawyer, the future for the airport could still be a bumpy ride.
On Friday, the Federal Aviation Administration decided to close the air traffic control tower at Sawyer, one of 149 across the country, a move DuRay said would hurt the future marketability of the airport.
Through the first six months of 2012, Sawyer maintained the highest market share of U.P. airports at 36.38 percent, but that was down from 43.66 percent over the same time period in 2011 and 53.32 percent through all of 2008.
At the same time, market share for the Houghton, Sault Ste. Marie and Escanaba increased. For the first two quarters of last year, Houghton had 22.08 percent, Sault Ste. Marie was at 18.38 percent, Escanaba had 11.82 percent, Iron Mountain was at 8.21 percent and Ironwood at 2.18 percent.
Kotler said should the declining boarding passengers and market share trends continue, "there is a heightened threat that Sawyer will lose one or both carriers."
"The partial or complete loss of service at Sawyer would clearly have a negative impact for the region," Kotler said.
If that occurs, under legislation passed by Congress last year, Sawyer would not be eligible for help to retain airlines through federal Essential Air Service subsidies, which are currently paid to carriers at other U.P. airports.
Any airport not getting subsidies when the law was passed cannot be included in the future. Sawyer was not receiving a subsidy because it had air service provided by two carriers, while the other U.P. airports are single-carrier airports.
Kotler said subsidies are provided to airlines "to attract and provide an incentive for carriers to serve small markets that might otherwise not receive any air service."
"The subsidies offset a carrier's operating costs and, presumably, help its bottom line," Kotler said.
Kotler has not seen studies that conclusively show the subsidies translate to lower airfares, either generally or for particular routes.
However, DuRay said the subsidies paid to other airports affect Sawyer.
"Without subsidy, those airports wouldn't have passenger service," DuRay said. "Our airport would acquire more passengers."
In a 2011 per passenger subsidy ranking of the 119 EAS airports in the lower 48 states, the U.P. airports ranged from Ironwood ranked 21st with a $368.79 subsidy to Houghton ranking 115th with a $20.47 subsidy.
The average subsidy for all 119 airports was $260.96 in 2011, down from $320.10 in 2010. Sault Ste. Marie ranked 104th in 2011 with a $45.30 per passenger subsidy, Iron Mountain ranked 87th at $92.57 and Escanaba was 81st with a $107.85 subsidy.
Kotler said fuel costs, which average 34 percent of airline operating costs, are driving airlines to consider higher capacity, more fuel efficient aircraft for the future.
Last year, Delta said it intends to reduce its 50-seat regional jet fleet from 350 to 125 or fewer given significant changes in economic and competitive conditions in the airline industry.
Industry consultants differ on the potential impact. Kotler cited one who said "sheer costs are outrunning the ability of markets to support air service locally" moving the concentration of service to being regionalized."
That analyst group predicted at least 100 airports will lose scheduled service, including many that now have over 100,000 origin and destination traffic.
Another consultant said much depends on fuel costs, but sees shifts in aircraft ownership enabling airports like Sawyer and Houghton, which can maintain passenger boarding numbers over 20,000 annually, as likely to retain 50-seat regional jet service.
For Escanaba, Iron Mountain and Sault Ste. Marie, the issue would not be the end of air service, but which planes would provide it. The consultant also expressed concern for airports like Ironwood, which must meet a new subsidy standard of 10 boarding passengers daily.
John Pepin can be reached at 906-228-2500, ext. 206. His email address is email@example.com