insights (2006-02)

Is Knox Air Service in Jeopardy?

The demise of Independence Air and the financial plight of nearly all the major airlines raise doubt about Knoxville’s prospects for sustaining, let alone improving, its air service.

But neither the loss of Fly i’s three flights a day to its hub at Washington-Dulles nor a couple of flights cut out by Delta has meant any reductions in the number of cities directly served or the number of flights a day in and out of McGhee Tyson Airport.

With direct service to 18 cities and more than 160 flights a day, Knoxville compares favorably to most other cities of comparable size. And as the Metropolitan Knoxville Airport Authority’s Dave Conklin sees it, those numbers are more likely to go up than down in 2006.

In February, United is due to launch a daily flight to Denver. In addition to providing direct service to another major city, that flight will mean that East Tennesseans can get to popular destinations such as Jackson, Wyoming, and Colorado ski resorts with only one connecting flight instead of two at present.

Conklin is also sanguine that this year will also bring direct service between Knoxville and either Miami or Fort Lauderdale. Miami is a major hub for American Airlines and the gateway for its extensive service to the Caribbean and South America. As of now, East Tennesseans have a more limited menu of connections to these destinations via Delta in Atlanta.

Where airfares are concerned, the loss of Fly i’s discount presence in the market could mean some increase in the cost of getting to Dulles and the mostly smaller cities that it served from there. But United’s typical $200 round trip fare on its three flights a day to Dulles isn’t any higher than

At its peak in 2004, Fly i offered eight flights a day in and out of Knoxville with flights to Orlando and Tampa in addition to Washington. These Florida destinations contributed to Delta’s decision to start offering direct flights to these same two cities. But after Fly i pulled out of the Florida markets in mid 2005, Delta has kept on serving them without any fare increases to speak of.

“It’s a whole different ball game now than it was five years ago when Air Tran pulled out of Knoxville and other fares went up. The competitive pressures throughout the industry are much greater now,” says Conklin.

It’s true that Delta, which declared bankruptcy in September, has reduced the number of its daily Atlanta flights (from eight to seven) and Cincinnati flights (from seven to five). But these reductions have been offset by increases in the number of daily flights offered by the two major carriers in the least financial difficulty, American and Continental, to Dallas and Houston respectively.

For the full year 2006, McGhee Tyson Airport served 1.83 million passengers, representing a 14 percent increase from the year before. That double-digit gain compares to an increase of less than eight percent nationally. So Knoxville represents a high growth market, and that augurs well for growth in service.

By way of comparison, the Chattanooga and Tri Cities airports only served about one fourth as many passengers as Knoxville with commensurately fewer flights. So Knoxville also has pulling power that’s making it East Tennessee’s air travel hub.

To be sure, Knoxville pales by comparison with Atlanta, Charlotte or Nashville when it comes to passengers, flights and direct destinations. And Nashville also has something else going for it that Knoxville just isn’t in the running for at present: extensive service by the preeminent low fare carrier, Southwest.

Still, with direct service to all but one of the top 10 markets east of the Rockies (Boston being the sole exception), Knoxville is as well positioned as just about any like-sized city. West Coast destinations are beyond the flight range of the 50 and 70 seat regional jets that provide most of Knoxville’s service.

All of this is not to say that Knoxville couldn’t face reductions in service and/or rising fares if the financial condition of the airline industry doesn’t take a turn for the better.

“We’ve told the airlines that we realize fares and yields need to go up because we want a healthy industry. But we believe it’s in their interest to keep their increases moderate and concentrate on getting their costs down,” Conklin says.

There’s a widespread misconception that recruiting another low-fare carrier is needed to keep the sky from falling on Knox air service, or rather to keep fares from going sky high. In truth, the city is much more dependent on the viability of the six major airlines, all of which are serving Knoxville well. Inducements to recruit another here today, gone tomorrow discount carrier could serve to jeopardize that viability.