Airport Leakage Improves 18 Percent

January 29, 2008

In less than three years the Springfield-Branson National Airport has seen an 18 percent decline in the number of customers leaving the market to fly from other airports. That conclusion comes from a new leakage study. “Leakage” is the aviation term used to describe customers leaving the market.

“For years studies told us the airport leaked 30 percent of its potential customers—including the last study done in 2005. The new study says leakage is 12 percent,” says Gary Cyr, airport director of aviation. “This is a very pleasant surprise.”

Leakage is usually caused by customers choosing other airports to take advantage of lower ticket prices. Historically, ticket prices in Springfield have been higher than at surrounding airports. Cyr says Springfield prices are still high, but not nearly as high as they used to be. “The leakage improvement tells me customers are deciding the difference in price isn’t worth the drive to airports in Kansas City, St. Louis or Tulsa.”

The study, conducted by the aviation consulting firm The Boyd Group, cites two reasons for the improvements: the addition of Allegiant Air service in April 2005, and the addition of Delta service to Atlanta in December 2005.

“Allegiant was our first low-cost airline,” says Kent Boyd, airport director of marketing. “It flies to Las Vegas, Orlando and Tampa. It’s not unusual to get round trip tickets for about $200. Before Allegiant’s arrival, it cost twice or three times as much to reach those cities. That made driving to another airport an easy decision.”

As for the impact of Atlanta service, Boyd says it has less to do with cost and more to do with connections. The service makes it much easier to connect from Springfield to the East Coast and Europe.

The improved leakage rate could help airport staff market the airport to airlines. “Airlines generally prefer existing strong capture rates rather than the potential to recapture traffic with new service,” says Tim Sieber, vice president and general manager of The Boyd Group. “In the age of $95 oil, most airlines don’t want to work any harder chasing passengers than they have to and most are also risk adverse.”

How accurate is the study? “The airport management team was skeptical at first,” says Boyd. “We’ve been stuck with 30 percent leakage for more than a decade. How could it improve so much, so fast?” The airport turned to a 2006 resident market survey and gave it to the consultants. “I asked them to look it over and see if it changed their conclusions. It ended up confirming them.”

The resident market survey interviewed people living in the airport service area during the 3rd Quarter of 2006. Among its findings, this statement stood out:

“Nearly 85% of resident commercial airport customers flew out of SGF on their last commercial flight.”

“When I read that finding back in 2006, I dismissed it,” says Boyd. “I assumed it was an anomaly. After all, it wasn’t an aviation study. It was a marketing study using different methodology. As it turns out, we now have two studies that validate each other. That’s a nice thing to have.”