Fort Collins-Loveland Municipal Finds Silver Lining in Allegiant's Departure

Author: 
Robert Nordstrom
Published in: 
September
2013

Officials at Fort Collins-Loveland Municipal Airport (FNL) were understandably befuddled when Allegiant Airlines pulled out of the northern Colorado airport last October after a decade of service there.

Inbound and outbound aircraft were often nearly full, and FNL had recently rehabilitated its primary runway and expanded its terminal to accommodate increased passenger traffic.

ReporterHerald.com, the online arm of Loveland's daily newspaper, chronicled the association between the airport and discount carrier, including news that after Allegiant's first full year of service between FNL and Phoenix, FNL ranked in the top 10% of the fastest-growing U.S. airports. The Phoenix service led to a 26% increase in enplanements at FNL, pushing the airport's total enplanements to nearly 45,000, according to FAA figures.

Given all the positive signs, airport and community officials were shocked when the airline announced

 

factsfigures

Project: Strategic Marketing/Business Plan

Location: Fort Collins-Loveland (CO) Municipal Airport

Consultant: AvPORTS

Primary Goals: Enhance service to existing airport stakeholders; attract new airline to restore lost commercial service

Of Note: Allegiant Airlines unexpectedly discontinued service Oct. 2012. Aviation, business & public communities have rallied with airport to help attract a new carrier.

in August that it would suspend operations in October.

"It really came as a shock to us - something we really weren't prepared for," recalls Airport Director Jason Licon.

"A month before they made their decision to pull out, Allegiant was touting us as a model airport within their 80-airport system. Everything seemed great, and we never saw the writing on the wall."

Allegiant officials explain the seemingly abrupt about-face as an "internal decision."

While FNL holds the return of commercial service as its highest priority, airport officials understand that current economic conditions will undoubtedly make it a lengthy process.

"All the mergers and bankruptcies make this a difficult time in the airline industry," elaborates Licon. "While we have great numbers and all of the facilities in place, initiating air service is a big investment with a lot of moving parts. Airlines don't make these decisions easily."

One-Two Punch

FNL wasted no time confronting the problem. Within two months after Allegiant's departure, the airport contracted AvPORTS, a company with more than 80 years' experience managing airports, to help it develop a new strategic marketing/business plan. The goal was twofold: reevaluate the needs of airport stakeholders and develop a strategy to eventually attract commercial service back to FNL.

The airport's first order of business, however, was to confront the financial strain created by the loss of revenue previously generated by Allegiant (landing fees, parking fees, passenger facility charges, etc). The single category of fuel flowage fees associated with the commercial service accounted for approximately 35% to 40% of FNL's total revenue.

The airport faced daunting questions: How can we protect existing revenue streams? How do we remain financially sound and continue to grow and develop services and facilities?

Shifting gears quickly, FNL reduced its staff by about 20% and its budget by approximately 15%. The cities of Fort Collins and Loveland, which jointly own and operate the airport, also reacted promptly, each approving a 108% increase in annual contributions for airport operations to help offset the revenue loss.

Complicating matters is the likelihood that this year FNL will drop below 10,000 annual enplanements - FAA's minimum threshold for a commercial service facility, which qualifies it to receive $1 million of airport improvement program (AIP) funds per year. Losing its status as a commercial service facility could prove to be devastating.

"Without the 10,000 enplanements," explains Licon, "AIP entitlement funds are reduced to $150,000 per year. That's a drastic decrease. It would be nice if the FAA had different levels of funding based on a sliding scale, but you either make the enplanement minimum or face an 85% reduction in FAA grant funding."

Maintaining FNL's facilities to the regulatory standards of a commercial airport without the associated funding will be tough, he acknowledges.

The funding hit will be delayed, due to the two-year lag between enplanement counts and AIP grant distributions. FNL will continue at its current $1 million level in 2013 and 2014, but anticipates a dramatic funding decrease in 2015.

Making Lemonade

Still reeling from the sudden and unexpected loss of commercial service, FNL and its surrounding communities have rallied together to tackle the problem.

"Sometimes your darkest days can end up being an opportunity waiting to happen," relates Bruce Tarletsky, AvPORTS's director of marketing. "All of the stakeholders in both the private and public sectors have realized that they need to take action to make the airport a world-class facility that meets the aviation needs of the communities going forward. If Allegiant was still at the airport, these kinds of conversations most likely wouldn't be taking place."

The airport reached out to its city sponsors, Fort Collins and Loveland, to increase their financial contributions. While Licon knows that dealing with public funding can be difficult, he acknowledges that it also offers more resources. 

"We had to analyze the problem from various perspectives: an operational perspective, corporate and general aviation perspective, a business community perspective and how the airport serves as an economic generator for the communities it serves and the airport's value to residents in northern Colorado," elaborates Tarletsky.

Educating FNL's various communities and stakeholders was critical, he adds. People needed to understand the value of the airport to their individual needs and activities. But before FNL and AvPORTS could educate the community, they had to educate themselves on the activities and aviation needs of various business and public stakeholders throughout northern Colorado.

In January, FNL and AvPORTS hosted a meeting of leaders from the public and private sectors to elicit input for a comprehensive air service development and marketing plan. Representatives from more than 45 corporations, as well as stakeholders from public, private, tourism and economic development organizations attended the meeting.

Walt Elish, president and chief executive officer of the Northern Colorado Economic Development Corporation, described the meeting as "a unique opportunity for our region to join together as one voice to support the mission and vision of the Fort Collins-Loveland Airport."

"The bottom line is education," emphasizes Licon. "Once you get members of the community educated, once people understand how an airport is funded and the challenges we now face, they become advocates. A company may use the airport for its corporate jet but not understand how the services and infrastructure that support (its) activities at the airport are funded."

Additional efforts were made to educate smaller general aviation users. "Sometimes they view the larger aircraft as a hindrance, without understanding that those aircraft bring in resources that allow the airport to maintain facilities and make improvements that benefit them as well," explains Licon. 

Since January, FNL and AvPORTS have been holding meetings on a monthly basis. In doing so, they are creating grassroots support for the airport from Loveland and Fort Collins administrators, the Northern Colorado Economic Development Corporation, Estes Park (a popular tourism destination and headquarters for Rocky Mountain National Park), members of the business sector and regional tourism entities, as well as general and corporate aviation users. Most importantly, a wide variety of communities came together for the wellbeing of the airport  - not just in the interest of securing commercial air service, stresses Tarletsky.

The airport promotions team modified a famous John Kennedy quote to guide its community education efforts: "Ask not what the community can do for the airport; ask what the airport can do for the community."

"We learned that once we engage the community from this angle, the paradigm shifts completely," explains Tarletsky. "At the end of the day, that's our message: How can the airport help the communities grow in the areas in which they wish to grow?"

"We're not concentrating just on air service," adds Licon. "We're focusing on the airport as a whole, figuring out ways to diversify our revenue streams by improving services to all of our stakeholders. We haven't had any infrastructure cutbacks, and we are growing our numbers for airport operations. We've added corporate jets to our locally-based aircraft count and that trend continues to show growth."

Subcategory: 
Operations

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