Here is the full report of the Airport Service Task Force:
Background
Through the course of our meetings, airport executives presented the Task Force with an overview and report of statistics. Research was also conducted through the Chamber, the airport, the Mayor's Office, by industry consultants and national news sources. The Task Force examined information on such issues as ticket pricing, market size, comparative market strategies of other airports, airline industry trends and other topics. Additionally, the task force received input from the community through an e-mail "suggestion line" that was open for over 2 weeks to collect ideas and suggestions from the public.
The following recommendations are not based on exhaustive research or scientific studies. It reflects the advice of the task force, driven largely by our collective experience as business professionals and a common sense review of the data, trends and information at our disposal. We realize that to implement many of the following recommendations, however, more data and analysis might be necessary. For instance, we fully expect that more information will be needed in order to develop the exact market potential and exact incentives which might entice citizens to use our airport more. Our recommendations are directional in nature, which was our charge. We anticipate the Mayor's Office and the Airport Authority Board of Directors will determine what additional course of action will be required to accomplish the strategies that are pursued.
Introduction
The Task force was formed for the purpose of identifying the best strategies for the Chattanooga Metropolitan Airport (CMA) to pursue improved service and value for commercial air travel. We were charged to provide a report to the Mayor of Chattanooga and the Chattanooga Metropolitan Airport Authority Board with our recommendations and strategies. While there are clearly some positive accomplishments that CMA has achieved in stabilizing existing passenger volumes and revenue despite industry-wide recession, this report does not draw conclusions regarding current management of the airport. Instead, this report is about where we believe and suggest we can go. The assumption that the Task Force operated under was that status quo, or the current situation, is unacceptable for the future and that Chattanooga desires change. Air service is an important aid to economic growth for many new and existing businesses in Chattanooga and opportunities for improvement should be pursued vigorously.
The Need for Change
Clear evidence of the need and opportunity for improvement includes:
1. A "catchment area" is the area from which an airport draws its passengers. Typical methodology to determine acceptable enplanements is equal to one times the population of the metropolitan statistical area (or MSA), which, for CMA, would be well over 450,000 enplanements per year. However, given a review of the tri-state location of Chattanooga's airport, labor pool statistics and retail trends for the area, over 1 million persons routinely access the City as part of its market area. This being the case, Chattanooga airport's current "catchment area" actually includes around 1 million people and the potential number of enplanements for the airport and its market is more likely equal to 1 million enplanements as well. Whether based on an MSA definition or the actual catchment area of the airport, the Chattanooga Airport is underperforming in its ability to capture a significant share of its market.
2. Currently most travelers cannot take a direct flight from Chattanooga to their final destination. Service out of Chattanooga is largely to connecting airports. This is an obvious inconvenience and burden on business travelers. Of the top 20 cities that people from Chattanooga fly to, direct service is available only to Chicago, Charlotte, and Memphis.
TOP 20 DESTINATIONS FROM CHATTANOOGA
1. Chicago 11. Denver
2. New York 12. Tampa
3. Washington 13. Raleigh
4. Dallas 14. Hartford
5. Philadelphia 15. Ft. Lauderdale
6. Charlotte 16. Kansas City
7. Orlando 17. Las Vegas
8. Memphis 18. Los Angeles
9. Boston 19. Detroit
10. Houston 20. Cleveland
3. Based on the consulting firm engaged by the Chattanooga Metropolitan Airport authority, PA Consulting Group, the catchment area can be expanded by increasing service provided by the airport. Therefore, communities can influence volume of air traffic by finding solutions to provide expanded air service offerings. A preliminary study by the PA Consulting Group suggested as many as 2 million or more enplanements might be a potential catchment area for the Chattanooga Metropolitan Airport if it offered a low cost carrier.
4. However, Chattanooga's weak passenger volume currently represents little leverage with airlines. Until higher passenger volumes are reached, Chattanooga does not represent a serious candidate for improved service with most airlines.
5. In addition to the frustration of poor service, limited options and below average passenger volume for our market size (which makes Chattanooga even further unattractive to airlines), CMA loses revenue for every passenger that does not leave from our airport. The Chattanooga airport earns federal dollars for capital projects for every passenger who uses our airport ($4 per passenger based on the most recent quarter's activity). On the contrary, for every Chattanooga passenger leaving from Hartsfield or other locations, local citizens are helping earn capital dollars to improve those airports, not ours. The outflow of passengers from Chattanooga is actually helping to fund the improvements of competitor airports.
6. While systematic customer service surveys are currently not conducted on passengers from the airport, the most consistent community feedback and perceptions of service offerings provided by the airport from news, anecdotal and other sources has been largely negative. Consistent negative perceptions and negative discussion of the airport, especially by business users, is one of the primary reasons prompting the appointment of this task force.
7. The commercial air travel industry is experiencing wholesale change. Airports who are not aggressively staking out their role in the industry run the risk of additional losses. While our airport has a respectable amount of offerings for an airport of our size, to compete, these offerings must improve in the future. Increasing passenger volume levels will be required to make financial sense for airlines to serve our market. Other cities of similar sized airports around the country are losing major portions if not all of their air service. Without a concerted effort, Chattanooga runs the risk of similar events.
Currently, there is lost opportunity for Chattanooga's airport which costs the airport, businesses, the community and citizens lost time and money. While solutions are not simple, Chattanooga cannot afford to stand still.
Whatever has prevented more growth for CMA in the past, the reality is that unless Chattanooga redefines itself it runs the risk of further service decline under current industry-wide circumstances. The task force believes that the airport needs to achieve a major repositioning of its role in the marketplace. The following goals and strategies are suggested to support this result.
Task Force Recommendations
Since the Task Force received its charge from the Mayor, the commercial air travel industry has undergone unprecedented change and is still changing. While some may argue that sound plans cannot be made during times of economic upheaval, the task force believes the contrary. Now it is more important than ever to be vigilant in identifying, pursuing and staking out an improved position in the market place for Chattanooga as the industry restructures and eventually rebounds. Since new rules will begin to define success in the industry, some of the disadvantages that have limited Chattanooga's success in the past may not necessarily be a hindrance in the future. To spot these opportunities and to act quickly in the wake of change, the Air Task Force urges activity, not passivity, during this time of industry shift.
How do we know what we should do or how we can position ourselves for success now and in the future?
Progress begins by starting somewhere. The Task Force starts from the premise that despite industry flux and steep challenges, Chattanoogans desire improvement. The Air Service Task Force believes successful results can occur by thoroughly understanding where our strengths and lack of successes have been, where we would like to be and aggressively testing our marketplace of target customers (both passengers and airlines) to identify opportunities.
Very simply, Chattanooga must increase passenger volume to be a player in the air service industry. Airlines have numeric thresholds for passenger levels which guide decisions for increased service. Until more Chattanoogans, North Georgia residents and Southeast Tennessee passengers use our airport, our options for increased service from airlines are bleak. To date, over 35% of our MSA and over 70% of our catchment area is flying out of other airports. Increasing passenger volume should be the single most important driver of any strategy or tactic that the airport decides to pursue. It will also require that the airport reposition its identity to be regional in scope.
How can we get more people to use CMA? What prevents people from using the airport today? We believe the following three goals are crucial to achieving an increase in passenger volumes:
1. More competitive commercial air fares.
2. New airline service and routes.
3. Enhanced reliability.
The airport should have a deliberate, on-going mechanism for strategic planning and refining how, not if, these goals can be accomplished. Strategies are likely to include a variety of both internal (operational) requirements as well as external (marketing and market-based) requirements. Results for some proposed strategies will be evident soon while others will require consistent and on-going efforts which produce results later.
Based on the input received, a review of the industry data and a review of the Chattanooga situation, the Task Force makes the following recommendations. These recommendations must be carried out in their entirety to achieve major repositioning, which we believe the airport needs. Pursuing one strategy or another will not achieve the major impact desired and will likely miss important windows of opportunity, which we believe currently exist in a reorganizing industry. We urge decisive, coordinated and collaborative action in carrying out the following:
1. Low Cost Carrier: Chattanooga should continue pursuing low cost carriers like Southwest Airlines, but more aggressively and systematically. Based on PA Consulting¡¦s study, the addition of Southwest will have an immediate impact of greatly expanding the catchment area for Chattanooga. Contrary to traditional thought, the proximity to Atlanta can be viewed as a positive factor. Our city is located within range of this major population and economic center in the Southeast. Also, significant community populations lie north of its periphery and in our backyard, north Georgia. Currently, Atlanta is the only top 10 market that SWA does not currently serve and has not been able to serve. As the consultant clearly establishes, the case can be made that Southwest could expect to penetrate the Atlanta market from Chattanooga if we can demonstrate our ability to attract or "own" the passenger traffic from densely populated areas of North Georgia. The consulting report does not even discuss whether additional expansion of our catchment area could be expanded as far north as Knoxville. This same strategy could be the theory in discussions with other low cost carriers such as Jet Blue, Spirit, or Air Tran.
Immediate/short term action: develop systematic communications and community recruitment campaign
Target short term result: gain attention, stand out from competing markets, create a relationship, create image of "can do" city
Target long term result: location in Chattanooga
2. Existing Airline Strategy: The existing arrangement with our present carriers should be reviewed closely to improve service that we already have. Some results with existing carriers are better, while serious performance deficiencies can be experienced with others. It should be a top priority to expand the existing service that could be provided by current airlines, finding ways to ensure direct service to certain destinations. (See page 2 for a list of the top 20 destinations by commercial air travelers from Chattanooga.) Chattanooga currently has direct air service to only one of its top three destinations and three of its top twenty. We should pursue creating contractual relationships or agreements with existing airlines, which provide for incentives based on the service added and reliability of the service. The fact that there is presently no contract with these airlines should be top priority for change. Even though pursuing such arrangements may not be "usual or customary" for smaller sized airports, we believe now is the time to negotiate new standards that create win-win solutions and incentives that "pay off" for both airlines and our public.
Immediate/short term action: engage/initiate negotiation and potential agreements
Target short term result: maintain current service
Target long term result: expand routes and service
3. Marketing Strategy: Aggressive marketing campaigns should be organized to support the repositioning of the airport, its identity as a regional airport and its renaming. Increased communication strategies also should be deployed to make local and regional areas aware of the benefits of traveling out of Chattanooga and benefits that we can claim as opposed to driving to Nashville or Atlanta. This program needs to be connected to the strategy of negotiating with the existing airlines (recommendation #2), Incentive Programs (recommendation #5) and Corporate Policy development efforts (recommendation #7). Creative marketing tactics should be deployed, not just standard billboard and print/radio campaigns.
Some of these could include:
- possible development of an Airport Speakers¡¦ Bureau enlisting volunteers to "get the message out";
- enlisting the support of college students to survey current users of the airport to determine likes, dislikes and opportunities for improvement;
- developing a city wide corporate and public campaign to get people involved in increasing use of the airport;
- potential partnering with a local television station to do a travel segment on one of their newscasts once a week, sponsored by the airport. Use the sponsorship to also highlight the great deals available, incentives, etc.
- see what can be done with the online price-bidding services in the way of advertising...for example, if someone goes to "priceline.com" or "travelocity.com" and tries to book a flight arriving or departing from our expanded catchment area, could a banner add pop up promoting our airport?
- educational or information sessions should be held at lunch time or other times for workers downtown or for shoppers in the mall, etc. to inform people about all the available flights/services and carriers available from Chattanooga in total as well as on a daily basis; pricing comparisons as well as types of planes (i.e. number of jets) and other key facts should be included; perhaps a single tri-fold brochure showing all the flights, times, carriers, extra amenities at the Chattanooga airport, etc. should be produced & distributed at these and other community/employer meetings
- consider conducting other general information programs (broadcast or in the community) on topical issues related to flying: fear of flying, tips on preparing/packing for trips, etc.
4. Airport Structure: If larger volumes of passengers and larger geographic area and population help to attract greater service by airlines, including a potential low cost carrier, then perhaps our airport structure should reflect a more regional orientation. Not only should regional representation on the board continue to exist from North Georgia and North of Chattanooga, but identifying ways to structurally engage these target service areas in more collective "ownership" of the airport in a regional structure should be evaluated. Regional patronage and support of the airport is needed for the CMA to have an increased bargaining position and market position desired by airlines. Development of a new regional structure for the Airport Authority should be studied and evaluated. Likewise, the name of the airport itself should be changed from the Chattanooga Metropolitan Airport to a name reflecting more regional ownership and identity. Other changes to board and management activities should include more active and defined participation of commercial passengers, customers, in the board appointments and planning of the airport.
Create a Competitive Advantage for the Airport by Providing Extra Customer Service
5. Incentives Program: An incentive program to provide perks for frequent flyers from the Chattanooga Airport should be created. This could include such incentives as earning local airport points the more you fly from the Chattanooga Airport. Redeemable "airport bucks" should be made available for concierge services, dollars towards flying any airline from Chattanooga, valet service, reserved parking, free airport club access, food, or other services from local Chattanooga vendors. It would enhance the services available at the Chattanooga Airport and help to make the experience of using the airport more enjoyable.
6. Customer Service: Related to recommendation 5, a defined and an on-going customer service program that rewards passengers who patronize the airport should be implemented. This initiative should be a systematic and coordinated effort that can begin immediately and can improve dramatically the experience of the airport passenger. In doing so, we believe Chattanooga could create a competitive advantage over other major airports by being a boutique airport with concierge amenities that caters to the traveler. Winning customers over based on service should be a niche that the airport pursues.
Some of the tactics to consider include the use of volunteers to provide manpower for these initiatives that staff time simply may not completely address. Additionally, staff bonuses and rewards should be tied to specific measures of performance largely coordinated with passenger satisfaction, customer service and other measurable goals. A mission statement, along with service and performance expectations should be defined. Perhaps airport staff should even receive coaching from the "Disney" school. Customer service surveys should be conducted in a confidential matter on a systematic and defined basis. Ways to collect systematic customer input from airline officials and travel industry officials should also be developed. Results should be published publicly in readily accessible sources and rewards for employees should be available for improvements that are made.
Local companies should also be featured and included in a process of providing more services at the airport. This should include showcasing food vendors and retail offerings that are headquartered in Chattanooga and the area (i.e. Krystal Company, Central Park, Chattanooga Bakery, Gordon Biersch, McKee Foods, Coca Cola bottlers, etc.). Additionally, "mini-exhibits" or interactive displays from the Aquarium and other regional attractions should be considered to market the region's unique qualities while providing quality entertainment options to waiting passengers.
7. Corporate Policy Support: Area companies which have traveling employees should be solicited for their specific support of the Chattanooga airports. Such corporate travel policies could potentially include:
1. reimburse 100% of air travel from Chattanooga if within $100 of the fares of other airports
2. encourage 21 or 14 day advance travel arrangements from Chattanooga's airport
Identify potential rewards systems for companies who develop and carry out such policies, such as free billboard or in-airport advertising, etc.
8. Goals for Growth: Measurable goals for the airport's growth should be set and made public. The task force believes the Mayor and Board ought to consider a target of reaching at least 750,000 enplanements over the next several years. This target goal is reasonable and doable based on the fact that our MSA population is nearly 500,000 and our catchment area is over 1 million. This goal is midway between both of these benchmarks and also targets a volume typically required to attract a low cost carrier. Plans should include annual goals, 3 -5 year goals and should be closely tied to specific strategies (i.e. corporate support & policies, general marketing, incentive programs, etc.). Additional quantifiable measures for customer service should also be set. Management and employee bonuses should be based on success towards these goals.
Initial Implementation Steps
- A specific group needs to be charged with forming and carrying out an implementation effort to address all 8 strategies recommended. This group should be named within 90 days.
- A statistically valid, regional market survey should be conducted by industry experts to identify (desired) target customer markets from Chattanooga/Hamilton County, North Georgia, North Atlanta, North of Cleveland, Northeast Alabama, and other potential markets in order to determine exact market size that Chattanooga could expect if the varying Task Force recommendations were pursued (such as attracting a low cost carrier, increasing service by existing carriers, adding passenger incentives to fly from Chattanooga, increasing customer service initiatives, etc.).
The survey should include:
o volumes and passenger levels that could be anticipated under specific scenarios related to recommendations # 1, 2 and 5
o key messages important to customers for recommendation #3
o preferences & solutions for recommendation #5 and 6
o impact of other inter-modal transportation options on potential passenger volumes (such as van service to Chattanooga available in North Atlanta, Dalton, Cleveland, other areas; high speed rail connections between ATL and Chattanooga)
- As a follow up to recommended strategy # 4 of the Task Force, request an expert opinion on a regional airport structure and name change that could possibly accomplish goals for increasing market size, creating more regional ¡§ownership¡¨ of the current Chattanooga airport and creating more balance across regional transportation systems.
- Consider conducting a Performance Audit of the Chattanooga Airport to assess whether or not the operational structure is optimal to serve customer needs (both airlines and passengers), respond to industry changes and operate efficiently. Since the Task Force was not asked nor equipped to assess the operations of the airport, we did not. However, it seems rational that an assessment should be made as to whether or not there might be other opportunities or improvements that could be made that would contribute to overall performance, especially given mounting financial constraints in the industry. Additionally, it seems it would be appropriate that since user fees are utilized to support the efforts of the airport that a performance audit would also consider how well taxpayer resources are being used. Comparisons of the Chattanooga airport with other airports might also help identify ways in which other airports structure themselves to solve problems.
- Launch development of an aggressive marketing/pr plan to support major repositioning of the airport in the region. Major campaigns and initiatives to educate