June 3, 2023


Business&Finance Specialists

Business or leisure? Lincoln Airport will likely need to shift focus to attract airlines, passengers | Local Business News

11 min read

The Lincoln Airport has taken its licks this century, with the 9/11 terrorist attacks, the Great Recession and COVID-19 all conspiring to blunt momentum and set its growth back years at a time.

Each time it has bounced back, regaining most, but not all of its passenger traffic within a few years.

But now the airport is faced with a double whammy. Not only did the pandemic greatly decrease its passenger traffic, just as things were starting to look up again, it was dealt another blow: the complete loss of service from Delta Airlines.

The airline, which has served Lincoln for decades, flew its last plane to Minneapolis in early January.

That leaves the airport with just one airline, United Airlines, and just two destinations. That’s less than the Central Nebraska Regional Airport in Grand Island, and the same number as Kearney Regional Airport, which also has service to Chicago and Denver on United.

David Haring, executive director of the Lincoln Airport Authority. 

Despite that major setback, airport Executive Director David Haring said he remains optimistic that things will rebound again, though it could take awhile, and it likely will mean changing the airport’s focus when it comes to attracting air service.

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Business or leisure

Haring took over at the airport in August 2014, just days before Delta added service to Atlanta, giving it four destinations. He said Lincoln’s main focus has always been on getting traditional airline service to destinations that appeal to business travelers.

In addition to flights to Chicago and Denver on United, and the Delta service to Minneapolis and Atlanta, the airport also in recent years has had service to Detroit, Memphis and Salt Lake City.

People who travel for business often like the convenience of being able to fly out of Lincoln.

Zachary Lee said that in the fall of 2019, before COVID-19 shut down a lot of business travel, he flew frequently from Lincoln for his job at Hudl.

“For me, it’s definitely a convenience thing,” said Lee, who is a support manager at the sports video analysis company.

Traveling for business, Lee has the flexibility to fly out of Lincoln, even when it’s more expensive. He said Hudl encourages employees to book their flights from Lincoln if the ticket price is within $150 of a similar flight from Omaha.

Lee, who has one small child and another on the way, said the two hours he saves by not having to commute to and from Omaha is important because it’s extra time he can spend at home.

When it comes to leisure travel, Lee said he also chooses the Lincoln Airport most of the time. He’s a frequent flier with United Airlines, so price is usually not a concern because he can use accumulated miles.

But Lee is in the minority when it comes to Lincoln residents. Most people, even those who routinely fly out of Lincoln for business, drive to Omaha for leisure travel. Research over the years has consistently shown that two of every three fliers from the Lincoln area start their trip at Eppley Airfield.

That’s often for two reasons: price and flight selection.

People are more price conscious when spending their own money, and they also are less accepting of travel delays that might eat into vacation time.

Michael Callari said price is the primary reason he flies out of Omaha rather than Lincoln.

“Tickets are at least $100 more to fly out of LNK, and it simply isn’t worth spending the money to avoid a 45-minute drive when I can instead spend it on a nice dinner with the Mrs. at our destination,” Callari said in an email.

The business focus has served the airport well for decades, but industry changes and changes in why people fly mean a new focus is needed, Haring said.

He said that in the wake of COVID-19 and the loss of Delta service, airport officials have done some “fairly significant evaluation” of how they can grow the airport going forward, and it brought them to an epiphany.

“We sort of came to the realization that we’re kind of running out of wells with respect to what we’ll call Lincoln’s traditional markets,” he said.

Haring was referring to destinations served by the major airlines. Consolidation over the years has left only four of what are considered mainline carriers: United, Delta, American Airlines and Southwest Airlines.

He said Lincoln has a strong relationship with United, one that has potentially gotten even stronger in the past year with the location in Lincoln of a maintenance operation of CommutAir, one of the regional airlines that flies for United in Lincoln and other smaller cities.

But getting service with the other airlines seems unlikely, at least in the near term. Though Haring said he believes Delta will eventually come back to Lincoln, it’s not likely to be in the next few years.

Despite lobbying by Lincoln officials and a $750,000 federal grant, American Airlines has shown no interest in starting service to Dallas. And Haring said Lincoln does not fit the business model for Southwest.

So that leaves two options, leisure carriers and ultra-low-cost carriers.

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Haring said many of the current ultra-low-cost carriers are startups that are focused on the coasts, so the most likely option for the airport to focus on now is leisure carriers.

“We think that’s probably where we’re headed next,” he said.

The largest and most well-known of the leisure carriers is Allegiant Airlines, which has made a solid and growing business out of flying two or three times a week to vacation destinations such as Las Vegas, Phoenix or Florida.

Allegiant, which flies out of both Grand Island and Omaha and offered service at the Lincoln Airport more than a decade ago, is probably not an option, but there are others.

“I think there are opportunities out there,” Haring said, although he declined to name any airlines that might be interested in Lincoln or vice versa.

One possibility could be Sun Country Airlines, a Minneapolis-based airline that flies to dozens of destinations in the U.S., Mexico and other countries.

It added a number of smaller Midwestern cities to its route map last year, and was reportedly interested in Lincoln in 2019, although the deal fell apart because the airport could not provide incentives the airline wanted.

“I’m optimistic that we will see some form of traction in getting leisure services,” Haring said.

Past experience shows leisure service can be successful in Lincoln. When Allegiant was at the airport from 2006-2008, it routinely averaged more than 2,000 passengers a month, despite only offering two departures a week.

More recent evidence, in the form of surveys fliers take when accessing the airport’s wireless internet, show 62% of people using the airport are leisure travelers, and about one-third are using the airport for the first time.

Scott Tarry

Scott Tarry

Matt Olberding

Scott Tarry, director of the Aviation Institute at the University of Nebraska Omaha, said he thinks shifting focus and considering leisure service is a “smart move” for the Lincoln Airport.

“They’ve got to be creative,” he said. “I think it’s a great start to at least have their eyes open to these different options and different strategies.”

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Incentives — a new tool

The Sun Country situation highlighted a problem when it comes to attracting air service to Lincoln: the airport has been at a competitive disadvantage for years when it comes to having money to offer airlines a financial backstop when starting service here.

Federal Aviation Administration rules allow airports to waive fees, such as landing fees, and provide marketing assistance for airlines that start new service, but it does not allow them to provide direct financial aid, either with money that comes from the FAA or with money they earn from their own operations.

There’s also a state law that prohibits any public money, whether it be from the state, county or city, from being used as a revenue guarantee, something that doesn’t apply to airports in most other states.

That has hamstrung the Lincoln Airport in competing with other similar-sized airports and limited the assistance it can offer to airlines — until now.

Last month, the Lancaster County Board agreed to give $1.5 million of its pandemic relief money to the airport to use to provide revenue guarantees to airlines that start new service here.

Though Mayor Leirion Gaylor Baird initially said she would not match that amount with city stimulus funds, she changed course earlier this month after several local officials urged her to do so.

Lincoln Airport Authority member Nick Cusick said at the time the mayor’s decision was great news.

“Having $3 million puts way more tools in our toolbox,” he said.

Haring went a step further.

“It’s hard to understate how massive that is for us,” he said.

The money was made possible thanks to unusual circumstances. Because of the pandemic, the federal government gave billions of dollars of aid to counties and cities.

Since the money is from the federal government, the city and county can funnel it to the airport to use as a revenue guarantee without running afoul of the state law that prohibits it. And because the money didn’t come from the FAA, the agency has no say over how the airport can spend it.

Because the money is a financial backstop for the airlines, meant to compensate them for a certain amount of losses incurred in starting up new service, Haring said his hope would be that not much of the money gets used because that would mean whatever air service it attracts is successful. He also wants to make it last as long as possible and have it available to multiple potential airlines.

“We’d like to see it yield more than one service,” he said.

Terminal velocity

Another potential selling point to bring in more passengers is the renovation and expansion of the airport passenger terminal.

Construction started last year on the $55 million project — that’s being funded by local taxpayers — which will grow the terminal by about 35,000 square feet, add gates and modernize the building.

The project should be substantially complete before the end of the year, at which time airlines and passengers will start using the new gates.

Amenities such as food and beverage service in the secure gate area will appeal to leisure travelers, Haring said, while ticketing, security and baggage enhancements should make for smoother operations.

While he said the new terminal won’t necessarily help attract new service on its own, it doesn’t hurt.

“Having a new terminal does not guarantee air service,” Haring said, “but having an insufficient terminal can cause you to lose it.”

He said that while the timing may not be great, it is smart for the airport to be making the needed upgrades in its terminal.

And though making improvements won’t necessarily entice airlines to bring new service to Lincoln, “you know that your chances are going to be slimmer” of getting new service without those upgrades, Tarry said.

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Hoping for a takeoff

Despite the ongoing pandemic and the loss of an airline, Haring feels confident that the airport can bounce back and reach its pre-pandemic passenger numbers.

“My goal is obviously to get us back to pre-COVID levels,” he said.

That could be a tall task. In 2019, the airport had nearly 330,000 passengers, which was its largest yearly total since 2007. In 2020, passenger numbers plunged to just over 100,000, and while they grew by about two-thirds last year, that still left them barely more than half of the 2019 numbers.

So where does Haring’s optimism come from? It’s multiple factors.

First off, he believes traditional business travel will eventually return to its pre-pandemic level, and he thinks Lincoln will get at least one new “traditional” business destination within the next couple of years.

Also, the airport expects to hold onto a significant portion of people who were flying on Delta. The airport’s consultant, Nick Wangler, owner and president of Forecast Inc., said he believes 50% or more of those passengers will keep flying out of Lincoln and switch to United.

And Haring feels confident that the airport can attract at least one leisure carrier in the next few years.

“You are seeing all these opportunities out there in the future, just basic math seems to indicate that one of those is probably going to pan out for us in some fashion because they have to put the planes somewhere,” he said.

If and when those new destinations and/or new airlines land in Lincoln, Haring feels confident local residents will use them.

Utilization metrics at the airport remain very strong. United flights are routinely more than 80% full, and even Delta was seeing good passenger numbers on its Minneapolis flight before it ended.

“Even though carriers are departing, demand is not,” he said. “And that’s where the optimism comes from.”