The Airlift Factor

Between 2007 and 2012, Pittsburgh International Airport experienced a nearly 40 percent decrease in scheduled flights. As US Airways shifted service away from the former hub, the carrier cut an average of 1.9 million departure seats annually from the city, according to data provider Aviation DataMiner Flight Schedules Innovata LLC. In the past five years, US Airways passengers have lost nonstop service from Pittsburgh to more than 50 destinations.

One might assume the local meetings market has suffered immeasurably from the diminished flight capacity. But that isn't the case, according to Jason Fulvi. "We're seeing record occupancy and revenue per available room right now," says the executive vice president of VisitPittsburgh, the city's destination management organization. "Up until this year, 2008 was our banner year in terms of convention room nights. Now 2012 has set the benchmark."

As legacy airlines continue to tightly manage capacity, reductions in the number of flights and seats are recurring at airports across the country. According to a September aviation industry performance review from the Office of the Inspector General, scheduled flights dropped by an average of 9.4 percent between June 2007 and June 2012 at the nation's 35 largest airports. Flight cuts occurred at 30 of those top 35 airports.

But Pittsburgh isn't alone in its ability to shrug off the apparent disadvantage. Memphis International Airport has lost nearly 42 percent of scheduled departures since 2007, according to Aviation DataMiner. The combined seat capacity of Delta and Northwest flights have dropped by 85.5 percent at the airport in the past five years. What has that meant for Memphis meetings? "We're coming off of our best convention year ever," notes John Oros, vice president of convention development at the Memphis Convention and Visitors Bureau, "and attendance at all of the conventions here was well up over their previous attendance in other cities."

"What we're seeing is there just isn't a direct correlation between flight volume and meeting RFP volume," says Anthony Miller, vice president of strategy for Active Network Business Solutions in San Diego. For example, request-for-proposal volume is growing for San Antonio, according to Active's StarCite Supplier Marketplace, despite decreasing flight volume, while in Charlotte, N.C., where flights actually have increased by about 12 percent in the past five years, StarCite's RFP volume has fallen by 21 percent.

Low priority for planners Fortunately for hard-hit destinations, flight capacity hasn't been a deciding factor for most planners. "It could have an impact on attractiveness of drawing conventions," says Bob Brindley, vice president of Advito, the consulting arm of corporate travel management firm BCD Travel, "but generally, air is the last thing clients are looking at when they're looking at sites for a meeting." Informed by findings of subsidiary BCD Meetings & Incentives, Brindley notes that "while air certainly can come into play in some advance planning, it's typically not the main driver."

That was the case for organizers of the One Young World Summit, held this past October in Pittsburgh -- which beat out Johannesburg, South Africa, among other destinations under consideration. That event drew 1,300 young delegates from 183 countries. "This is the only event that brings together as many countries in one place other than the Olympics," notes Henrietta Walsh, a spokesperson for One Young World. "Holding the event in Pittsburgh meant that most flights had a stopover in a larger U.S. airport, but that didn't cause any major problems with people arriving on time."

In terms of importance, Walsh says, the flight service paled in comparison to Pittsburgh's level of commitment to host the event. She cites examples such as the opening-night party held on the iconic Roberto Clemente Bridge, which the city closed to automobile traffic.

"If the destination is providing the right package and is the right fit for the piece of business, that overcomes the increase of flight costs or lack of direct-flight convenience," adds VisitPittsburgh's Jason Fulvi. "We track all of our lost business, and I can tell you that the category of air service is very low on the scale of why we lose business."

Caveats to Consider

Flight capacity might not be a top concern for planners when selecting a meeting site, but it definitely should be considered, cautions Debi Scholar, CMM, CMP, president of the Scholar Consulting Group. If you're working with a travel management company, a key service it should provide is an air analysis of cost and lift availability by location.

"Going through that process is very important," according to Scholar, who recommends that a group air analysis for commonly traveled city pairs be done quarterly, especially given the frequency with which flights are being cut. "When a meeting sponsor asks about the average airfare for a city of interest, the data should be available."

Another consideration: Many organizations have policies regarding the number of executives permitted to fly together on the same flight. If that's the case, a city with limited airlift could cause real problems for executive meetings.  
M.J.S.

Photograph: ©iStockphoto.com/KUPICOO

Cost considerations While reaching many second-tier destinations isn't as convenient as it used to be, the lower meeting costs within those cities remains an allure. "As prices are returning to near pre-2008 levels in the first-tier cities, they are becoming budget-limiting or prohibitive," says Carolyn Pund, CMP, CMM, senior manager of global strategic meetings management at Cisco Systems in San Jose, Calif. "We try to source to second-tier cities, many times in hopes of finding a more budget-friendly location."

If fares to such destinations rise too steeply, however, the price advantage is canceled out. But in many locations fares have remained competitive -- particularly in cities like Memphis, Pittsburgh and St. Louis. "When these airports move from a dominant hub to a more competitive market," explains Advito's Brindley, "the amount of air service may go down, but the level of competition generally goes up."

When US Airways cut a hefty share of Pittsburgh service, carriers like JetBlue and Southwest moved in to keep fares competitive; likewise, Southwest has picked up slots due to Delta's cuts in Memphis and American's reductions in St. Louis. "Southwest is our major carrier now," notes one St. Louis-based corporate meetings manager, "and they keep adding flights. Where we run into trouble is when we try to use other carriers, since there are very few direct flights from St. Louis. That is painful, but we've had time to get used to that, and it is our new reality. It hasn't had an impact on our local meetings, because people still need to come to our office whether lift is good or not."

A certain amount of flight capacity obviously is required to keep a city viable as a meeting destination. It helps, for example, to have flights scheduled both in the early morning and after the workday, and most attendees should be able to reach the destination with one connection. Many of the second-tier markets that lost the most flights, though, had an abundance of service to start with.

What's more, notes VisitPittsburgh's Fulvi, most second-tier destinations are in the same boat. "Capacity cuts were widespread for a lot of second- and third-tier destinations," he says. "And I think that the traveler has kind of accepted the fact that the way you have to travel now is different: You don't have a lot of direct flights anymore unless you're in a first-tier destination. So it kind of leveled out the competition for a lot of non-first-tier cities."

More to come While a transition to smaller, more regional meetings has been identified as an industry trend nationally, not every destination has experienced a noticeable impact from the practice. Pittsburgh, for instance, still ranks national association meetings as its largest market. And the Memphis CVB's John Oros says his city hasn't seen an influx of local meetings -- yet. But that doesn't mean they aren't preparing for it.

"We're going to place more emphasis on prospecting in the Southeast," says Oros. "For example, airfares between Atlanta and Memphis are very inexpensive right now. So we think that the corporate meetings market in and around Atlanta has some strong possibilities for us." They're also looking toward regional association business from Alabama, Mississippi and Georgia, he adds.

Delta is continuing to reduce service at Memphis, according to Aviation DataMiner -- by almost 33 percent just from 2012 to 2013. So, while the city's national meeting business remains strong, notes Oros, looking to nearby regional markets just makes sense.

"It's an anticipatory move that we feel is a good strategic move for us because of the philosophies that are being employed by the airline industry -- to reduce capacity," Oros says. "We don't see that changing anytime soon. It's something we can do to help offset whatever business we lose, if any."

While the past five years of capacity cuts may not have directly hurt meetings business in a number of cities, that doesn't mean the next few years won't bring about more noticeable change.

"There's a yellow warning light flashing," says Oros. "We monitor it, and we have to be flexible and ready to move if fares just keep escalating to the point of being prohibitive. We're planning some defensive moves in case that happens. I'm sure that thought process is in the minds of every CVB executive in the country."