MSP fares rank high nationally

  • Article by: PAT DOYLE , Star Tribune
  • Updated: August 10, 2011 - 11:27 PM

Geography and lack of airline competition are blamed for disparity.

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An airplane lands at MSP International.

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Travelers flying out of Minneapolis-St. Paul International Airport have long paid some of the higher air fares in the nation. These days, they're even less likely to get a deal.

MSP had the 11th-most-expensive average airfares among major U.S. airports, one of its highest rankings in a decade, according to the latest report by the federal Bureau of Transportation Statistics.

The dominance of Delta Air Lines -- inherited from Northwest Airlines -- and difficulty attracting low-cost carriers have helped send prices higher at MSP than elsewhere.

Finding a way to lower ticket prices has been a goal of Gov. Mark Dayton and the Metropolitan Airports Commission, which oversees MSP. The MAC has an employee whose job is to lure other airlines to the Twin Cities.

But low-cost airlines moving into any market dominated by a major carrier face the prospect that the leader will temporarily cut prices or add routes "so you would bleed and disappear," said airline analyst Adam Pilarski.

MAC Chairman Dan Boivin recalls recent events.

"Sun Country announces a new flight to Costa Rica," Boivin said. "What did Delta do? They announced a flight to Costa Rica starting a week earlier."

"It really bugs me," he said.

Still, the airport's long-range expansion plan calls for turning over the main Terminal 1-Lindbergh to Delta and its partner airlines and moving American, United and others to Terminal 2-Humphrey with the low-cost airlines.

MAC officials juggle a desire for more competition to bring down fares with an almost contradictory desire to satisfy the dominant airline that keeps the airport a major hub.

"Minnesotans are fortunate to have a hub," said Mike Landy, a MAC member since 2002. "You have that flight capacity at any hour of the day to go most places you want to go."

"On the other hand, we'd like to see some competition at the airport."

Delta this week declined to comment on why fares ranked higher at MSP than at many other major airports -- including Delta's hubs in Detroit and Atlanta.

"A variety of factors influence fares, including the cost of providing the service, the route flown, whether a route is nonstop or connecting, the price of jet fuel and customer demand for the service," said Delta spokesman Trebor Banstetter.

MSP ranked 11th among the nation's largest airports in airfares in the first quarter of this year with a $413 average ticket price for domestic flights. The price rose 9 percent from the first quarter of 2010, when MSP ranked 15th in prices.

MSP's prices ranked higher in the first quarter of 2011 than in any quarter since 2008, when it ranked as high as sixth.

To be sure, average air fares in Minneapolis and across the nation have risen less than inflation in the past decade, restrained by economic hard times and intense competition at some airports.

At Chicago O'Hare, where there is tight competition between United and American, prices fell 5 percent over the 10 years. O'Hare ranked 25th in fares this year at $389.

Atlanta ranked 45th among major airports in the first quarter of 2011, with an average ticket price of $360. Detroit ranked 43rd with a ticket price of $364.

As if to illustrate the disparities, an e-mail sent last week to Delta frequent fliers offered low-priced deals out of 24 airports -- none at MSP. Ten of the deals were for flights from the airline's hubs in Detroit or Atlanta.

MSP's higher prices could be explained in part by geography and its use of smaller planes to fly expensive regional routes in the Upper Midwest, airline analysts say.

"Minneapolis serves some markets that are monopoly markets ... some of the Montana cities, North Dakota, South Dakota cities," said airline consultant Ernest Arvai. "Detroit serves a more metropolitan mix."

He said smaller regional planes that serve many cities out of MSP have higher costs per passenger so "you've got to jack up the price."

While Detroit is 280 miles from competing airports in Chicago, "Minneapolis is more geographically off by itself," said George Hamlin, a consultant specializing in aviation economics.

Analysts point to low-cost carrier AirTran, which is the second most popular carrier at the Atlanta airport, for holding down prices there. By contrast, AirTran and low-cost carrier Southwest Airlines have a minor presence at MSP.

Hustling for new carriers

The fare ranking is a selling point for Brian Peters, the MAC employee with the task of recruiting new airlines to MSP.

"We point out that our airfares are high, and that's always music to an airline's ears," said Peters. The airport also cites the Twin Cities business climate.

He talks regularly with "pretty much every carrier we do not have," including JetBlue and Spirit.

Peters said airlines haven't complained about the Humphrey terminal location, which has fewer amenities than the Lindbergh terminal but also is more economical for carriers. Humphrey is connected to the Lindbergh terminal by light-rail transit.

"You make pitches and hope they come," MAC member Landy said. "They need to feel confident that they will be able to compete in this market."

Offering incentives isn't practical because the airport would have to offer them to all airlines, MAC officials said.

"What's going to happen if we do that domestically is Delta taking advantage of everything," Boivin said.

At the Humphrey terminal last week were Shane and Tamika Sanders, 25, who say they typically find cheaper fares on Southwest between Minneapolis and Washington, D.C., than on either United or Delta.

A recent round trip cost each $320, while the major airlines "were upwards of $400," Tamika said.

John Hanlon, 70, paused before catching a flight to Orlando on AirTran, which he booked even though he said a travel agent advised him that Delta would probably match the price.

"I'll stick with the one who gave me the lowest rate upfront," Hanlon said.

But other travelers prefer sticking with the airport's major carrier. At the Lindbergh terminal, Grant Wibben, 33, of Minneapolis, was preparing to catch a nonstop Delta flight to Washington rather than connect through other cities on other carriers.

"I don't like the hassle ... so I'll pay a little more," he said.

Pat Doyle • 612-673-4504

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