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North Bay Business Journal

Monday, April 21, 2014, 7:00 am

Data show Horizon flights outperforming industry norms

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    SANTA ROSA — New federal data show each of Horizon Air’s four commercial routes involving the Charles M. Schulz – Sonoma County Airport operated at a higher percentage of capacity than the carrier and industry as a whole in 2013, signaling for some that growing demand could encourage Horizon to expand services in the future.

    Including the impact of flyers that stop in Santa Rosa on their way to other airports, those route-specific numbers show an average 85 percent capacity for routes involving the Sonoma County Airport and its four destinations of Los Angeles, Seattle, Portland and San Diego. The carrier flew at an average 81.1 percent capacity over all of its routes in 2013, according to data from the U.S. Department of Transportation.

    While Sonoma County Airport’s monthly passenger report provides insight for local activity, the additional federal data offers a broader look at the Alaska Airlines subsidiary’s own operations and the overall performance of those routes.

    “In general, Alaska is very happy with our performance,” said Jon Stout, airport general manager. “With these high loads, that tells me we can support more service.”

    Alaska Airlines was unable to comment on those results by press time. Yet the federal data — which trails the airport’s own overall numbers by several months — shows increasing demand for routes involving the North Bay’s only commercial airport.

    Flights to and from Seattle were at the highest average capacity in 2013, at 88 percent. Portland flights were at 85 percent capacity, followed by San Diego at 84 percent and Los Angeles at 82 percent.

    The prior year had seen a regular Las Vegas route replaced by San Diego, and the combined average passenger load for both routes increased 3.22 percent compared to San Diego flights in 2013. Portland saw capacity rise 0.89 percent year-over-year, with levels essentially unchanged for both Seattle and Los Angeles.

    Those results occurred over a greater number of flights, with a total of 3,870 flights in 2013 representing an increase of 4.9 percent. Horizon held 21.5 percent of the market share for Portland passengers and 30.3 percent of the market for Seattle passengers as a whole.

    Though route profitability hinges on a number of factors, passenger volume is a key metric. Mr. Stout, who has spent more than 20 years in airport management, suggested 72 percent to 77 percent average load as a median range for well-performing routes.

    U.S. commercial air carriers as a whole flew at 82.68 percent capacity in 2013, compared to 82.26 percent in 2012, according to the Department of Transportation.

    While the 82 percent capacity for Los Angeles flights ranked the lowest in the Horizon data, Mr. Stout said that the route still represented very good performance while spread over a greater number of flights. Los Angeles flights represented over 43 percent of all flights involving the Sonoma County Airport for Horizon Air in both 2013 and 2012.

    That passenger volume has made Los Angeles a particular focus for tourism and economic development, said Tim Zahner, chief marketing officer for Sonoma County Tourism.

    “L.A. is a very strong market for both leisure and business,” he said. “For us, it’s a strong way to attract meetings.”

    The Sonoma County Tourism Bureau is partnering with the airport for an ongoing passenger survey to begin in late April, with preliminary data expected as early as May, he said.

    “I want a really good one-year cycle, so we can figure out what a traveler in January is doing versus a traveler in May. Where are they staying? How much are they spending?”

    Some data does exist suggesting an increase in tourism: The $4.6 million in gross rental car revenue in 2013 was up 15 percent from 2012, and comparable revenue for the year is up 7 percent, Mr. Stout said.

    Seats allocated for passengers traveling to or leaving from Santa Rosa were at an average 77 percent capacity in 2013, up 1 percent from the prior year and 6 percent from 2009. Those volumes fluctuate with the seasonality of air travel, averaging 80 percent or greater during the summer months.

    An average of 55 percent of capacity aboard Horizon’s fleet of 76-seat Bombardier Q400 aircraft serving the Sonoma County Airport is allocated for local passengers, a share that the carrier typically increases during the summer months, Mr. Stout said.

    Horizon, which generally serves smaller regional airports than its parent company, saw its annual operating revenue rise 1.89 percent in 2013, to $377 million, according to the Department of Transportation. Costs had increased, however, with $14 million in net income down 12.5 percent from the prior year.

    Alaska Airlines, the larger parent, increased its annual revenue by 11.2 percent in the same period, to $5.1 billion. A one-time reevaluation of deferred revenue from a passenger incentive program — along with increased passenger volume — helped boost net income 42.4 percent from the prior year, to $460 million, according to Alaska’s annual report. Passenger load averaged 85.8 percent for 2013.

    Many have speculated that Alaska Air Group (NYSE: ALK) or another carrier may pursue new routes at the Sonoma County Airport following the expansion of its two runways to comply with new federal standards, with Denver, Colo. seeming likely as an eastern connection. Yet those possibilities remain speculation, along with the addition of new flights on existing routes that may well hinge on the availability of aircraft.

    “The key is an eastbound connection for us,” Mr. Zahner said.

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