Fares up, flights down at Indianapolis airport

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Travel agents still talk wistfully of ATA, the city's homegrown airline that brought low fares and nonstop service to Florida, Las Vegas and other favored destinations for Indianapolis passengers.

"ATA drove down prices. It was unique," said Mark Moorhead, president of The Travel Agency in Carmel, who booked countless ATA trips for customers in the 1990s and early 2000s.

More than any other factor, it was ATA's demise as a passenger carrier in 2006 — driven into bankruptcy from which it never recovered before closing two years later — that explains why Indianapolis saw some of the steepest cuts in passenger service and largest jumps in airfares of any U.S. city over the past eight years.

A new study by USA Today of air service at the nation's 200 largest airports found that Indianapolis International Airport has lost a third of its passenger flights since early 2005 while inflation-adjusted airfares here have risen 23 percent — the 17th-largest jump among the airports studied.

Only now is Indianapolis starting to recover from the fallout over the departure of ATA, which in 2004 was the city's largest air carrier with 25 percent of passenger traffic.

The city's air service continued to decline after ATA closed down when another airline, Northwest, reduced the mini-hub it had been building in the city after its merger with Delta in 2009, said Chris Matney, air service director at Indianapolis International Airport.

Other mergers also ended up reducing flights and keeping airfares higher by reducing competition, Matney told The Indianapolis Star.

"When it came time to take the medicine the airlines were doling out across the whole U.S., we took more than our share," he said.

Local airfares — which began rising after ATA's closing, through the recession of 2007-09, and during the subsequent years of high jet fuel prices — have finally begun to stabilize this year, Matney said.

And for the first time in years in Indianapolis, several airlines have begun adding new routes, including nonstop service to Los Angeles, San Francisco and Trenton, N.J.

"We're turning around from a long run of negative air travel," Matney said.

The USA Today study tracks by number what's been a tumultuous period for passenger aviation over the past eight years. The period was marked by rampant airline consolidation, radically restructured route systems, escalating costs and erratic airfares (though the average inflation-adjusted ticket price at all 200 airports rose just 5 percent since 2005.)

Indianapolis went from being a city with 13 air carriers to one with eight. Seats on flights originating here dropped nearly 40 percent, from 1.75 million to 1.1 million. Nonstop flights fell from 46 to 30. And inflation-adjusted airfares rose on average from $316 to $388.

It all happened despite the city opening a $1 billion runway, control tower and airport terminal, a humpback-roofed building that's been voted the best-functioning airport in the country. The city-owned airport even froze landing fees on airlines to not add to their costs after the new midfield terminal opened in 2008.

New terminal or not, having fewer flight offerings and costlier ticket prices has been an undeniable drag on the city, said Michael Huber, president of the Indy Chamber. "It's certainly not been helpful in an increasingly connected world."

Huber said he could try to spin the issue by saying Indianapolis hasn't suffered the severe cuts of 60 percent to 80 percent in flights and seats that other midsized airports such as Cincinnati and Memphis have seen. But "I realize that's not necessarily inspiring," he said.

For Brian Sweany, a Fishers businessman who flies a few dozen times a year, primarily to the East Coast, the decline of air service in the city has meant paying more for his ticket and waking up three hours earlier to catch one-stop flights to New York because the nonstop he used to take was eliminated.

"I'm up at 3 a.m. just to make a lunch appointment in New York," said Sweany, director of acquisitions for Recorded Books, whose studios are in New York. "At times I drive to Chicago because I don't want to deal with the hassle of one-stop flights."

While air service from Indianapolis to New York has narrowed, it's still there. Indianapolis city officials and businesses grew so frustrated with the paucity of flights to the West Coast that they lobbied the Indiana Economic Development Corp. earlier this year to fashion a first-time guarantee to United Airlines to get it to begin once-daily nonstop service to San Francisco starting in January.

"That's what it took" to persuade United to offer the five-hour flight, Matney said of the $1.5 million guarantee that the IEDC put up. United will draw on the money if revenue from the flight doesn't meet projections over the first year.

Airlines, most of which operate on thin profit margins these days and have a bankruptcy in their past, are wary of adding long-haul flights in non-hub airport cities such as Indianapolis. The 1,700-mile Indianapolis-to-San Francisco once-daily flight, for example, costs around $40 million a year to operate, considering the cost of the plane, jet fuel, crews and overhead, Matney said.

City officials now hope that United's competitors don't respond by offering cut-rate fares on competing one-stop flights to San Francisco, undercutting the gamble that the IEDC has taken with public money.

The narrowed air service and rising airfares in Indianapolis have been something that city tourism and convention officials have had to overcome, in part by pointing out that Indianapolis can offer visitors comparatively cheap hotel rates, restaurants and taxi fares, said Chris Gahl, a spokesman for Visit Indy, the city's tourism promotion arm.

On the other hand, the new San Francisco air service, and recent restart of nonstop daily flights to Los Angeles by American Airlines, gives Visit Indy some rare airline service news to trumpet on its website and in promotional items.

"It's a new message we have been able to deliver to key meeting planners," Gahl said. "We can now tout nonstop flights to San Francisco and Los Angeles."

Airport and city officials think Indianapolis has taken almost all the hits it can take from airline consolidation, cost-cutting restructuring and other trends that have trimmed routes and raised fares in non-hub airports such as Indianapolis.

Passenger count declines are close to leveling out, projected to be down only about 3 percent this year over last, Matney said.

Indianapolis International, meanwhile, has adapted to the long decline in airline service by turning more to non-airline sources of revenue to finance its operations. They include land rent from a solar power farm on its property and landing fees from cargo carrier FedEx, which has created its second-largest cargo hub in Indianapolis. The airport collects more in landing fees from FedEx than all the passenger airlines combined.

Sweany, the Fishers businessman, said he sees an ironic side to the decline in air service in Indianapolis every time he uses the new terminal.

"It's such a wonderful airport. You would think your choices of flights and airlines would be equally as nice."


  • We still have lots of NYC direct flights
    Not sure why anyone is up at 3 a.m. to take a flight with a connection to NYC when Delta offers regular nonstops to LGA and United does the same to EWR. USAirways eliminated its nonstops, but you stil get Star Alliance credit by taking the United flight.
  • I'll probably catch grief for this....
    Even though I DO like the new terminal better than the old, I have to admit I don't see what the big deal about it is. If out of town visitors are impressed by it than I think thats great and more power to the airport! But as someone who flies in and out of a lot of different airports, IMO our new terminal isn't that big of a deal. Perhaps part of the reason I feel that way is that no matter what day or time you are in our airport, it is dead and lifeless.
  • Airline Mergers
    Amazing that the premise in economics of fewer choices eventually driving up prices (which is what has happened in Indy) was not enough to keep the justice department from green lighting the recent airline merger! Stinks for the consumer!
  • Airport Investment Creates New Opportunities
    The new airport passenger terminal is well worth the investment. The old terminal was an embarrassment to the approximately 1+ million tourists & business people that use the airport each year. It is the first & last impression anyone has of our city. Clearly there is a lot of work to be done to make our airports direct flights live up to the overwhelming quality of our infrastructure investment. Seems someone should see a huge market opportunity with all this airline consolidation. Maybe foreign carriers or a new charter hub.
  • Sigh
    What part about the airport expansion not being taxpayer funded do you not understand? It has been stated in print thousands of times, yet people like you continue to complain.
  • Did we really need a new airport
    I know, it's time for the "new terminal doubters" to start complaining, but it is worth bringing up: was the new airport ($1B) really necessary.....I mean, a decent renovation would have worked out fine, in my mind. I know, the construction companies and the cement/asphalt industry would not have made out like bandits (how many miles of new roads were constructed as part of this boondoggle?) but the truth is, the new airport, its costs, etc, were never really justified. We would have done just fine with the old airport. Just saying...

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  1. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

  3. I agree with the other reader's comment about the chunky tomato soup. I found myself wanting a breadstick to dip into it. It tasted more like a marinara sauce; I couldn't eat it as a soup. In general, I liked the place... but doubt that I'll frequent it once the novelty wears off.

  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.