Airports work harder to win new flights, fliers
By Ken Leiser
Published: Sunday, Jun. 06 2004

Nobody works an airport terminal like Fredbird.

Darting from one ticket counter to the next at Lambert Field one day in April, the St. Louis Cardinals' mascot hugs one passenger, puts his beak over the head of another, then pauses to pose for a snapshot.

"What a sendoff," said American Airlines passenger Mary Taylor of Webster Groves, unruffled by the sudden commotion while she waited for her husband near the ticket counter.

Not far away, Allen Sherman is beaming. He is one of the volunteer business executives trying to reverse the airport's fortunes after it lost 214 daily American Airlines flights last fall. Some visitors got baseball caps on opening day. There's talk of a Final Four promotion next year when St. Louis hosts the event.

"Besides trying to give the airport a nicer atmosphere for the people
that fly in and out, I also see it as an ... area for increasing tourism,"
Sherman said while watching Fredbird cavort.

If giveaways and promotional appearances sound a little desperate, these are worrisome times for commercial aviation in St. Louis. Airlines are starting to snap out of their post-Sept. 11, 2001, doldrums in many markets but not here. American Airlines made deep schedule cuts last year to keep its costs down.

As a result, there's a new entrepreneurial zeal at the airport due in no small
part to former Sara Lee Bakery chief Barry Beracha, former Anheuser-Busch executive Aloys "Al" Litteken and Sherman.

The goal is to keep the airport on a competitive footing now, but more important, when airlines start paying their share of a new $1 billion runway after it opens in 2006. Beracha uses that ominous term "turnaround" to describe their work.

Across the river at MidAmerica Airport, St. Clair County officials still are mired in the startup mode at the 6-year-old airport. It has seen two passenger airlines come - and go - at an airport built to relieve congestion at Lambert that does not exist.
Airport officials still hold out hope for the return of passenger planes. But MidAmerica director Tim Cantwell spends a lot of time talking about the potential market for cargo flights, particularly international cargo.

Preparations are under way for a new $7 million cargo facility to open in
October and be in operation next March.

"We have to make a market here," Cantwell said of MidAmerica's potential as an international cargo portal. "We have to show that it's viable and we have to have somebody take a chance. And our focus is to find all those chains to come together by March 2005."

Meantime, he stresses the importance of the airport's other ongoing missions: joint-use operations with Scott Air Force Base and the pursuit of national passenger service.

On the passenger side, a consultant report commissioned by the county suggests that MidAmerica had a realistic shot at regularly scheduled passenger service.

Two airports, one common thread: Both are hustling for more planes.

Barry Beracha has been dealt a hand like this one before.

When Anheuser-Busch spun off money-losing Earthgrains Co. as a publicly traded business in 1996, Beracha said he went to shareholders and potential investors to tell them in effect: "This is going to be a good deal."

So what if the baking business was not doing so great at that point?

"We put together a solid team and we addressed the issues" facing the company, Beracha said. "Within the first quarter, we showed a profit and we showed
improvement consistently thereafter."

Sara Lee Bakery Group acquired Earthgrains in 2001.

The recipe for a turnaround, he said, is to identify the most important things you need to do, focus your resources on getting those done and know what your customer is looking for. And do it all better than your competitors.

St. Louis Mayor Francis Slay dispatched Beracha as his personal representative at the airport, with an eye toward keeping costs in line and making Lambert more attractive to its customers. Beracha, in turn, assembled other volunteer executives.

Lambert's most urgent matter is the new runway, which must be finished on time and within budget. Beracha was part of a task force of business leaders that determined this year that there was danger it would miss on both counts.

"We started out as a task force questioning hard, do we need to continue with this investment," Beracha said. "But it didn't take us long to understand how the economics of the airports work and what capability it was adding. So a few weeks into it, we said this needs to be completed but as efficiently as possible and as quickly as possible."

The task force findings were made public in February.

Beracha and his team now believe that the runway could be finished a few months early. Two local construction firms teamed to turn in a slightly
lower-than-expected bid to build the runway and taxiways.

Beracha's group is working with the Airport Authority on ways to keep costs down - something Director Leonard L. Griggs Jr. has been focusing on since the week following the Sept. 11, 2001, terrorist attacks.

The task force found that Lambert was in danger of losing significant ground to competing Midwestern airports such as Chicago-Midway, Indianapolis and Kansas City unless it kept its costs down.

That was particularly true when it comes to the heavy debt load the Airport
Authority will begin passing along to its airline tenants after the new runway opens. The carriers will begin paying off their 23 percent share of the $1 billion runway cost through user fees.

Because Lambert runs as a break-even enterprise, the airlines are billed
through their landing fees and leases for the difference between St. Louis'
overall cost to run the airport and the amount it collects through concessions and parking receipts.

To keep Lambert a competitive, "growth-oriented" airport, the cost needs to be held in the $8 to $10 per passenger range once the runway opens. Last year, that broke down to $5.83 per passenger.

Beracha believes that goal is attainable without a major infusion of outside
funds. And the cost per passenger could be even lower if more flights are
added.

Lambert officials continue to seek new flights out of St. Louis, Griggs said.
So far, nearly 50 new daily departures have been added and, Griggs said,
Denver-based Frontier Airlines recently opened three gates in the previously empty D Concourse.

Airport travel records and interviews show that the airport continues to
approach discount carriers like JetBlue and AirTran Airways. Griggs believes Southwest, the airport's incumbent low-cost carrier, may be poised to add flights, too.

"We have said publicly that we are not going to open any new cities this year," said Tad Hutcheson, spokesman for AirTran Airways of Atlanta. "St. Louis has continued to keep the dialogue open, but we have not made any decisions to serve the market."

JetBlue Airways spokesman Todd Burke said there were no formal talks between the carrier and St. Louis and "it's not on the foreseeable future list." On the other hand, the airline is not ruling any cities out.

More flights are one thing. But travelers unaccustomed to the smallish regional jets that now account for a larger share of St. Louis flights want bigger planes, too.

Beracha said the good news is that Lambert has become a profitable hub for American during the first few months of this year, although the airline won't publicly break down those numbers by individual airport.

Still, everyone seems to agree that Lambert's long, cavernous terminals need to be more palatable to the public.

Travelers have tolerated the airport's dark, leaky passenger concourses for
years, while other airports added glitzy retail shops and open, airy terminals. Lambert's East Terminal, which serves Southwest Airlines, reflects the national trend.

"The thing we have to do now is maintain the ambiance of these concourses .to the traveling public," Griggs said. So "that their experience is pleasant.
That we have the proper sort of merchandising. The proper sort of food and beverage, and all the rest."

Airport officials are negotiating with concessionaires HMSHost Corp. and
Paradies-Concessions II-Arch Inc. about new specialty shops and other stores on Concourse C, where American has consolidated much of its operations. An announcement is expected within weeks.

Griggs said the airport also would put together a $77 million budget that
includes concourse upgrades.

Plans for an ultramodern midfield terminal and underground connector once eyed by Trans World Airlines now sit in a drawer at the airport offices, Griggs said. Both are considered part of future expansion but would be driven by future airline demand. The terminal project carries a $1.3 billion price tag.

"When are we going to build a new terminal? That's everybody's question to me," Griggs said. "It is going to be a long time."

Beracha said the business community is putting together data on the most
popular destinations for business-related travel to share with the airlines.
The hope is that they will adjust flight times and the size of aircraft serving
the market.

Richard Fleming, president of the St. Louis Regional Chamber and Growth
Association, said 44 of the region's 60 largest companies taking part in an
ongoing survey were asked to size up their biggest air service worries.

Nearly one-third said their top priority was restoring nonstop service to
cities abandoned by American and its regional partner last year, Fleming said. Thirty percent said they wanted fewer regional jets and more full-size planes.

Others believed the terminal should be more customer-friendly, while others want airport security to move faster.

The so-called airport hassle factor is one reason people are driving instead of flying on trips of 300 miles or less, Griggs said. That market has not
returned, especially in the Midwest.

The tough times also prompted Mayor Slay to ask former U.S. Sens. John
Danforth, Thomas Eagleton and Alan Dixon to look at a more regional approach to governing Lambert, which is owned and operated by the city of St. Louis.

Fuller Brush man

Tim Cantwell of MidAmerica likens himself to a Fuller Brush man. And why not?

Last month, he talked about freight supply chains with a small group of
trucking company managers in an empty MidAmerica gate area designed for airline passengers.

International cargo is now being eyed at the airport along with national
passenger service and joint civilian-military operations.

"We'll talk to anybody, anywhere, any time about the airport," Cantwell said.

Construction workers are preparing a site along the north side of the airfield for a 50,000-square-foot cargo facility, complete with 37 dock doors and 10 airside cargo doors. It was funded mostly with a federal grant, although the county chipped in $700,000.

The hope is that it will someday be an entryway for international cargo, such as auto parts, radio components and flowers, Cantwell said. From here, they could be loaded onto some of the many trucks that buzz past the airport on Interstate 64 every day.

"Somebody's filling them up," Cantwell said of the trucks. "That's what we're after. We want to fill them up here."

Airport officials are negotiating with prospective tenants for the cargo
facility, although none has signed a lease yet, he said.

So far this year, Cantwell has traveled to a four-day trustee meeting of the
International Air Cargo Association in Johannesberg, South Africa, and twice to Costa Rica to talk to flower growers, exporters, packers and airport officials about the international flower trade. Travel records show he and other county officials have gone to Miami to observe how other airports and buyers handle cargo coming in from outside the United States.

Illinois congressional leaders are trying to secure port-of-entry status for
MidAmerica, which would allow it to become an entryway for foreign passengers or products. Cantwell sees it as another tool to attract businesses, along with the cargo building and the airport's 10,000-foot runway.

"All of a sudden I think you will see some charter business pick up here," if
port-of-entry status is granted, he said. "For sure, we need it for the
international cargo."

Last month, Cantwell released a new market study by consultants Mead & Hunt suggesting people would use MidAmerica if chartered or scheduled passenger flights were offered.

It found that the geographic "catchment area" surrounding MidAmerica is capable of generating nearly 1 million passenger trips a year, although the study found it is "not reasonable" to expect all those people would use MidAmerica instead of Lambert. .

"MidAmerica has a population around it of about 750,000," said Michael Boggs, manager of airport business services at Mead & Hunt. "In the air service world,
that's a sizable market. From a convenience standpoint, there is a place for
MidAmerica in overall air service in St. Louis."

The Mead & Hunt report identified ATA Airlines Inc. as "the most likely target airline" for MidAmerica, offering connecting service to Chicago's Midway Airport. But ATA spokeswoman Peyton Bailey-Brown said the airline didn't discuss potential markets "until we make a formal announcement."

The Indianapolis-based airline serves 34 cities.

Cantwell's goal is having scheduled charter or other commercial airlines flying out of the airport by the end of this year. Allegiant Airlines now offers
occasional chartered flights to Reno and Laughlin, Nev.

A new $3.4 million general aviation apron is set to open in October. St. Clair County is building a $490,000 hangar to house the Illinois State Police's flying unit once it moves from Carbondale to MidAmerica by year's end. And AVMATS, a corporate jet repair company, is building a new paint hangar.

"Name an airport that doesn't have any construction going on," Cantwell said, "and you are going to find a dead airport."
There are still plenty of doubters about the future of passenger service at
MidAmerica.

"That was an unfortunate mistake," said Professor Darryl Jenkins of
Embry-Riddle Aeronautical University in Daytona Beach, Fla. "There are things you can do there. It is a perfectly good place for general aviation to fly into and out of.

"Whether you need it for commercial service, that case is not compelling - even remotely."

While it wasn't built to be profitable overnight, St. Clair County Board
Chairman John Baricevic acknowledges the airport has to start making money sometime. In 2002, it lost more than $12 million if you factor in depreciation and interest costs.

He said the county has put aside $65 million to $70 million to help make debt service payments.

"The facts are that we have a significant amount of cash to help us pay the
bonds," Baricevic said. "It is not enough. The airport has to start generating
revenue."

Dixon, the former Illinois senator, said he understood how people could look at the empty terminal and consider it a waste of public money.

He acknowledges that regular air service may be a long time away, but he
believes the cargo business will flourish.

"That was no mistake," Dixon said in a telephone interview. "That will be
great. The future of that airport for my children and grandchildren will be one of the great investments of my time."

Boardings pick up

Despite the slowdown in commercial air service to St. Louis, some see a
brighter future.

Mel Burkart, emeritus professor at St. Louis University's Parks College and a former Trans World Airlines pilot, said growth cycles in the aviation industry are often out of sync with the economy.

"People will start to travel in order to maintain or initiate their business
relationships on a personal level, one to one," Burkart said. "When the economy turns down and orders turn down, then people go back to sending faxes and calling them on the phone."

Meantime, Griggs said, St. Louis ranks No. 18 in size among commercial aviation markets in the country.

Griggs said last week that Lambert boardings picked up noticeably in April.
Kathie Gonzalez, manager of corporate communications for Cheaptickets.com said the online ticket service has noticed a 21.7 percent increase in summer flight bookings out of St. Louis this year.

"People are more confident about traveling," Gonzalez said.

Still, the airline industry continues to struggle financially. The Air
Transport Association told Congress last week that "the industry remains mired in red ink" while holding out "the faintest and dissipating hope" that it will turn the corner by next year.

Paul Sarris, a salesman for Nokia, got to Lambert about an hour early when he noticed the Cardinals mascot during the April appearance. So he took a few pictures using his cell phone to "send it to friends to say I was hanging out with Fredbird at the airport."

Sarris, who travels about 100,000 miles a year, justified his move to St. Louis four years ago, in part, because it was home to a hub airport. His company wanted him to move to Chicago. Both cities had thriving hub airports at the time but no more.

That means earlier flights, smaller planes and fewer nonstop options.

"Since American, and everything that changed here, life has moved on," he said. "And we're used to it."

Reporter Ken Leiser
E-mail: kleiser@post-dispatch.com
Phone: 340-8119