After A 95 Percent Drop In Passengers, Cherry Capital Airport Inching Back To Normal

After a staggering drop in passenger traffic of 95 percent in late March and April, Cherry Capital Airport is beginning to see a slow return to normalcy. The Ticker checked in with Airport Director Kevin Klein to see how bad it got, what $14.8 million in federal relief funds will be used for, and what the future of air travel might look like.

Ticker: What’s it like inside the airport these days?
Klein: Quiet. Our staff is [typically] about 26 people, but we had frozen new positions, so we’re now a staff of 20. The airline employees are working around the flight times and car rental staffs are doing similar. The gift shop has closed and only the café is open. The TSA is the same – working around flights. At midday it’s very quiet. You’d see our security and operations and maintenance people still. You’d also see a lot of guidance and signage in the terminal…

Ticker: Your world has changed more than most. How is the airport doing?
Klein: Really since mid-March, right around the 14th, you started to see a shift. We were averaging in February 1,600 passengers a day enplaning and inbound. We had 37 enplanements and 76 total passengers in April. So we’ve lost about 95 percent. It’s gone up a bit in May, but only one or two people more per flight [note: as of May 29, there were 138 enplanements and 260 passengers total]. But it’s about the industry average. The TSA does daily counts and we are right in step with the rest of the country.

Ticker: And what’s the revenue impact of all that?
Klein: Our budget as a whole is about $7 million and parking is about $2 million of that. The remaining comes out of operational things like rent and car rental rent – and those are based on number of passengers – landing fees for airlines landing, general aviation. For the first 90 days of this year, we were impacted about $1.5 million, and then the remainder from here on just shy of $5 million. The first quarter was pretty solid, which has given us some good operating cash. However, that’s where the (Coronavirus Aid, Relief, and Economic Security) Act comes in. We received $14.8 million from that, and it’s a revolutionary concept of assistance for airports because any federal assistance we’ve ever received has always been directed only for capital projects. This can be used for operations, maintenance and debt service. They give us four years to use the money. It allows us to keep staff, keep the lights on, bills paid.

Ticker: What are you hearing and predicting for a return to normal?
Klein: Predictions are all across the board. Forbes said three years. A hotel chain said two years. Some travel writers have talked about how there’s so much pent-up demand. Here, we’ve looked over SARS, H1N1, 9-11 and what (did) those do to our economy? How does that fit our market and how do we return? Markets like Traverse City that are a destination tend to return a little faster than the rest of the country. So I’m looking at that for us, and predicting in maybe 24 months. But to get there, there will be a lot of changes in the airline industry. Changes in booking and reservations, social distancing and more. You’ll see a slow buildup through the summer ... maybe get us to 30-40 percent by fall. Maybe next year we’re looking at 50-60 percent and then maybe two years a normal load factor for us of 80-85 percent.

Ticker: But all this doesn’t necessarily mean lower fares.
Klein: Pricing is such an odd thing. I’ve looked at flights to Florida and seen $25, but then looked at some going to Kansas for $300. It’s all across the board, mainly because the industry is trying to figure who’s going where, how long they’re staying, what they have to do and then building a pricing model. There’s just not a lot of science on it right now. Also the low-cost airlines are setting up flights to do things differently. Allegiant, for instance, might still go from Sanford (Florida) to Traverse City, but might stop in Flint on the way.

Ticker: What about the projects that were planned for the future, like expanded parking or terminal expansion?
Klein: Everything was frozen immediately once we saw the numbers decline. Our staff was reduced to 20, we adjusted our security force hours, we adjusted janitorial hours, legal, marketing, parking lot hours – (all) except for the jet bridge project that was fully funded. Once the CARES Act revenue comes in, we’ll reevaluate because we know in two years we’ll return to our parking lot being full, and it’s a lot easier to build prior to a full return. With our new Runway 10 instrument landing system, we want to see that go forward because it takes the FAA 18-24 months to approve it, so we don’t want to slow that down. And then the terminal expansion study: We’ve just completed a lot of the preliminary information, and we want to continue with that because we already know it is four to five years away, and we don’t want to slow that down too much.

Ticker: The Department of Transportation last week said it would allow airlines to stop flights to about 60 small- and mid-sized airports, including Delta to Flint and Kalamazoo. Is Traverse City on that list?
Klein: We are watching closely but no not at this time. My hope is that we are gaining back passengers everyday so we will never be on this list.