Growth in Florida is a bit like the sunshine - there's always plenty to go around. No matter which way you slice the numbers, Florida is booming. With almost 15 million residents it has the fastest growing population of any US state and is the world's fourteenth largest market economy. Local industries expand way beyond tourism, giving Florida the fourth largest buying income in the USA. And strong ties with Latin America have led to growing numbers of prosperous Hispanic families establishing businesses and family homes in Florida. Last but not least, some 6 million international travellers visit the sunshine state every year.
Such figures add up to a highly lucrative travel market which the region's airports have been keen to develop. The bulk of travellers use Miami International as their gateway and even more connect through the airport. Last year a massive 40% of Miami's 34 million passengers were international - the highest ratio for any of the major US hubs.
With constant speculation that Miami will be unable to absorb its share of future growth (strongly disputed by Miami itself), it is hardly surprising that Florida's smaller fry want more international action. The state is littered with airports, although only a handful can accommodate international traffic, or have strong ambitions.
The big four real contenders - Orlando, Tampa, Palm Beach International (PBI) and Fort Lauderdale (FLL) - are determined to wrest more international service from Miami and each has ambitious plans to expand and develop the infrastructure they need.
At first glance, these airports have some persuasive arguments. But while Miami recognises that a growing pie means a bigger share for everyone, the airport intends to use its considerable strengths to prevent market share slipping away. Not least is the high percentage of connecting traffic. "The airline will choose Miami because the aircraft if full of business people bound for Miami connections to 190 cities. You can fill your plane with all kinds of passengers and make a dollar here, or you can go somewhere else and not," says Peter Reaveley, manager route development at Miami international airport.
Miami is also a huge cargo market with 2 million tonnes expected at the airport this year and a 10-year $500 million cargo development programme already more than half complete.
Its dominance of the Latin American market is hard to assail. Last year Miami accounted for 62% of all weekly US scheduled non-stop passenger flights to South America and over half of those to Central America. Its 412 scheduled non-stop flights per week to South America stand in stark contrast to Orlando's three flights, while neither Tampa, FLL nor PBI have any scheduled services to the region. Miami's weekly departures to Central America dwarf those of even its largest US rivals at 220 weekly non-stop flights compared with 95 out of Houston, 28 at Dallas/Fort Worth and 30 at Los Angeles.
The Caribbean also has a massive 710 weekly non-stop flights from Miami, one third of all scheduled US services to the region.
These numbers are intimidating, to say the least, and Miami's local competitors could be excused for feeling discouraged. But a constant reminder of their own strengths can do wonders for their confidence.
Orlando looks to growWhile Miami may still dominate others are rising fast. Orlando handled 27 million passengers last year, and posted a growth rate of 6.7%, more than twice that of Miami. The airport expects growth in scheduled international services to average 10.2% a year to 2000, double the domestic rate, though this is due to slow to 6.9% through to 2005.
With Disneyland, Universal Studios, Sea World and Magic Kingdom on its doorstep, Orlando is a marketeer's dream. The city hosts six of the top eight US theme parks, and the high-tech Islands of Adventure project is under construction. Visitors pump 40 million extra consumers and $16 billion a year into the economy.
Not surprisingly Orlando is the largest domestic passenger market in Florida. Some 80% of its traffic is pure destination, giving it a passenger base far in excess of its population. The local population is slated to grow by 35% through to 2006, faster than any other US city.
International service currently accounts for just 10% of passengers and, while the aim is to increase this, Orlando's main market will remain domestic. The airport's 25 million domestic US passengers easily outstrip Miami or Tampa, and the airport plans to increase its market share further. It is heavily promoting domestic connections to 52% more points than any other Florida airport, alongside scheduled non-stop services to 73 US destinations. This compares to 48 at Tampa and 46 at Miami. Orlando has 24% more domestic scheduled flights than Miami and is served by 27 scheduled airlines, compared to just 18 at its larger rival. The airport is not a major hub for any single US carrier.
One third of Orlando's visitors attend business conventions, meetings and shows and its convention centre is being expanded to the tune of $750 million.
But it clearly irks the airport's executives that a mere 10% of the international visitors to major Orlando attractions fly direct. Less than one third of overseas visitors use the local airport as their gateway. Despite this, services are growing: in January the airport had 18 weekly scheduled non-stop flights to Latin America with 52 to the Caribbean, 20 to Europe and 20 to Canada. By April it had services to 23 international cities.
In preparation for growth, Orlando's master airport plan is geared towards ensuring that no passengers are forced "away from Orlando because we can't handle it," says Keith Phildius, senior director marketing and international development.
The airport is planning aggressive increases in infrastructure, installing new common use facilities and making operational improvements. A new international fee structure, designed to stimulate traffic, cut overall arrival fees for common use gates by 36% from the start of October.
Spurred on by expectations of double digit growth, a $1.2 billion improvement plan is under way. The expansion of the north terminal will boost passenger capacity to 30 million by 2001 and a new south terminal building will boost passenger capacity by another 40 million by 2002. "No airport has that today," says Phildius. By June 2000, there will be 16 domestic gates.
In some cases bilateral restrictions have held back direct international service but the master plan projects 4.1 million international passengers by 2015, still a modest 14% of total traffic.
Meanwhile, Orlando is facing an unwelcome challenge from its nearby competitor. Sanford International airport has reportedly taken a large slice of Orlando's bread and butter UK charter traffic. The UK accounts for over 40% of international arrivals at Orlando and the reduction in charges aims to help stem the loss of this business.
Orlando is also seeking to tap into the potential of the central Florida market for direct air cargo traffic by creating a cargo hub. The area has a range of high value industries, many of which truck cargo to Miami. "We lose nearly all of the Latin American cargo," says Ken Amand, cargo marketing manager. Orlando's goal is quite simply to keep more of that business but also to capture cargo from other hubs such as Atlanta, Houston and Dallas.
Tampa ambitions
An hour's drive away from Orlando, Tampa airport's ambitions look like a half-size replica of its bigger neighbour's. Like Orlando, it aims to lure more direct international cargo and passenger services away from Miami. The difference is that Tampa is primarily a high yield business destination with 55% of passengers falling into that category.
George Elbe, director of air service development and international commerce, barely hides his frustration at Tampa's lack of direct scheduled Latin American service. The Hispanic population, which exceeds 279,000 and accounts for as much as 17% of the population in some parts, continues to fly into Miami. The Hispanic market is growing four times faster than the non-Hispanic and the population has virtually doubled over the past two decades, says Elbe. Hispanic households are as affluent as the other American families in the region, making them a lucrative source of income.
"There's nothing that Miami has that Tampa does not," insists Elbe. Except, that is, for connecting traffic. Most of Tampa's business is origin and destination (O&D), but the airport has the potential for connections with non-stop services to 65 destinations in the USA, Caribbean and Europe.
Another key strength is the size of Tampa's catchment area. The Tampa/St Petersburg/Clearwater region spans four counties and is the largest metropolitan statistical area in Florida. Its population of 2.2 million just sneaks ahead of Miami and is well above metro Orlando and Fort Lauderdale with around 1.5 million each.
With Orlando's theme parks literally just up the road, and a host of tourist attractions of its own and some of the finest beaches in the USA to boot, Tampa has some definite selling points. And, like Orlando, it is cutting its charges and enhancing capacity as an added incentive. The airport currently handles over 13 million passengers a year and has room for up to 20 million. It expects to be full by about 2010 by which time it will be ready to double capacity again. Tampa's best chance of Latin American service is probably Brazil: some 500,000 Brazilians visit Bush Gardens every year.
But the battle to get Tampa known is also hindered by alliances. Taca, for example, is ideally placed to serve Tampa from all the major Central American markets but its strategic alliance with American Airlines, which accounts for half of Miami's traffic, rules this out.
Miami's dominance in the Latin American air cargo market is even more crushing and studies are under way at Tampa to measure just how much is trucked to Miami for shipment. A strategic response will then be put in place, says Elbe.
Selling Fort LauderdaleNext up to pitch for international service is Fort Lauderdale. FLL is situated 20 miles north of Miami, far too close for comfort. "I could run between the two airports on a good day," says Ed Nelson, marketing manager for Fort Lauderdale-Hollywood International.
FLL's main selling points are its lower costs and attractive demographics. The airport shares much of its catchment area with Miami but the greater Fort Lauderdale/Boca Raton area has the second largest population in Florida. Disposable income per capita is the highest in Florida and over 68% of residents have flown in the past year, the second highest rate in the USA.
FLL had double digit growth in four of the last five years, including 10% last year when it handled 12 million passengers. But while record domestic growth has resumed since Pan Am/ Carnival's demise in February, international traffic has been in decline following reductions in services to Europe and the Bahamas at the end of 1997. Delta is FLL's largest carrier with 26% of its traffic.
Just 10% of FLL's passengers are international with only a handful of direct international flights to Montreal, Jamaica, Frankfurt and Helsinki. Its business traffic is nearly all O&D and so is 65% of its leisure traffic. In an effort to attract more service, FLL currently maintains the lowest landing fees and rental rates of any Florida airport. The airport also hopes approval of the British Airways/American alliance could bring new service by rival carriers into FLL.
While it waits for more foreign service, FLL is building another domestic terminal for completion in 2000. Its cargo traffic is purely domestic but the airport can claim at least one victory against Miami. Federal Express is moving its Caribbean operation from Miami to Fort Lauderdale, bringing around 75,000 tonnes of business.
Innovative independent carriers like Southwest or Virgin Atlantic have been quick to recognise the potential of Florida's secondary airports. Virgin operates more services into Orlando than any US carrier while Since its first venture into the sunshine state, Southwest now operates 13 flights a day between Tampa and Fort Lauderdale and is FLL's third largest carrier.
The German charter carriers have also homed in on opportunities in the market. Condor operates a Frankfurt-Tampa-Mexico service three times a week and, from 1 November, will add a weekly Frankfurt-Tampa-San Jose flight. Condor's compatriot LTU flies from Düsseldorf Express via Tampa to Costa Rica. But for the moment international services account for a mere 5% of Tampa's total traffic.
Slightly north of Miami, Palm Beach International is upbeat about its international prospects. Current direct services are limited to the Bahamas but a runway extension programme, due for completion by early 2000, will enable the airport to take any size aircraft. "We know a lot of people flying to the other airports wind up in Palm Beach," says marketing director Richard Haller.
Haller adds that the number of visitors to Palm Beach county grew by 13% last year and tourism has risen by up to 6% per annum. "Growth is higher in the Palm Beach area," he claims. Business travel is rising fast and makes up around 55% of traffic even in the high season.
Miami to expandBut the smaller airports would be unwise to count on overcrowding at Miami pushing much business their way. Miami is quick to deny any capacity problems. "Airport capacity is a state of mind," intones Peter Reaveley, as if reinforcing his own belief in the concept. Certainly he has had a lot of practice at masterminding capacity utilisation and development at Miami. "We have to build on top of the old, while maintaining it operationally," says Reaveley, explaining the complex $4.7 billion capital expansion and improvement programme underway at the airport.
Miami already has three runways operating 24 hours a day and is planning a fourth by 2002. "We have more operations per runway than any other airport in the USA," says Reaveley.
The current terminal building will more than double in size by 2005 and, with the numerous other redevelopment projects, this will take Miami's current 34-35 million passenger handling capacity to around 55 million by 2010, he adds. Reaveley concedes that American will remain the dominant carrier at Miami but insists there will be room for expansion by others.
As Miami's smaller rivals battle to acquire a healthy-looking Florida suntan, it seems likely that some of them will get burned.
Source: Airline Business
