The City of Kenai is planning to apply for money to help incentivize new airport services, including a direct flight to Seattle.
During a regular city council meeting Wednesday, members received a presentation from Jack Penning, a managing partner with Volaire Aviation. That’s an air service development firm the city hired to study air traffic in and out Kenai Municipal Airport. Penning presented the results of that study, including options for the city to expand its airport service.
“There are a lot of dynamics in the industry that we simply can't control — in the aviation industry — that are going to impact this community in very significant ways for at least the next decade, probably more than that,” he said.
Overall, Penning says the number of people flying in and out of Kenai is less than before the COVID-19 pandemic — on average 217 passengers per day in 2023, compared with 253 passengers in 2019. It’s also down from a market high of more than 320 passengers per day in 1995.
Kenai was served by three regular airlines until last October, when Ravn Alaska pulled out, citing a pilot shortage. The airport’s two other regular airlines, Grant and Kenai Aviation, increased their daily flights to make up for the loss. Grant bought more planes to help accommodate that increase.
Still, almost half of the seats on the airport’s up to 44 daily departures go unfilled. Penning said that’s because it’s already expensive to fly somewhere from Anchorage. Nearly all people — 95% — who fly to Anchorage from Kenai travel on to a second destination, meaning they tack roughly $350 in roundtrip fares to Anchorage to their second ticket.
On average, someone flying out of Kenai spends $750 on one-way fare including their ticket to Anchorage and the second ticket to their final destination. That’s compared to the national average of $185 for a one-way ticket.
“Very, very expensive air service market. What happens in markets with fares that high is that it suppresses the traffic, people just don't travel as much for obvious reasons,” Penning said.
Regional airports are also experiencing the same difficulties that impact airports in the Lower 48. A nationwide pilot shortage, for example, disproportionately impacts regional airports. Airlines in North America are 14,000 pilots short of what they need to operate at pre-pandemic levels.
Perhaps unsurprisingly, Seattle is the number one market for people flying out of Kenai. Every day, about 70 people travel through the Kenai Airport to and from Seattle. That makes it an appealing location for expanded service.
“If we want to look at service to Seattle nonstop, because if you look at where our people are traveling, that makes the most sense with really business plans that the airlines have already constructed,” he said. “We're never going to be able to convince an airline to fly something that isn't already in their business plan. So we have to make them believe that this should have been in their business plan from the very beginning.”
In the case of Kenai, the pitch for direct service to Seattle would be to, probably, Alaska Airlines.
Why Alaska Airlines? Because more than 90% of all plane seats flown in the United States are held by five companies. Of those, two — Alaska Airlines and Delta — have major hubs in Seattle. Of those, Penning said Alaska’s likely to be more interested in the pitch.
Getting airlines to set up shop in a new place, though, can be expensive. The financial risk associated with starting new routes, such as a long hauler from Kenai to Seattle, can be significant. If not as many people fly a route as anticipated, the airlines are out a bunch of money.
Penning pointed to data points plotted on a map of the U.S.
“These are all the airports in the Lower 48 that offer at least six figures in incentives for new routes,” he said. “There are 360 dots on that page. And so when you look at where that plane can go, essentially, if we're talking about a regional jet that flies for any number of airlines, it can go to any single one of those dots. So our competition is not Homer, our competition isn’t Anchorage. The competition is every dot in the Lower 48.”
That’s where the grant comes in.
Volaire is crafting the city’s application for a grant through the Small Community Air Service Development Program. That program is offered through the U.S. Department of Transportation and makes money available for small airports to enhance their air service, including through airline incentives.
“If we want to be truly competitive, we need to win that grant,” he said.
Penning said Volaire is working on the city’s application, which is due on July 25. He said applications usually go through a three month review process. During that time, he’ll be looking to the city to help rally communities around the Kenai Peninsula in support of the effort.
Penning’s full presentation can be viewed on the city’s YouTube channel.
