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Published in Economic Development

Passenger travel rebounds as West Mich. airports eye capital projects

BY Sunday, August 01, 2021 05:27pm

Airport officials in Grand Rapids, Kalamazoo and Muskegon have yet to see passenger travel fully rebound to 2019 levels, but they remain optimistic about the gradual return of business travel and their ability to support capital investments.

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In particular, leisure travel through Gerald R. Ford International Airport, Kalamazoo/Battle Creek International Airport and Muskegon County Airport has represented the most gains in passenger travel numbers, while business travel remains slowed by the pandemic, airport officials told MiBiz.

For the Grand Rapids airport, June was the best month yet since the start of the pandemic in March 2020, said airport President and CEO Tory Richardson. Passenger travel in June was only down about 14.5 percent compared to June 2019. Richardson’s year-end goal is for passenger numbers to be about 80 percent to 85 percent of what the airport saw in 2019, the most useful year to benchmark.

“People have been flocking to outdoor, fun-and-sun leisure markets. We don’t have all of the business markets back,” Richardson said.

Airport officials in Kalamazoo and Muskegon are witnessing the same trends.

Kalamazoo/Battle Creek Airport Director Craig Williams said passenger travel so far this year is about half of what it was at this point in 2019, with leisure travel leading the way. The airport typically experiences a 70 percent to 30 percent split between business and leisure travelers, respectively. Currently, it’s about 60 percent leisure travelers, he said.

Richardson said business travel may not return to pre-pandemic levels for at least another couple of years.

“There’s some talk that traffic will never come back to where it was,” he said of business travel. “Zoom and Teams meetings are here to stay, so business travelers aren’t going to travel the way they used to. There might be some truth to that, but we’re hoping the recovery (funding) and new growth will get us there.”

Richardson said other measures of rebounding air travel include relatively full flights, limited numbers of gates and jetways, and delays in processing travelers through security checkpoints. This is largely dependent on airlines, which have been shifting schedules based on demand and removing some previous routes.

“We’re going to hit a wall here soon because our planes are full or close to full,” Williams said. 

“It’s getting to a point where we’re not going to close that gap unless the airlines add some capacity. The good news is: What they’re bringing in, we’re filling up. The bad news is there are just not enough planes right now. That’s across the nation,” Williams added, referring to the ramp-up time to bring planes back into service and retraining pilots and employees.

New management in Muskegon

Meanwhile, Muskegon County’s airport — the smallest of the three — underwent a major operational shift this year when county officials approved plans for a private company to manage the facility. The move came after federal citations in recent years involving a lack of training and inspection reporting.

Milwaukee, Wis.-based Founders 3 Management Co., which does business as F3 Airport, formally took over management of the county-owned airport on April 1.

“It’s going very well,” F3 Airport Director Joel Burgess told MiBiz. “We are seeing traffic rebound fairly quickly. There’s a definite pent-up demand out there, so people are really itching to get out and travel. The quick comeback has been from leisure and not yet business, but I think that will come as well.”

The Muskegon airport actually had more passengers pass through security checkpoints in the first three weeks of July than it did during the same period in 2019, Burgess said.

“It’s very encouraging from the airport’s standpoint,” said Burgess, whose firm was also hired to help improve lagging passenger travel numbers in recent years. F3 also manages the Waukegan National Airport in northern Illinois, which is owned by the Waukegan Port District.

“We’re taking the success story we’ve had in Muskegon and looking to other airports with that same need that fit that same niche market,” Burgess said.

Capital projects back on track

Richardson said the precipitous drop in passenger travel last year “obviously has taken its toll” on the airport’s balance sheet. The Grand Rapids airport scaled back some capital projects and offered early retirement packages to some staff, he said.

Still, the federal government has provided three relief programs since the start of the pandemic — the CARES Act of March 2020, the Coronavirus Response and Relief Supplemental Appropriation Act (CRRSAA) of December 2020, and the American Rescue Plan Act, signed by President Biden earlier this year — with a total of nearly $20 billion in aid to U.S. airports.

“We have been fortunate that at least Congress has recognized the requirement of airports to stay 100 percent open and operational despite the fact that there were days of absolutely no revenue coming in,” Richardson said.

Federal relief grants have come in the form of reimbursements for eligible pandemic-related costs, including for personnel and debt services.

Meanwhile, grants keep rolling in to support future growth. 

Last month, the Kalamazoo/Battle Creek airport announced a $1 million federal grant to help support a new flight, which airport officials hope will be with American Airlines’ hub in Charlotte, N.C. Capital projects include a runway extension in the coming years and various construction and infrastructure projects.

In total, the Kalamazoo-Battle Creek airport will bring in about $23.5 million in federal funding across the three relief programs.

“The CARES Act funding was basically the difference between being in really dire financial straits to being where we’re kind of business as usual,” Williams said. “It really provided that gap funding we needed to make sure we didn’t have to lay off any employees or make any draconian cost-cutting measures.”

After receiving $10 million in state and federal grants, the Grand Rapids airport is moving forward with a concourse expansion that will add eight gates to accommodate future growth. It also recently opened a new federal inspection station that could accommodate international flights in the future. Other planned investments include additional parking and a consolidated car rental facility. The Grand Rapids airport’s five-year capital improvement plan totals nearly $400 million, Richardson said.

“We’re very optimistic and bullish on the future,” he said. “We’re planning for the return of the traveler and welcoming business travelers back. We also think that will be the impetus to move forward with some of these large-scale capital programs on the books.”

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