Losing Altitude

Oregon’s rural airports face an uncertain future.

Share this article!

Commercial air service to key rural Oregon communities is in jeopardy, as international aviation trends and federal-level politics are combining to crush it. Should communities like Pendleton, Klamath Falls, Astoria, Newport and North Bend/Coos Bay permanently lose commercial flights, the situation could choke off future growth in these communities and alter forever the state’s commercial air-service network.

Oregon legislators and aviation officials are working to preserve what’s left of the state’s rural air service, but they face an uphill battle. Congress, in general, wants to slash funding for smaller airports. Airlines are also moving to larger planes, away from the 20-30-seaters that could economically serve regional airports. Pilots need far more hours to qualify for commercial cockpit duty, making recruiting tough for small-market airlines.

Last but not least: The Transportation Security Administration doesn’t want to screen in out-of-the-way airports. As a result, the trends are looking gloomy for small airport supporters. Consider:

• Crater Lake Klamath Falls lost its lone commercial airline, SkyWest, in mid-2014. For the first time since 1947, it has been without service. By the time SkyWest left, traffic was half of what it was in 2007.

• Pendleton’s only commercial airline, SeaPort Air, went bankrupt in February, leaving its schedule in a shambles. Pendleton service is subsidized by a federal program, Essential Air Service, that many in Congress want to get rid of.

• SeaPort abruptly shut down its flights to North Bend’s Southwest Oregon Regional Airport in March, leaving it with just one carrier, United. PenAir, a feisty, Alaska-based air carrier, jumped into the void left by SeaPort on March 21, stabilizing its service. Still, business has dropped more than 40% between 2007 and today. Astoria, Salem and Newport lost their commercial routes years ago.

Prospects for a return of service are dim. Local economic development officials are sounding the alarm. “If a corporation looks at Klamath Falls and we don’t have service, they see the added cost of not being able to get into Klamath Falls conveniently,” says John Barsalou, director of the Klamath Falls regional airport. “They look somewhere else.” Employers, Barsalou adds, “want air service in their backyard.”

Mitch Swecker, director of the Oregon Department of Aviation, echoes that assessment. “If you live in a small community in a rural state like Oregon, it’s very hard to attract business and a workforce if you don’t have a viable airport and you don’t have reliable air transportation,” he says.

In 2014 the Oregon Department of Aviation released an economic impact report that included the state’s six regional airports that, at the time, had commercial service. Economic valuations can be tricky. But according to the report, the combined aviation-related impact for the six was $1.2 billion.

For the three regionals that are on the knife’s edge of keeping or losing their commercial service, the estimated regional impact was: Crater Lake Klamath Falls, $300 million (includes Air National Guard); Southwest Oregon Regional (North Bend), $175 million; Pendleton, $4.9 million. 

To understand the challenges facing the small rural facilities — and why they are losing business — start with a federal bureaucracy, the Transportation Security Administration in particular. Airports can’t attract commercial carriers unless the TSA has a screening office on-site. But citing budget pressures, the TSA is becoming more selective about which airports it will serve.

The loss of service to Klamath Falls, for example, was triggered when SkyWest, citing lack of business, pulled out in mid-2014. When no airline stepped up to replace it, the TSA shut down its Klamath Falls operations. Now PenAir wants to serve Klamath Falls, building on its new service to the North Bend airport. PenAir “believes there are at least 15 to 17 communities throughout Oregon and the western region that have lost or are in danger of losing service,” says CEO Danny Seybert. “We think we’re a perfect fit for these rural communities.” But without TSA on-site, the PenAir flight to Klamath Falls is a no-go.

Enter the TSA Fairness Act, a possible lifeboat. Written by U.S. Rep. Greg Walden, whose district includes Klamath Falls, the act would require the TSA to offer its services to any airport that it has pulled out of since 2013. To Walden’s surprise, his bill attracted interest from Congressional representatives around the country whose rural airports are facing the same challenges. Now, with bipartisan support in Congress, the bill is steamrolling ahead.

But whether it will survive the opposition of the TSA remains to be seen. Klamath Falls’ Barsalou says the TSA’s most likely ploy will be to demand more dollars from Congress to serve the dozen or so airports that would have service restored. And the prevailing view in Congress, say Oregon airport executives, is that if an airport can’t offer commercial service without subsidies, it shouldn’t offer them, period.

The TSA isn’t the only federal headache. Another is the Essential Air Service designation, a category created in 1978 to address concern about the lack of air service to certain rural regions. Pendleton, for example, is the only Oregon airport designated by the U.S. Department of Transportation as an EAS facility. This means it is guaranteed a subsidized commercial route between Pendleton and Portland. Fares as low as $147 for a roundtrip to Portland have been a key piece of Pendleton’s marketing campaign. But recent events may throw a wrench into the EAS route, held by SeaPort since 2012.

All was going well until this year, when, aviation experts say, SeaPort overextended itself by taking on too many small-market routes (North Bend among them). As traffic to those airports fell, SeaPort’s fortunes plunged. The subsidized flights to Pendleton were among the few routes that were profitable. But the bankruptcy interrupted its schedule, undercutting passenger confidence. PenAir has expressed interest in the potentially lucrative Pendleton route, but despite SeaPort’s struggles, the city is inclined to stick with that airline, at least for now.

Steve Chrisman, the city’s airport and economic development manager, underscores the precariousness of the situation. As long as the EAS exists, “Pendleton is not going to lose its air service,” he says. “But there’s always the danger of it, when you have one carrier and it’s dependent on subsidies to make it work.” Congress recently tightened the rules on EAS designation, restricting the program to the current roster of designated airports.

With federal support for regional airports eroding, regionals have looked to the state for funding. But Oregon’s airport maintenance and support budget is limited. In addition to the small commercially served airports, the state directly manages 28. Overall, Oregon’s airport count exceeds 100, from PDX to Silverton’s single-strip Iron Crown Airport. All are in constant need of upgrades.

Swecker is putting together a marketig plan to support what most refer to as the “bubble” airports, a reference to the tipping point of about 20,000 to 30,000 annual passengers that are just enough to allow a small facility to survive. But it will be a shoestring campaign, run on $1.2 million in new revenue from a state fuel tax. “That won’t go very far,” Swecker admits. There are bright spots on the horizon — for some airports anyway. As the lower-tiered regionals struggle to survive, second-tier players have prospered — sometimes directly at the expense of the smaller airports. Barsalou estimates that Medford’s passenger count now includes about 20,000 passengers from Klamath Falls. Passenger enplanements (the standard by which airports measure commercial business) in Eugene and Medford are up 26%, and 23% in Redmond, since the recession’s depth in 2009.

Growth of the mid-size regionals raises a chicken-or-egg question: What comes first, airports or economic development? Eugene has benefited as the University of Oregon’s reputation, boosted by its football team, has exploded nationwide. Meanwhile, the city promotes its flights (served by five airlines) to the Bay Area by exhorting customers to fly “from the Silicon Shire to the Silicon Valley” rather than fly out of PDX. “Our pitch is convenience, and if you support us, it’ll get us more flights,” says airport director Tim Doll. At the airport’s current growth rate — it just marked five years of record growth — it will need a major capital project within a few years, Doll says.

Currently, the airport is spending $17 million in state and FAA funds to upgrade its terminal. Like Eugene, Medford airlines — there are four — connect the Rogue Valley with most of the major western hub cities. A multifaceted marketing campaign by the city, the county and Travel Medford has greatly boosted tourist traffic through the airport. Local businesses — Lithia Motors, Harry & David, Amy’s Kitchen, Asante Health System — provide much-desired corporate traffic. 

Meanwhile, in Central Oregon, Roger Lee, executive director of economic development for Central Oregon, says Redmond’s Roberts Field airport “works hard” to find the funds to keep commercial airlines interested. Redmond offers airlines seven-figure incentive packages, he says, and the airport will soon undertake a $20 million runway renovation. Federal and state dollars are paying the bill. Roberts Field, which now has about 270,000 annual enplanements, could handle a half million if it could secure routes to Las Vegas or Dallas-Fort Worth, Lee says: “We’re pushing hard.” 

As for the smaller regionals — state air-transport officials keep searching for solutions. Swecker likes the idea of creating rural routes with air charter service providers to serve the state’s rural communities. Pendleton’s Steve Chrisman wants to encourage the bubble airports to form an alliance to offer group incentives to airlines to serve all three. Will these solutions fly? The last recession ended, perhaps for good, commercial flights out of Newport, Astoria and Salem. While the bubble airports survived, they emerged scarred—as did airlines like SeaPort that served them. The next downturn may not be so forgiving.

Ultimately, the decline of the rural airport signals yet another shift in the consolidation of economic growth and power to the state’s urban centers. And although the loss of these airports may make sense economically, something more than wealth is being lost, boosters say. “The alternative to keeping commercial service in those small communities is that we lose touch even more with those communities,” Swecker says. “And that drives a greater wedge between the urban and rural communities in Oregon.”