New Indianapolis Terminal a Burden In the Short Term

(MoneyWatch)  A report in the Indianapolis Star this week focuses on the decline in nonstop flights from the airport. The article blames the economy, but there's actually more to this story. As I wrote back in November, the new terminal is going to raise the cost of operating at the airport, and that is most certainly putting pressure on the more marginal nonstop flying.

The new terminal opened in November, and while it's a very nice facility and a huge improvement over the last one, I wondered if the extra costs would be worthwhile. Since then, we have certainly seen the economy fall down dramatically, but I have to wonder if any of the now canceled flights would have been retained were the costs still as low as they were at the previous terminal.

Northwest dropped San Antonio, Austin, Philly, and Kansas City while US Airways dropped Pittsburgh. Northwest has also made routes to Hartford, Ft Lauderdale, and Orlando seasonal (though I have no clue what season is peak for Hartford). Is this all because of the economy? I doubt it. With Northwest, it's probably a mix of the economy, the increased airport fees, and the Delta takeover which means that they have different ways of evaluating the viability of a route.

I have no proof that these flights would still exist were airport fees lower, but it's pretty simple math. If an airline can make money on a route and has no better opportunity elsewhere, then it will fly it. In this case, the rising costs make it harder to reach that point of profitability. In the long run, this terminal may prove to be necessary, but for now it's just not helping the area's service levels.