TVC Soars: With record passenger traffic, Cherry Capital Airport looks to an even bigger future

More than 500,000 passengers passed through the Cherry Capital Airport in 2018, a record year for an airport that seemingly has few limits on future growth.

“Traverse City has far more access to the rest of the world than it did just three years ago,” said Mike Boyd, president of Boyd Group International, an aviation consulting firm in Evergreen, Colorado. “Cherry Capital flies to seven global connecting hubs. If somebody wants to fly to Traverse City, there’s no reason not to.”

And more people are doing just that. Cherry Capital served 500,416 passengers last year, up five percent from 2017. Airport director Kevin Klein attributed the increase to new routes and more flights, a growing regional population, a strong economy and runway improvements that allow for larger planes to serve the airport.

That growth is in part prompting the airport to consider a new governance structure to allow more flexibility in future expansions.

Cherry Capital is owned by Grand Traverse and Leelanau counties and is governed by the Northwestern Regional Airport Commission. But it is considering changing to an airport authority, which Klein said would give the airport more power to issue debt and transact land.

Although the current operating agreement between the two counties doesn’t expire until 2040, work needs to begin now, he said. That’s because the airport won’t be able to negotiate new 20-year leases for hangars and other property after 2020 without a new agreement.

Under the commission structure, Grand Traverse and Leelanau counties are liable for the airport’s financial obligations. Those obligations would be assumed by the airport authority. The two counties would continue to have representatives on the authority. “We could be a lot more nimble [as an authority],” Klein said, adding that the FAA also has recommend the switch from a commission.

The governance change, which would have to be approved by both counties, is part of a strategic plan the airport is crafting with assistance from Albany, New York-based airport management consultant Steven Baldwin and Associates. Klein said the plan is expected to be completed by May.

Cherry Capital is the fourth-largest commercial airport in the state behind Detroit Metro, Gerald R. Ford International in Grand Rapids and Bishop in Flint. Passenger traffic at Cherry Capital is up 36 percent since 2010 compared to 23 percent for all U.S. airports, Boyd said.

A 2017 study by the Michigan Department of Transportation found that Cherry Capital produced $1 billion in annual economic impact to the area.

And while summer traffic far exceeds that in the rest of the year, Klein said an increase in business travel is making Traverse City more of a year-round destination for travelers. “Business travel has grown considerably,” he said. “Our traveler demographic used to be 75 percent leisure and 25 percent business travel. Now its 60-40.”

Passenger fares overall from Cherry Capital have been flat since 2010, adjusted for inflation, Boyd said.
The main challenge to business travel is video conferencing and other online technologies that allow people in different locations to communicate with each other, Klein said.

This year promises to be even busier as several airlines have added new direct flights to Traverse City. American Airlines will offer weekend summer service from Charlotte, North Carolina, while United Airlines will start weekend summer service from Washington D.C.’s Dulles Airport in June. United also is expanding summer weekend round-trip service from Denver to a daily schedule beginning June 20. The expansion will boost the flight capacity between the two cities to 10,000 seats. United, American and Delta Airlines provide service from Cherry Capital Airport. And while some would like to see Southwest Airlines or another discount airline serve the region, Klein said that’s unlikely to happen anytime soon.

“Everybody would love to see Southwest, but their business model is to serve larger communities,” he said. “They like to be in metro areas of one million people.”

Southwest does serve some smaller airports, including Flint and Grand Rapids, primarily because of its 2011 acquisition of AirTran that was serving those facilities. Klein said he’s focused on keeping good relationships with American, Delta and United, airlines that have operated out of Cherry Capital for more than 30 years. “The one thing we need to do is retain the carriers we have,” he said. “It’s important for them to succeed and grow. If they don’t, other airlines won’t be interested in us.”

Klein said he spends a lot of time talking with those carriers and others in Traverse City about events, such as the new Ironman race in August, and employment growth that could lead to more flights and larger planes serving Cherry Capital.

“Getting more seats in the market is important,” he said. “We’re looking for incremental growth. Our goal is for an airline to add a flight this year, maybe two flights next year and then maybe daily flights.”

One brake on growth at Cherry Capital is the number of smaller airports within a two-hour drive of Traverse City that are heavily subsidized by federal Essential Air Service program dollars, Klein said.

The program, established in 1978, was designed to maintain air service in small communities in the wake of airline deregulation. Initially, most of those airports were in Alaska, but the program has since grown to serve 175 communities across the country.

Airports in the Lower Peninsula communities of Alpena, Manistee, Muskegon and Pellston receive Essential Air Service dollars. Klein has long maintained the subsidies should end because air travel is not otherwise viable in most of those communities.

“That diminishes our air service here,” he said. “If the rules were to be followed by the original intent, communities that are within a two-hour drive of a medium-sized airport shouldn’t be subsidized.”

Klein said the program is “broken.” “I’m not upset with those airports,” he said. “My goal is to fight for air service. I promote those airports from time to time. My point is the program is broken.”

As far as potential competition from a proposed new passenger train service between Ann Arbor and Traverse City, Klein’s not worried.

A recent study, spearheaded by Traverse City-based Groundwork Center for Resilient Communities, showed that the train could carry 1.5 million riders a year by 2040. That’s three times the annual air traffic in and out of Cherry Capital. But Klein said he believes that estimate is greatly overblown and that passenger train service wouldn’t be viable without large government subsidies. “The train is not a threat,” he said. “But I do see all kinds of possibilities for freight trains in northern Michigan. That’s something that’s needed.”

As for the future, Klein said Cherry Capital has asked the Federal Aviation Administration to conduct a study on what he sees as a need for expansion of the airport’s terminal. “The terminal building is hitting peak-hour capacity,” he said. “We’re looking at adding more gates and ramps, and are researching grants [for the potential project].”

Cherry Capital also is looking to lease the rest of a 63-acre parcel it owns that’s partially occupied by Costco Wholesale. The warehouse club leases 19.5 acres of the parcel from Cherry Capital for $170,000 a year, Klein said.

Boyd says he sees a bright future for Cherry Capital Airport, which he thinks could someday attract more air carriers. “Airlines are starting to notice that part of the country,” he said. “Traverse City is a pretty hard place to beat.”

 

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