Air Transport World

Denver's Stapleton Airport: a good place to watch deregulation.

Denver's Stapleton Airport: A good place to watch deregulation

The spirit of the wild west is truly alive and well at Stapleton International Airport in Denver, Colo., a city whose own colorful history is steeped in gold rushes, shoot-outs and claim disputes. "Sometimes I feel like the sheriff,' George F. Doughty, director of aviation at Stapleton, said. "Other times I feel more like the guy in the black coat presiding over Boot Hill.' Doughty refers to the fact that during his two and a half years in charge of Stapleton, at least four airlines--the latest being Frontier Airlines--have gone out of business, primarily because of the vicious price cutting that has caused Denver to be labeled the "fare wars capital of the world.'

The fifth busiest airport in the U.S. and sixth in the world, Stapleton had nearly a half-million flight operations and handled just under 30 million passengers in 1985. Twenty-three airlines serve Stapleton. Analysts call it "one of the country's most important, and competitive, airline markets.' Airlines call it "a place everyone has to go to, but no wants to be in.'

Because of its central geographical location, making it a logical connecting point on both east/west and north/south routes, and its importance as a gateway to one of America's busiest resort areas, Denver has become a major component in the country's hub-and-spoke system.

Attractive airport

With the exception of Pan Am, every major domestic airline flies into Denver; it has become the second largest hub for United Airlines, which also maintains its Apollo reservations and flight training centers here; and it is Continental's largest hub. At last count United had 219 daily departures from Denver--12% of its total system--and Continental had 179. Until late August, when fierce competition among other problems, forced it into bankruptcy, Frontier also had its main base at Stapleton. The three carriers--United, Continental and Frontier--shared over 80% of the Denver market. And with local regional carriers, they had developed one of the most formidable and competitive feeder systems anywhere. Even with Frontier out of the picture, United and Continental are continuing the fare war and are waging a battle for Frontier's old market share.

In addition to its attractiveness as a market, Stapleton is also an excellent facility with a good safety record. The city/ county-owned airfield more than pays its own way with nearly $85 million annual operating revenues collected from airlines and vendors. A renovation program is continuously underway to improve handling and reduce delays; and the airport management is ever tiptoeing on a tightrope on such issues as noise abatement, trying to appease airlines and the public, the usual situation for large airports everywhere.

One major problem, from the airlines' viewpoint, is that no one is making much, if any, money flying out of Denver with the current spate of discount fares, according to industry analysts. Yields have dropped to as low as 5^ per mile; and even Continental, with its pared-down costs, has a cost per seat-mile of about 5.8^. Both United and Frontier had a cost of over 8^. "It doesn't take a genius,' one analyst said, "to figure out you can't make money that way.'

Denver yields low

Continental's Regional VP, Bill Neary, admits that "Denver yields aren't as profitable as other parts of our system,' and that "the fare wars have had an impact on our economy.' A study made by Continental, based on material from the Airline Tariff Publishing Co., showed that Denver had the lowest average one-way, full-coach, unrestricted fares of any major hub in the country. Averaging all the major destinations, Denver's aggregate fare was $149. The next lowest was Houston, also dominated by low-cost carriers, with $158. …

Log in to your account to read this article – and millions more.