NEW YORK ( TheStreet) -- Denver International Airport is one of deregulation's success stories, a major airport in a medium-sized city that is now acquiring the sorts of trophies that distinguish a leading 21st century airport.
Most importantly, Denver is a United (UAL) hub with 375 daily departures to 145 destinations including 20 international cities. Yet United has only about 40% of the passengers at Denver International Airport, the fifth-largest U.S. airport with 53 million passengers in 2013, leaving room for lower fare carriers Southwest (LUV) and Denver-based Frontier to flourish as the second- and third-largest carriers.
Still, United has sufficient traffic -- 15 million passengers through August, according to airport statistics -- to offer premium international destinations. It added Denver-Tokyo aboard a 213-seat Boeing (BA) 787 Dreamliner in March 2013, providing another example of a route where a relatively small long-range aircraft can fill a niche. The distance is 5,787 miles.
Next up is Panama City. Daily service will begin Dec. 3, with a 118-seat Boeing 737-700. Panama City is a hub for United's Star Alliance partner COPA, just as Tokyo is a hub for Star Alliance member ANA.
Coming in 2016 is the completion of a $1.5 billion, 22-mile extension of Denver's light rail system to the airport, a particularly significant event for the airport, which is 25 miles from downtown, requiring a $55 cab ride. A 500-room hotel will be built atop the airport light rail stop.
"No great city with a great airport is without a train system to the airport," said Tom Clark, CEO of the Metro Denver Economic Corp., the principal backer of the 2004 campaign for a sales tax increase to fund the system.
"The idea behind the transit line was that the Federal Transit administration had competition nationally for public private partnership demonstration project," Clark said. "Sixteen (competitors) tried to put together a proposal. None of the other regions could get in line."
But in Denver, environmentalists and business groups were unified in behalf of the project, he said, noting that "business people don't walk precincts, but environmentalists do."
While United was lured to fly trans-Pacific, the trans-Atlantic has been a different story. There, United has preferred to route traffic through its other hubs, meaning that Denver has relied on European carriers, which currently include British Airways, Icelandair and Lufthansa. British Airways and Lufthansa both fly 747s, taking advantage of Denver's 16,000 foot runway.
Denver has also sought service by Swiss, another Star member, Clark said. And it has repeatedly approached AirFrance, but Clark said the carrier, a Skyteam member, regularly declines, even though Paris is the city's second largest European destination.
Like most airports, Denver continues to seek new international destinations. Recently, officials from Clark's staff and the airport called on Turkish Airlines and Emirates Airline in Istanbul and Dubai, respectively. Clark noted that the runway can also accommodate an Emirates Airbus A380.
"This is the beginning of a three- to five-year process," Clark said. The meetings were cordial, informative and an exchange of data. We will continue to meet with them at least twice a year and at the usual confabs where airlines gather. Ultimately we will press for a delegation of the companies to come to metro Denver.
"We're often in airlines' top five, but never their top two," he said. "Because we're a small market we always have to fight above our weight. "
Unlike many major airports, Denver does not have its eye on China service. "China doesn't work real well for us because its economy does not match up with ours," Clark said, noting that China's relationship with western markets largely reflects its manufacturing capabilities, while "we have a high tech economy best (matched with) Japan with its technological capability."
Meanwhile, United rebanked its Denver hub in September, moving flights closer together during the flight banks, the roughly one-hour periods when aircraft arrive and depart. Rebanking brings the arrivals and departures closer together, enabling shorter connecting times. Additionally, the carrier has been "upgauging" or putting bigger aircraft on flights, which reduces its cost per available seat mile.
"This quarter we launched a new initiative to consolidate departure frequencies throughout the network," said Jim Compton, chief revenue officer, on the third-quarter earnings call. "As an example, in January, with our Denver to Minneapolis route, we are reducing service from five flights per day comprised of a mix of Express and mainline aircraft to four flights per day, comprised exclusively of mainline flying on week days.
"In this example, we are only increasing our daily seats by 3% while increasing seats per departure by approximately 30%," Compton said. "Frequency consolidation will reduce costs, improve reliability, improve the product offering and provide more premium seating."
-- Written by Ted Reed in Charlotte, N.C.
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