MIAMI — Fort Lauderdale-Hollywood International Airport (FLL) is on an impressive run. Almost a year after opening its new $800 million runway, traffic growth over 2014 (already a record year at 24.6 million passengers) has consistently clocked in between 7.5 and 10.5% for the first three months of the year. The airport has already seen the launch of nine new routes this year with nine more to come, and as rivals JetBlue and Southwest Airlines continue to ramp up service at the airport, the airport’s growth can only be expected to accelerate in coming months.
Fort Lauderdale is currently in the midst of a massive $2.3 billion capital expansion project, including the new runway, 12 additional gates, a doubling of international gate capacity, and more. The airfield and terminal complex improvements have increased operational capacity by more than 63% (to 425,000 movements per year – 1,164 per day) and passenger capacity to 32 million, allowing for nearly 7.4 million annual passengers worth of growth before the airport hits capacity.
A tight three way battle, with an odd little operation to boot
In order to get a better idea of Fort Lauderdale’s current network and operational profile, we conducted an analysis of the current market in Fort Lauderdale for the week of December 14-21, 2015 (Florida traffic peaks seasonally in the winter and day of the week wise on Saturdays unlike most US airports, which peak during the summer and on Thursdays). That date encompasses all currently announced new routes at Fort Lauderdale except for JetBlue’s planned service to Quito, Ecuador, which will launch in the first quarter of 2016.
For the week, Fort Lauderdale is serviced by 28 airlines, offering 2,473 weekly departures to 108 destinations, including 1,939 weekly departures to 65 domestic destinations, and 534 weekly departures to 43 international ones. The airport serves as a hub (in all but name) for JetBlue and Southwest, as a focus city (and the largest base) for ultra-low cost carrier (ULCC) Spirit Airlines and regional carrier Silver Airways and as a point-to-point (p2p) base for Spirit’s ULCC rival Allegiant Air. In terms of market share, Southwest and JetBlue are neck in neck, with both carriers trading the market share lead and carrying between 18% and 20% of passengers over the trailing 12 months. In recent months, JetBlue has edged slightly ahead of Southwest by about a percentage point, though this could be due to the seasonality of JetBlue’s Northeast focus at FLL. Spirit is third placed with roughly 16-17% of the market, and Delta fourth with 12-13%. Once they finalize their merger, American and US Airways will combine to be the fifth largest carrier at the airport with just over 10% of the market, a position that United holds today with market share of 6-7%. Over the remainder of part I of this column and part II, we will take a more in-depth look at the four carriers with a focus city at FLL.
Silver Airways offers regional connectivity to Florida and The Bahamas
Silver Airways is an unorthodox airline. Based out of hubs in Fort Lauderdale and Orlando, Silver Airways primarily operates regional flights in and between South Florida and The Bahamas, (with a couple of daily flights to Charleston, South Carolina from Tampa and Orlando). The airline operates a fleet of 25 Saab 340B turboprops with five more aircraft on order (though their recent struggles with pilot shortages could threaten these orders). And it has Essential Air Service (EAS) contracts from the federal government worth millions of dollars, which support many of the intra-Florida routes and a completely unrelated hub at Washington Dulles that has nonstop service to seven cities in Pennsylvania and West Virginia.
Specifically at Fort Lauderdale, Silver Airways offers 174 weekly departures (~25 per day) to 10 destinations, five in Florida and five in The Bahamas (but not the capital Nassau). The carrier’s network is mainly targeted towards business travelers looking for a quick and convenient option for intra-state travel, and towards tourists looking to travel to The Bahamas. There isn’t much overlap between its network and that of most of the other big players in Fort Lauderdale, so even as JetBlue and Southwest grow, Silver Airways should be able to hold its niche. Other, non-competitive factors may prove to be its downfall.
Will Spirit move down to Miami?
Fort Lauderdale is Spirit’s home base and largest operation, with 353 weekly departures (~50 per day) to 43 destinations. But because Spirit’s nationwide operation is optimized for p2p routes (though it does allow connections in its booking engine), it’s probably better to think of their Fort Lauderdale focus city as two focus cities in one. There’s a domestic focus city, which is standard ULCC fare, offering high-frequency (at least daily) to major domestic cities (save for a few oddballs like Latrobe, an alternate airport for Pittsburgh, and Niagara Falls, an alternate airport for Buffalo). Then there’s the Latin American focus city, which features low frequency (many with 2-3 flights per week) to destinations across Central America, South America, and the Caribbean and is optimized for visiting family and relatives (VFR) ethnic traffic in the Miami metropolitan area.
The big question for Spirit at FLL isn’t actually growth. In fact the FLL operation has been pretty much static for several years as Spirit embarked on its nationwide expansion in major markets. The tenor of the operation has changed some in that Latin America has been de-emphasized and domestic focus cities added and strengthened frequency-wise as they came online (like Dallas Fort Worth, Chicago O’Hare, and so forth). But by and large, the FLL operation has plateaued. The real uncertainty lies in whether Spirit will move its operations to nearby Miami International, a fortress hub for full service carrier American Airlines.
A Spirit move to Miami has been rumored for more than a year, and it would make sense for several reasons. First and foremost is Spirit’s strategic shift over the past few years. As it moved sharply to embrace the ULCC business model, unlike worldwide peers (and Allegiant) who prefer operating from secondary or alternate airports, Spirit has built its business with focus cities at primary hubs like Dallas Fort Worth, Chicago O’Hare, and Houston Bush. Spirit’s business model in these cities is to chase a different cadre of traffic than the legacies, offering by far the lowest fares in the market. This approach certainly has a stronger chance of success at Miami, which is dominated by American and has the highest average fares in the region. Meanwhile at Fort Lauderdale, Spirit has to contend with two more leisure-oriented carriers who are in the midst of a massive growth spurt. The major downside to Miami is operating costs; as passenger costs are $10-15 cheaper at LCC-oriented Fort Lauderdale. But in the long run, it might make sense for Spirit to leave the JetBlue/Southwest clash behind and shift to being a thorn in American’s side. Of course that would merely ease FLL’s capacity constraints, likely incentivizing JetBlue and Southwest to further their growth.