Chatting with Duane DuRay, Airport Manager at Sawyer International Airport

In this episode of the Rural Insights Podcast, David Haynes sits down with Duane DuRay, Airport Manager for Sawyer International Airport–the Upper Peninsula’s largest airport. DuRay has served as the Airport Manager since 2012, following his position at Gogebic Iron County Airport.

Topics discussed include the challenges presented by the reduction in flights by American Airlines and Delta Airlines, the pilot shortage, the changes to the Essential Air Service, and how the Sawyer and Marquette County are dealing with these challenges.

Transcript

David Haynes:

Good afternoon to all of our listeners. If you are one of our thousands of readers and listeners, you know who Duane Duray is. He’s the head of the Sawyer Air Force Base… Excuse me, airport. You could tell how old I am when I call Sawyer Air Force Base, in Marquette County. And he’s what we’ve all come to know is our expert in this region about rural air service issues and certainly about the UP. So we wanted to talk to him about the bigger picture than just Marquette County, what it means around the UP, what should we expect? What’s driving this rural air service issue for us? I have in Montana, Wyoming, et cetera. They’re all going through the same thing in many places. So Duane, welcome. Thank you for joining us again.

Duane Duray:

Well, thank you David, for having me and I look forward to… Hopefully I can answer some of the questions that are out there regarding rural air service. It is a very changing environment right now. The airlines, as we know, are going through another reset. We seem to run into this and over the last handful of years where the airlines seem to have numerous resets, but with every one brings new challenges. And many of us may recall the 9/11 issue when we were attacked and the airlines quite literally shut down. And we all kind of wondered what was going to happen to airline industry and it rebounded fairly well and actually rebounded quicker than the analysts had forecasted. Then of course, we just had the recession and then now we came into COVID and COVID added a whole new level that a lot of travelers were not anticipating.

And the airlines didn’t equally anticipate either. The federal government did come in during the early stages of COVID and tried to assist both the airports and the airlines with financial assistance to ensure that our national network still maintained a level of stability and flexibility in the changing environment. But with COVID, it brought in a lot of new challenges that we in the aviation industry knew were out there. But now, they’ve kind of been magnified because COVID brought in a real change of view with both the traveler and the industry. I think one of the lead things that we’ve all noticed over the last handful of years, sorry about that, or not over the last handful of years, but over the last year is flight reductions. And everybody is experienced in that across the country, not just small rural airports, but a lot of the larger airports as well.

And we’ve watched a lot of solid markets lose flights that were never anticipated to or were thought to be in jeopardy. And a lot of that follows suit with COVID. I can lay a little foundation as when COVID first impacted the airline industry, the airline started to pull down capacity in frequency because people quit flying. A lot of parts of the world were actually shut down. So the airlines reacted by shutting or pulling down capacity and lessening the frequency of flights. With that, they also did not require as many flight crews and supporting staff. So the airlines did as they would normally do or any industry in that matter would try to streamline their workforce and say, well, this is a time that if we have people who want to retire early, to limit our expenses. Let’s get some early retirements out there. And quite a few pilots and flight crews and airline employees as a whole took that advantage of taking early retirement and they left the industry.

David Haynes:

What’s the impact on the UP in the sense of now I understand in Marquette County where I fly out of a lot, we’re down to one Delta flight, one American. What’s happening in the rest of the [inaudible 00:05:20] Iron Mountain. I think of the three major other airports. I might have dropped one. What’s happening there?

Duane Duray:

Well, that’s a good question, David, is Marquette is not alone with the flight reductions. As many people know, there are six commercial airports across the UP. Ironwood, Iron Mountain, Escanaba, Houghton, [inaudible 00:05:47], and Marquette. And Marquette is unique to itself because we’re one of the few, or we’re the only airport in the UP that is not receiving any federal subsidy or any guarantee of flight service. The other five carriers airports receive a program under the essential air service group or essential air service program under the DOT. And they guarantee air service. Those airports still maintain their flights, but they have equally experienced flight reductions. And some airports have actually received notifications that the airlines don’t want to fly there anymore. Prime example is Houghton County, Sky West, who is their air carrier provider, flies for United. They put in a request to discontinue service up in Houghton because of the challenges that they’re facing with flight crew reductions and equipment or resource management. So Houghton has lost some flight service. They’re still giving flight service. At this stage right now, they’re getting one round trip a day

David Haynes:

On Sky West.

Duane Duray:

On Sky West for United. Now there have been carriers that have bid to provide their service into Houghton, but at least at this stage, Houghton is still operating with Sky West as a United carrier. Now Escanaba, they have gone to piggybacking their flights with neighboring cities. So Escanaba, normally would’ve had a flight to Minneapolis and a flight to Detroit all to themselves. Now Escanaba flight schedule is going Escanaba, [inaudible 00:07:40], Detroit. So they are partnering up with [inaudible 00:07:46] because those two airports are essential air service. And the DOT is allowing them to do that due to the pilot shortage. The Sioux, they are equally with that. They’re flying the Sioux to Alpina and to Detroit. So they’re piggybacking with Alpina. Iron Mountain, they’re going Iron Mountain, Relander onto Minneapolis. So these cities are being coupled with other essential air service markets to better manage the resource for those stations and to assist the air carrier in being able to at least provide the minimal air service. So the UP as a whole has lost capacity with all of our flights, all of our airports.

David Haynes:

So let’s see if I can get this right. Tell me how I’m wrong. Sawyer is the only place with a direct flight to Detroit and Chicago. All the other areas will have a stop in between the hub.

Duane Duray:

Well, there is one airport that I believe is somewhat immune to this. It’s the furthest to the west, the Ironwood Airport. I believe they are still operating regular nonstop service to Minneapolis.

David Haynes:

And why is that, that that market would be-

Duane Duray:

My guess David is the very simple fact is there is no near city that they can partner up with that would accommodate that. I know in years past, Ironwood used to couple with Relander for service, but I believe the provider over in Ironwood is not flying the industry standard 50 seat regional jet. I believe they’re less than 50 seats. It is a regional jet, but probably 32 to 36 seats. So that equally limits the capacity to partner up with another city. So that would be my best guess, David, for that reason, but all of the other cities are operating the 50 seat regional jet.

David Haynes:

Okay. So will we see bigger jets be put in to sort of handle the pilot shortage in rural airports like the UP? Will they go to [inaudible 00:10:31] six or will they stick at 50?

Duane Duray:

Well, that’s a very good question, David, and that one I’m hedging my bets. The 50 seat aircraft has been around since the mid 90s. The mid 90s don’t sound like that long ago, but it’s been 30 years. When you think about it, that’s coming up on 30 years that aircraft has been the backbone to the regional industry and airplanes are well designed and well maintained and they’re very safe to operate. But at the end of the day, the efficiency is what is going to be driving the industry. And one thing to take into mind is when the aircraft first was put into place and operated these airports, their field costs was about 400% less than it is today. And the pilots’ wages, the compensation for flight crews from the regional airlines when the 50 seat first came up was substantially less than the main line or what we would call the legacy carriers, like the Deltas, Americans, the United.

So there was a huge difference in the pay structure. So the airlines could in essence generate revenue off of those aircraft, flying these smaller markets with this aircraft. But now fast forward to 2022, the airlines are struggling with managing their flight crews. They’ve had to make some serious adjustments in compensation. Some air carriers that raise their pilots rates 20 to 60% for compensation, which off the very top cuts the profitability of those 50 seat aircraft. So my forecast is that the airlines are going to be transitioning out of the 50 seaters for a handful of reasons. Number one, they’re an old aircraft. They’ve in many cases have met their life. The economics of operating that aircraft no longer makes sense. And the efficiency of moving into a larger aircraft, the namely the 66 seat up to the 76 seat, you can add 50% more seats to an aircraft that is nearly as efficient as a 50 seaters with minimal changes, same flight crew, two pilots.

You add an additional flight attendant, but still the efficiency of the aircraft and the capabilities of the aircraft go up 50% with the size change. So the airlines are going to start to shift those out. We’re anticipating just by the end of 2023, the industry is anticipating losing about 20% of their 50 seat fleet, which is roughly about 80 aircraft by 2023. And a lot of these aircraft are going to be coming out of markets, just like the ones that we have up in the UP. So long term, the larger aircraft are coming in. Now the challenge with the larger aircraft is anything over 61 seats to operate scheduled air carrier service require a higher level of security, and that is designated through the Transportation Security Administration or the TSA. That we’re all familiar with at the airports when we check in and that’s another component that’s going to come into play that is definitely going to hinder some of these surrounding airports in the UP.

Marquette, we’ve seen this quite a few years back and we started the process to get up to that higher level of security. And we’ve just recently made the full transition. We are anticipating a larger aircraft being operated through Envoy Air or American Airlines. We anticipate them before the end of this calendar year, which is very appropriate because we’re going to lose 100 seats of capacity in and out with Delta’s reduction of flights. But at the very least we are going to recoup at least additional 50 seats with the larger aircraft with American.

David Haynes:

So let me… I am a frequent flyer out of Marquette and sometimes out of Iron Mountain, Escanaba, but my home is Marquette. And if I can’t get on a flight, I have to drive to Green Bay to get a flight. And what about folks on the Eastern end? Can they cross over into Canada to take an international flight out of Canada, out of Sioux Canada?

Duane Duray:

Oh, yes. You’re able to do that. Again, these flights are going to be challenged to where you’re going to go. I mean, if you’re going international or up into Canada, that’s all right. But there is going to be an added expense if you’re going to transition over into Canada and then have to go through customs, coming back into the United States someplace. So that’s going to add value or add expense to the trip and it’s going to add to mine.

David Haynes:

And I think for all the travelers, you’d rather fly out of your home airport or somewhere nearby. I love flying at a Marquette. You all run a great airport. It’s efficient and it’s great facilities. I’ve had a couple of our readers writing they’ve coming home, are already put in a trip back to the UP for Christmas. They live in out east or down state, and they’re already worried about the flight schedule and when to get in. So there’s lots of chatter, where else can I get into? But you’re right. I mean, by the time you get into Green Bay, you got to rent a car, if you can get a car. And if you want a car for a round trip, it’s almost, you can try that. But if it’s a one way, it’s a whole nother problem and car rentals are expensive right now, whether you fly into Green Bay or Chicago or Detroit and drive to the UP for the second leg. It’s expensive, right? I mean, that’s another consideration for the traveler, is that expense.

Duane Duray:

Yes, there’s another one. Yep. Yep. The automotive industry has not been immune from COVID as well. And we all know if any of the listeners have recently looked to buy a new vehicle, you’ll find that the car lots are nearly empty. And the rental cars, when you think about their operations, the national wide operation, they buy thousands of cars on an annual basis. And they have been struggling. We heard early on as COVID impacted the airports that the rental cars gave us heads up early on stating that expect limits on rental cars because of the shortage. And you’ll look in a lot of the rental car fleets right now. They’re still an older model car that they have yet to replace. And they’re still struggling. The car industry or the automotive industry and the dealership still have yet to recover from that.

So there’s still a lot of challenges. And then again, you add to that the fact that the airlines have pulled capacity yet down further in the flight seats that are available. The airlines that do very well with managing supply and demand. And that’s another component that a lot of people need to think about when they’re flying from rural airports is being proactive and booking as early as you possibly can because as these flights fill up and they are filling up, even at the higher costs, the availability is going to get tighter and tighter. And the airline industry at this stage, as much as they would like to expand, they are limited. They’re just like every other industry out there. If they have the help wanted signs out, looking for a crew and the challenge with that is they’re still forecasting an ongoing shortage of pilots way out into 2032.

They’re anticipating a long leg on getting pilots trained to come back into the industry. Delta loan is showing roughly about 8,000 pilots shortage industry wide. And they’re trying to bring on as many pilots as they possibly can, but it’s very challenging and they’re pulling it. And that’s where we’re seeing the biggest impact is the legacy carriers are pulling their demands for fly crews out of the regional carriers, which are supplying us with our air service. And the regional carriers are the ones who are impacted with these shortages.

David Haynes:

So Duane, I read recently, tell me if it’s accurate that there is some concern in United States Congress about maybe not continuing the airport subsidies. For instance, to the UP airports, except for Marquette. What’s your crystal ball tell you about those?

Duane Duray:

Boy, the Essential Air Service Program, David, has been one of those programs that have been hands off, no matter what side of the aisle you’re on in. And unfortunately, I don’t think there’s a state in the union that either party is affected by essential air service. I’ve watched it over the years and I’ve watched the cost of operating it continue to skyrocket. Good example, if I’m correct, is 2020, the essential air service market just for the UP was over $14 million for one year, providing subsidy to all these surrounding airports. And the challenge Marquette faces is we’re competing with the federal government. We don’t get any subsidy in our services provided due to the very simple fact that we have a very loyal and dedicated flying public that wants to support their local airport and hats off to those people. We see them come and go every day and we truly appreciate their loyalty to the airport because without them, we wouldn’t be where we’re at today.

But going back to what I think the essential air service market is going to be. I think what will most likely happen is going to be tied to how the airlines grapples with this aircraft and flight crew issues. If the airlines transition, as we know they are going to, into the larger aircraft, these smaller regional airports, the expense and the time, and the resources necessary to transition to a larger security airport, it may become overwhelming and they’re going to end up going to something that they may not be accustomed to. As we know the Escanabas and Iron Mountains, they’re still getting a legacy carrier service with Delta and United and American. And that’s what people want. What’s going to happen if that service gets downgraded to something less than those carriers, what if it goes to a small regional independent carrier that’s not connected to the airlines? And the reason I would say the potential risk is there is we’ve seen when the airlines went from turbo props to jets. None of the air carriers… Now all the legacy carriers are not flying any turbo props.

They have gone fully into jet service and they are not going to shift gears and go back into turbo props to supply a legacy connection to some of these rural airports. They’re going to continue to improve their service, upgrade their aircraft fleet, and provide the service that the public demands and the potential risk, again, to some of these regional airports that are dependent on EAS is that their service may be downgraded from legacy carrier service down to some independent carrier that may not provide them the connectivity to the network.

David Haynes:

Right. Yeah. Well, Duane Duray, thank you. You are the UP’s Mr. Aviation, and you do a fantastic job. As one of your regular customers, you and your staff do a wonderful job at providing a great travel experience, even under stressful conditions that we all go through in rural areas. But thank you to all of you and thank you for doing these sessions with us to keep folks in UP with some good, solid information about what to think about air service and what we can expect over coming months and years. So thank you very much for your time, sir. I really appreciate it.

Duane Duray:

Thank you, David. And I want to thank Marquette and the community abroad for supporting Marquette Sawyer International. Without our customer base, our guests, we wouldn’t be where we’re at today.

David Haynes:

Well, great. Great. Thank you so much. And we’ll see you at the airport.

Duane Duray:

Okay. Thanks. Thank you, David.

David Haynes:

All right. Have a good week.

Duane Duray:

You too.