Things are starting to look up at Lebanon Airport

Lebanon Airport has been through some lean times. It used to offer service from four airlines. Today it has one carrier flying one route. As recently as the early 1990s, the airport served nearly 60,000 passengers a year. By 2004, that number nearly fell below the crucial 10,000 mark.

The decline was primarily caused by changes in the marketplace. When air travel was deregulated in the late 1970s, airlines gained the freedom to choose their routes, and they largely abandoned smaller airports. In New Hampshire, Lebanon was eclipsed by the aggressive expansion of Manchester-Boston Regional Airport.

In recent years, staffing and funding declined because of low traffic and a lack of support from city officials. Airport facilities fell into disrepair, and in May 2005 the facility failed a Federal Aviation Administration inspection.

The decline was viewed with alarm in the business community. “The airport is a tremendous asset to the Upper Valley,” said Paul Boucher, president of the Greater Lebanon Chamber of Commerce, adding that he feared that its loss would be a blow to the area’s economy.

But things have begun looking up. There’s a new airport manager on board, and political support is on the rise. The airport passed FAA muster this spring. Passenger numbers have shown a modest increase, and a new marketing campaign is under way. The airport’s future seems secure, as long as outside forces don’t overwhelm it.

Revenue sources

For those accustomed to the bustle of Logan or Manchester, a visit to Lebanon Airport may feel like a trip back to a simpler time. Parking is free, and the terminal is a few steps away. Inside, there’s no restaurant, snack bar, convenience store or newsstand. There’s only one gate. On an average day, the airport handles fewer than 40 passengers.

The only carrier is Colgan Air, a partner of US Airways, which flies four daily round-trips between Lebanon and New York’s LaGuardia Airport, using 19-seat Beechcraft with no restrooms or flight attendants.

The tickets are pricey — just under $700 for round-trip — although, thanks to an oddity of the pricing system, fares are often lower for travel beyond LaGuardia on US Airways. Most of Lebanon’s passengers are business travelers from the Upper Valley area who are willing to pay the premium (or have their companies do so) for the convenience of a local departure.

The bulk of Lebanon’s traffic is general aviation, private planes owned by individuals and businesses. As general aviation becomes more accessible, and more prevalent, in the business world, it is gaining importance as a source of airport revenue.

Federal subsidies

“I knew the job would be a challenge,” says airport manager Steve Miller, “but to be honest, it’s been a lot more challenging than I thought.”

Miller is in his early 40s, and he could pass for a rugby player: compact, stocky, short hair. He’s spent his entire career in the air travel business, but this is his first chance to manage an airport.

Miller arrived in November 2005, and immediately went to work bringing the airport into FAA compliance, working on repairs and upgrades, building political bridges with the city council, and just plain getting the word out. “I have had literally thousands of people tell me, ‘I didn’t know there was airline service out of Lebanon.’ Even some travel agents in the area.”

Under Miller, the airport applied for, and won, a $500,000 federal marketing grant. The money has bought a multimedia ad campaign and a rebate program: $50 for anyone who flies one round-trip, $250 for three, and $500 for five. Miller says it’s working so far. “We’ve paid out about $35,000. We’re getting several submissions a week.”

Colgan Air reports a modest increase in passengers over the same period last year — which was solidly higher than the year before.

A number of improvements are planned for general aviation users, including a longer taxiway and new hangar space. That would make Lebanon a more attractive base for private and corporate aircraft, and provide more income in landing and hangar fees.

Miller hopes to persuade Colgan to boost passenger service, starting with a shift to larger aircraft. Colgan plans to phase out its 19-seaters in favor of Saab 340s, which offer 34 seats, rest rooms and flight attendants. But Dennis Burnett, Colgan’s director of development, said “there’s no time line for that.” And since the average Lebanon flight is less than half full, Colgan has no pressing need to upgrade.

Miller also has approached Colgan about adding a second destination and lowering fares for LaGuardia flights. Burnett doesn’t sound encouraging on that suggestion: “It’s a very challenging industry right now. We have to justify the service; we can’t operate at a loss.”

In a purely free market, Colgan would already be taking a loss. The carrier gets almost a million dollars a year to operate at Lebanon under the U.S. Transportation Department’s Essential Air Service program, which was created after deregulation as a way to ensure service at smaller airports.

But what if Congress, in the face of huge deficits, decided the program was a luxury? Without EAS, Miller says, “we might possibly retain passenger service. My gut is that we probably would lose it.”

That could set off a domino effect. Lebanon Airport receives about a million dollars a year for repairs and upgrades from the FAA’s Aviation Improvement Program, which helps maintain the air travel system. But if passenger numbers fall below 10,000 a year, Lebanon’s AIP funding would drop to $150,000 annually.

“It would be very, very difficult to run this airport” at that level, says Miller. “It would begin to deteriorate over time.” And Lebanon would become less desirable for general aviation.

If that happened, “I’d be concerned that someone else would pick up the slack,” said Paul Boucher. “The Claremont Airport has been expanding.” And that, he said, could divert some of the Upper Valley’s growth away from Lebanon.

As long as the federal dollars keep coming, Miller is confident the airport can continue to grow — mainly through serving general aviation users. He has no illusions of a return to 60,000 passengers a year; he’d be happy with 20,000. He’d love to attract multiple airlines, but that seems unlikely, since a second carrier would not get a piece of the EAS pie. And when Lebanon’s EAS contract came up for renewal, no other airlines came forward, with Colgan the only bidder.

Miller has more work to do on the home front as well. Lebanon’s city charter requires the airport to break even, but last year’s revenues were about $600,000, and expenditures about $200,000 more.

Miller said airports inherently lose money. “It’s like your sidewalks. They don’t generate money, but they’re kind of a necessity.”