Airports brace for fewer flights, passengers

That will mean about $15 million less in revenue from parking, rental cars and concessions, said CEO Fegan. Besides freezing the budget, landing fees will rise "slightly," he said, and this week airport officials tossed around the idea of closing part or all of one of the terminals to save money.

In Cleveland, Continental Airlines Inc. spoke just last year about increasing capacity by 40 percent in two years. Instead, it will cut available seats 13 percent and end nonstop service to 24 cities.

There will be about 160,000 fewer passengers a week passing through Los Angeles International Airport, where capacity will fall nearly 11 percent, according to airline industry database Innovata. American, Delta Air Lines Inc., and UAL Corp.'s United Airlines are making big cuts; low-fare Southwest Airlines Co. is standing pat.

To offset fewer flights, LAX is raising landing fees by 15 percent, to about $500 for a fully loaded Boeing 737 and more than $2,000 for a full Boeing 747 jumbo jet.

Airlines and airports often have tense relationships — partners in the travel business, but adversaries when it comes to haggling over landing fees.

Southwest is the only major U.S. airline not shrinking and so it stands to pay a larger share of landing fees. Last month, CEO Gary Kelly complained that unlike airlines, airports do not control their spending during economic downturns, which runs up the tab on the airlines.

"We have a few airports out there that I think are spending more than they should, quite frankly, and so there are some real total airport cost increases that we are very vocal about," Kelly said.

"The more you raise fees, the more you drive airlines and customers away," said Howard Putnam, a former Southwest Airlines CEO and now an aviation consultant.

Airport executives say they get the message and are keeping landing fees as low as possible.

Deborah McElroy, executive vice president of the Airports Council International, a trade group for airports, said Kelly's comments reflected the short-term view of airlines that must report to shareholders every quarter.

"It's rhetoric I've heard for 41 years, but I understand," McElroy said. "These folks aren't sure if they're going to be in business in six months."

Airports plan for growth years into the future, she said, and they're starting to ask carriers to stand behind long-term projects.

Although airports depend on airlines, they are seen as much better investments because they have more sources of revenue, including federal grants.

Airline stocks have rallied the last three weeks because of a drop in oil prices, but they are still far below their early-2007 peaks. Airline debt, except Southwest's, is in junk territory while airport bonds are solidly investment-grade.

"On the other hand, airports are very dependent on the airlines bringing passengers," said Kurt Forsgren, an analyst with Standard and Poor's. "Airports are headed into uncertain times."

Also in msnbc.com business Answer Desk: The risks of investing extensively in gold Your Career: The repercussions of expressing your faith Interactive: 10 cars we’re looking forward to in 2010 ‘Reaching out’ and the other worst buzzwords of the year   Video: Existing home sales make an unexpected jump

MORE FROM TRAVEL

Travel Section Front

10 years of twisted travel Top 10 ski resorts for nonskiers Holiday scenes in New York City Airlines waive fees for storm-affected travelers Police react to unruly crowd at Delta terminal Bride marries arriving groom at Texas airport I canceled my room — where’s my refund? Olympian task of taking on travel companies Fastest disappearing natural wonders Ten uniquely American meals Travel Section Front   Add Travel headlines to your news reader: