Reference no: EM132720176

Flight Plan

With a small year-round population, Branson, Missouri, is in a location not easily accessible by air service.45 The city, best known for its country music and music variety shows and family-style attractions, also has the kinds of outdoor activities that attracted more than 8 million visitors last year, "earning it the unofficial nickname 'Vegas without the gambling.'" About 95 percent of those visitors come by car or bus. But now there's a new show in town-the Branson Airport. The $155 million airport, which opened in May 2009, is an experiment that many people are watching.

The airport is generating interest from city governments and the travel industry because it's the nation's first commercial airport built and operated as a private, for-profit business with absolutely no government funding. As one expert said, "...unpretentious little Branson Airport could have an outsize effect it if works. It could turn what now is a mostly regional tourist spot into a national destination for tourists."

Steve Peet, the airport's chief executive, admits that he had no idea where Branson was in 2000. But by 2004, he was convinced there was money to be made flying tourists there. He says, "If you were ever going to think about building a private commercial airport, this would be the place to do it. How many more visitors would come here if we made it easier and affordable for them? It seemed like an incredible opportunity." So, using private financing, he decided to build a new commercial airport a short distance south of Branson's popular music shows district. Both Peet and Jeff Bourk, executive director of the airport, continue to tackle the managerial challenges of turning that dream into reality.

Construction work on the airport terminal and the 7,140-foot runway (which can accommodate most narrow-body jets) went smoothly. Bourk believed that much of that was due to minimal red tape. Because the airport wasn't using federal assistance, it didn't face the restrictions that accompany taking government money, which also meant it could pick and choose the airlines it allowed in. To attract those airlines, the airport agreed to not allow other competitors in. Also, the airport owners kept the airlines' operating costs low since airport employees do much of the work usually done by an airline's ground staff. Initially, the airport's owners offered exclusive contracts to AirTran and Sun Country on certain routes to Branson. Now, Frontier Airlines and the newly-formed Branson AirExpress have added service. Mr. Peet emphasizes that they want the airlines to succeed. "We want to build real service, sustainable service."

The airport earns money from landing fees (based on number of passengers, not on weight), aircraft fuel sales, a percentage of every sale at the airport's facility, and a $8.24 fee paid by the city of Branson for each arriving passenger. To reach Peet's goal of 250,000 passengers a year, the airport needs only 685 passengers (five to six planeloads) a day. He says, "What we're doing is going to work." But first, they have to deal with some significant turbulence. Branson city officials (who have been elected and hired since the original agreement was signed) now say that the contract between the city and the airport regarding the arriving passenger fee may not even be constitutional. Airport officials respond that, "We have a legal document and we expect to be paid." And Bourk maintains that Branson benefits from every tourist that goes through the airport. "We bring in high-quality tourists all over the country to spend money in Branson for a cheap price of $8.24."

Discussion Questions

1. Using the four functions as your guide, what challenges would Jeff Bourk face in managing the Branson Airport?

2. Again, using the four functions as your guide, do you think the managerial challenges Jeff Bourk faced when getting the airport up and running are different from what he faces now in actually overseeing the airport's operation? Explain.

3. What management roles would Jeff Bourk be playing as he (a) negotiates new contracts with potential airlines, (b) works with the airport employees in providing a high level of customer service to arriving and departing passengers, and (c) resolves the contractual issues with the city of Branson? Be specific and explain your choices.

4. What skills would be most important to a manager like Jeff Bourk? Explain your choices.