A CEO’s Insights

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A History of why our Region Needs More International Nonstop Flights

By 2022, China is expected to have over 630 million middle class citizens, spending $3.4 trillion annually according to Dominic Martin for The Diplomat. This new demographic already buys more flat panel TVs than most of the other prominent Asian economies combined. As China increasingly opens its doors for out-of-country travel by its citizens, airlines are gearing up for one of the greatest tourist waves ever recorded. Bigger airplanes, greater attention to the “customer experience,” new signage to direct international passengers, and increased language fluency from airline personnel will be engaged in the coming competition for new flyers. It’s a daunting task with this tsunami headed all across the globe…and soon.

Each year, Denver International Airport (DIA) staff execute a strategic marketing plan focusing on particular airlines which, in DIA’s estimation, are a good fit to provide service from the airport. When evaluating new service from DIA, here are a few facts to consider as well as a couple of myths:

  1. In the near term, China does not fit into Colorado’s economic strategy, despite the fact that DIA also don’t have a nonstop flight to Shanghai or Beijing. Colorado is not a major manufacturing state and doesn’t have a seaport for China’s exports. While many Chinese will soon enter the middle class, economically, we are better off pursuing them as tourists than as investors.
  2. Coloradans want nonstop flights to Paris. So does the Metro Denver EDC. The problem remains that developing business relationships with French companies has been a challenge over the past 30 years. Since the 1980s, the French have focused on the continent, not some startup metropolitan region in the middle of the United States. Our inability to establish strong business ties with France did not stop concerns about the lack of nonstop flight to Paris. So, when Icelandair announced plans to open a new flight from Denver, our region saw opportunity. Icelandair flies to Reykjavik daily, but also connects to 18 European locations, including Paris. Today, our business connections with France are still marginal, but Paris has become Colorado’s No. 2 international destination, behind London.
  3. Hub-to-hub flights work best for passengers and air carriers alike. The Star Alliance, of which United Airlines is a member, helps member airlines maximize schedules, share revenue, and increase efficiencies for both passengers and airlines. DIA’s attraction efforts pursue Star Alliance members as the first choice for new routes. DIA is a great connecting hub for all airlines, but particularly so for nonstop international flights. Forty percent of DIA traffic is comprised of origin/destination (O&D) passengers.
  4. The best customer is the one you already have. DIA focuses its energy on existing carriers: British Airways’ success at DIA, along with United, Lufthansa, Icelandair, Air Canada, Frontier, Volaris, and our Mexican and Central American airlines. British Airways, a member of the One World Alliance, is particularly important because the United Kingdom is Colorado’s largest international flight market. United is crucial because its Tokyo flight connects Colorado to Asia.
  5. Lufthansa’s Frankfurt flight continues to be one of the airline’s most profitable routes, with Colorado passengers connecting across Central Europe through this important gateway. A nonstop flight to Munich failed when oil prices reached $140/barrel a decade ago. DIA continues its efforts to reinstate this flight. Munich is the center of the cleantech industry in Europe and is a great connecting airport to the Middle East. Its famous Terminal 2 is one of the most efficient connecting terminals in the world. 

But why does our region still pursue new international flights? Because we have been doing it from the very beginning of Denver City. In the 1800s if a city didn’t have a port —a river or an ocean —it was destined to be a second-tier city. The publisher of the Rocky Mountain News (and the first Chairman of the Board of the Denver Chamber) William Byers, was so convinced of this fact that he printed steamship schedules and had them distributed in St. Louis, announcing steamship service from St. Louis, up the Missouri River, connecting to the South Platte, and arriving in Denver City. Byers was a shameless promoter of his hometown. He knew that in a wet year, August river flows in spots along the South Platte were probably 3-6 inches. No riverboat with a paddle wheel was ever going to meet Byers’ fictitious schedules. 

The absence of a port gave rise to the Denver Board of Trade’s creation, raising $300,000 to build a rail spur to Cheyenne, Wyoming, connecting the Front Range to the Transcontinental Railroad, and securing the region’s economic future for over 150 years.

Since that auspicious beginning, the Denver Metro Chamber of Commerce and its economic development affiliates such as the Metro Denver Economic Development Corp. have pursued ports. The minutes of one Chamber board meeting in the early 1900s alluded to connecting the Atlantic and Pacific Oceans through Denver with a rail link to Galveston, Texas, at the Gulf of Mexico. In the 20th century, Phil Anschutz’s purchase of the ATSF and Southern Pacific railroads finally accomplished this long-sought goal, connecting the two oceans with one continuous rail line.

In the 1930s, Denver Mayor Ben Stapleton saw commercial aviation as our port. Ridiculed for his purchase of land from his cousin at Rattlesnake Gulch, Stapleton was exonerated in the 1970s when Stapleton International became one of the 10-busiest airports in the nation.

DIA was originally planned as a connecting hub. Planners estimated that 40 percent of passengers would be origination and destination (O&D) with 60 percent connecting through DIA. But DIA’s impact on the region’s economy turned that projection, literally, 180 degrees. Access to the entire nation and eventually the globe, grew the Colorado economy dramatically in the 1990s, resulting in DIA becoming a 60 percent O&D market and 40 percent connecting passengers. It also caused one heck of a parking problem. The O&D passengers wanted to park at the airport, but parking quickly became a scarce commodity.  Airport planners scurried to build new surface lots and encourage off-airport parking to accommodate the most important passengers —those who work here and drive more dollars into the economy than connecting passengers.

As we approach DIA’s 20th anniversary, we realize that while we take great pride in our beloved airport, soon to connect to downtown by rail, that we are part of an ongoing narrative of reaching to new markets by creating our own ports. With capacity for 12 runways (DIA has six runways today) our future as a great port appears safe for another century, and ready to receive a whole new group of global tourists eager to spend time in our beautiful state. And, with Lockheed Martin and United Launch Alliance’s successful launch of Orion this past December, we seem to be positioning ourselves to play a significant role for another port – Mars.


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About Phil Kalin

Phil Kalin joined Pinnacol Assurance as CEO in 2013. He has served as the chief executive of both public and privately-backed companies, including large hospital systems, as well as organizations focused on health care data, technology and education. He has been active nationally on health care topics related to insurance, data analytics, technology innovation, cost improvement and risk mitigation. Phil is providing an informed opinion on what we see in the Monthly Economic Indicators.

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About Pinnacol

Pinnacol Assurance is the Metro Denver EDC's Research Sponsor. Pinnacol is Colorado’s leading provider of workers’ compensation insurance. Pinnacol provides comprehensive, competitively priced coverage; immediate attention to claims; a highly qualified network of medical providers; and proactive safety programs to more than 55,000 Colorado businesses. Annually, Pinnacol supports nearly $500 million of Colorado’s economic activity, spends over 35,000 hours keeping Colorado worksites safe and provides compassionate care to over 40,000 Coloradans injured on the job.

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