Transportation

Report: Cost of Flights Out of MSP to Rise in 2013

Local hotel rates are also likely to increase next year, but Twin Cities car rentals are expected to go down in price, according to a report by Carlson Wagonlit Travel.

If you’ll be flying next year for either business or pleasure, you’d better bump up the travel budget.

Tickets for flights out of the Minneapolis-St. Paul International Airport (MSP) will likely rise between 5.4 percent and 7.9 percent in 2013, according to a report released Monday by Carlson Wagonlit Travel (CWT).

The expected increase for the Twin Cities is significantly higher than the 2.8 percent airfare bump that’s predicted for all of North America. The report said that the increase will result from “continued capacity reductions”—or smaller planes and fewer flights—in the Twin Cities market.

CWT, which focuses on business travel management, formed its price projections based on several factors, including a statistical model that evaluates price behavior and forecasts future increases, and information gleaned from CWT’s own travel experts.

Based on CWT’s projections, plane fares aren’t the only travel-related costs expected to increase next year.

Daily hotel rates are likely to rise between 1.8 percent and 4.1 percent locally—and by 3.2 percent for the United States and Canada together, CWT said in its report, noting that the local price hikes will be driven by a handful of upscale hotels that are still trying to boost average rates to the pre-2008 prices they charged before the recession.

For consumers, the CWT report did offer one piece of welcome travel news: Local car rental rates are expected to decline between 1.8 percent and 3.4 percent next year. Driving that decline is “intense competition between suppliers, coupled with low fleet costs and a strong used car market.”

For North America as a whole, CWT anticipates that rental car market pricing will decrease 1.1 percent in 2013.

CWT, which provided travel price projections for every region of the world, said that prices in most travel categories are expected to “grow modestly around the globe next year.”

Meanwhile, Nick Vournakis, CWT’s senior vice president of global product marketing, said in a prepared statement that price increases in 2013 “will begin to level off in most regions throughout the world” as compared to 2012, but “slightly higher prices will be the reality again next year as demand for travel outpaces supply in most places. . .”

News about the anticipated increase in local airfare might not come as a surprise to most Twin Citians. A report that the Bureau of Transportation Statistics released last year found that MSP is the 11th-most expensive airport in the nation.

The average domestic airfare from MSP during the first quarter of 2011 was $413—up 9 percent from the same period the prior year.

—Christa Meland
(cmeland@tcbmag.com)

Spirit, Southwest Add Flight Destinations from MSP

Spirit Airlines will offer nonstop flights from the Twin Cities to Dallas, Fort Myers, Florida, and Fort Lauderdale, Florida, while Southwest Airlines plans to add flights to Kansas City, Missouri.

Two airlines have added flights from the Minneapolis-St. Paul International Airport (MSP)—giving Twin Cities travelers new options for reaching destinations in Texas, Florida, and Missouri.

Dallas-based Southwest Airlines said Monday that it will begin offering two daily, nonstop flights between MSP and Kansas City, Missouri, beginning February 14.

Southwest spokesman Chris Mainz said Wednesday that Southwest now offers nonstop flights from MSP to seven different destinations.

Meanwhile, Florida-based Spirit Airlines—the newcomer that debuted at MSP in May—said Monday that it is adding nonstop flights between the Twin Cities and the Dallas/Fort Worth International Airport in Texas.

The airline will offer four weekly nonstop flights to Dallas beginning April 26, but it plans to offer daily service starting June 13.

A day after announcing its flights to Dallas, Spirit said Tuesday that it is adding two other destinations from MSP: Fort Myers and Fort Lauderdale, both in Florida. Spirit will offer nonstop, seasonal flights between MSP and those two cities from November 8 through April 24.

By adding Dallas and Fort Myers, Spirit has doubled the number of destinations it offers to Twin Cities fliers: The airline currently flies from MSP to Chicago and Las Vegas.

Spirit offers fares as low as about $29 but charges fees for many services that are available for free from other carriers; for example, the airline charges $20 for carry-on bags and will boost that price to $25 in November, according to its website.

Bob Herbst, founder of AirlineFinancials.com, told the Star Tribune that Spirit’s presence at MSP is unlikely to put much pressure on Delta Air Lines to lower fares, and smaller airlines like Southwest and Mendota Heights-based Sun Country Airlines are more likely to be affected by the new competition.

—Jake Anderson
(janderson@tcbmag.com)

90 Applicants Vying for $47.5M in State Grants

Some high-profile projects—like the proposed St. Paul Saints ballpark and the Southwest Corridor light-rail line—previously announced plans to seek a share of the state funding, but 90 applications have now been filed.

The deadline for applying for $47.5 million in state funding has passed—and the large applicant pool indicates that competition is stiff.

A $496 million bonding bill that Governor Mark Dayton signed last month included $47.5 million for unspecified economic development projects in Minnesota. The Minnesota Department of Employment and Economic Development (DEED), which is charged with doling out the funding, began accepting grant applications in May, and the initial June deadline was subsequently extended to July 9.

DEED spokesman Monte Hanson told Twin Cities Business on Tuesday morning that 90 applications were submitted, and the agency will now begin its process of selecting grant recipients.

Download the full list of applicants here.

The state will consider a variety of factors for each project before selecting recipients, including job creation or retention (including permanent and temporary construction jobs), whether a project will increase the local tax base, and general return on investment. Selected projects must provide matching dollars for any state funding they receive.

Individuals involved with a few major projects previously publicized their intention to apply for funding. St. Paul is seeking $27 million to help fund a new $54 million stadium for the St. Paul Saints minor league baseball team. The city council approved St. Paul’s plan to pursue the funding, and Mayor Chris Coleman’s office announced Monday that the city had formally applied.

“This ballpark won’t just be an attraction for families across the region, it’s going to create jobs and add vitality to our community,” Coleman said in a statement. “I’m looking forward to putting people to work as soon as we receive the funding from DEED. This is a very exciting day for St. Paul.”

It’s been clear for some time, however, that St. Paul faces competition from other major projects that were left out of the bonding bill. For example, the Metropolitan Council is seeking state funding for the proposed Southwest Corridor light-rail line, which would run between downtown Minneapolis and Eden Prairie. The Pioneer Press recently reported that the Met Council requested $14 million for the project. And there have also been funding requests for expansions of the civic centers in Rochester and Mankato.

It's now clear that those applicants represent only a small fraction of the pool of projects vying for funding, and the applicants are collectively requesting $288.4 million—far more money than is available.

"We were impressed by the volume and quality of the projects submitted for capital project grants," DEED Commissioner Mark Phillips said in a statement. "In the next several weeks, we will evaluate the applications closely and make a decision on which projects are selected. It's going to take time, given the huge response to the program."

—Jake Anderson
(janderson@tcbmag.com)

Xata Lays Off 29 as It Moves to Mobile Devices

The job cuts come at a time when Xata—which provides fleet-management software for trucking companies—is moving away from onboard systems and toward the use of mobile devices.

Xata Corporation has laid off 29 employees as part of a shift in its business model.

The Eden Prairie-based software company helps trucking companies keep track of their fleets—and it is in the process of moving away from onboard fleet-management systems and toward the use of mobile devices.

It announced the job cuts in a Tuesday filing with the U.S. Securities and Exchange Commission. As of September 30, Xata employed 210—so the cuts affected almost 14 percent of the company’s workers.

Xata said that it expects to take an $800,000 restructuring charge for the quarter that ended June 30 in order “to better align our work force with our mobile-based strategy.” However, going forward, it predicts annual costs savings of $2.8 million.

The company will also record charges of between $1.3 million and $1.6 million in order to write off obsolete inventory. Additionally, management concluded that a $3.4 million impairment charge was necessary, Xata said.

Xata made headlines recently when Chief Financial Officer Scott Christian abruptly resigned, effective June 22, after about a year on the job.

For the fiscal year that ended in September, publicly traded Xata reported a net loss of $2.8 million on $63 million in revenue. For the second quarter that ended in March, the company reported a $2.1 million net loss on revenue totaling $15.9 million.

—Christa Meland
(cmeland@tcbmag.com)

Local Truck Sells Clothes on the Go

Two entrepreneurs have reportedly transformed an old Star Tribune newspaper truck into a mobile clothing retailer.

As the food truck craze continues in the Twin Cities, two entrepreneurs are repurposing the model for retail and starting a fashion truck.

The truck, called The Fashion Mobile, hit the road late last week to sell clothing at a festival in White Bear Lake, according to a blog post by Mpls.St.Paul magazine Senior Editor Allison Kaplan.

The Fashion Mobile was launched by David and Teresa Grim, who previously ran Doozie, a now-shuttered brick-and-mortar children’s store in Stillwater. They reportedly bought an old Star Tribune newspaper truck on Craigslist, painted the exterior, wallpapered the interior, and even installed a dressing room.

According to Kaplan, there’s also a mobile store called Uniquely Attainable, which has been circling the Twin Cities and selling home décor.

Click here to read more about the new mobile retailers in Kaplan’s blog post.

—Jake Anderson
(janderson@tcbmag.com)

MSP Travelers Will Have Free Access to 2,500 iPads

The iPads will be installed for traveler use as part of a renovation of the airport’s Concourse G.

Delta Air Lines last year unveiled plans for an overhaul of Concourse G at the Minneapolis-St. Paul International Airport (MSP)—including a series of new restaurants and a “virtual newsstand” where travelers can rent iPads and download content to view during flights.

But travelers at MSP will also soon have access to 2,500 iPads scattered throughout the concourse.

OTG Management, which will operate most of the restaurants being added in Concourse G, said Thursday that it will install roughly 7,000 iPads at three airports during the next 18 months—including 2,500 tablets at MSP.

OTG spokesman Sean Aziz told Twin Cities Business that the iPads will be available exclusively in Concourse G. Roughly 80 percent of seats at gates will have iPads, while all barstools and restaurant seats will have access to the tablets. Travelers can surf the Web, check flight statuses, play games, and even order food from airport restaurants to be delivered to them. Users can also charge their electronic devices through the tablets' stands.

In addition to those at MSP, OTG will add 2,000 iPads at New York’s LaGuardia airport and 2,500 at Toronto Pearson International Airport.

“We believe this to be the largest deployment of consumer-facing iPads in the world, and for us, it’s just the beginning,” OTG CEO Rick Blatstein said in a statement. “We have plans to roll out thousands of additional iPads at other airports around the United States and the world.”

—Jake Anderson
(janderson@tcbmag.com)

Pinnacle Airlines Encouraged to Relocate to MN

A Metropolitan Airports Commission spokesman told the Star Tribune that the commission “had a phone conversation with leadership at Pinnacle to express our interest in seeing them move here.”

Pinnacle Airlines, a regional carrier for Delta Air Lines that filed for Chapter 11 bankruptcy protection earlier this year, is being encouraged to move its corporate headquarters from Memphis, Tennessee, to Minnesota.

A Metropolitan Airports Commission spokesman told the Star Tribune that the commission “had a phone conversation with leadership at Pinnacle to express our interest in seeing them move here.”

Pinnacle bought Eagan-based Delta subsidiary Mesaba Airlines for $62 million in 2010. Then, late last year, Pinnacle shuttered Mesaba’s Minnesota headquarters—a move that was expected to result in the loss of roughly 200 jobs.

Pinnacle has 7,400 employees, including roughly 1,500 in Memphis and 1,200 in Minnesota, including pilots, flight attendants, and maintenance workers at the Minneapolis-St. Paul International Airport (MSP) and 50 workers at an Eagan training facility, according to the Star Tribune.

Joe Williams, manager of corporate communications for Pinnacle, told the Minneapolis newspaper that the company is “examining every aspect of our business to find opportunities to reduce costs—this includes partner contracts, vendor contracts, and other areas of the business including facility carrying costs.”

“We currently don’t have plans to move, but every opportunity to reduce costs will be considered,” he added.

The Star Tribune pointed out that there are two empty hangars at MSP, which would provide ample space for a new airline tenant. One of the hangars was built for Mesaba Airlines.

Representatives from economic development agencies in Memphis, meanwhile, told the Minneapolis newspaper that they want Pinnacle to stay put, and they suspect that incentives the company receives there will entice it to remain in Memphis.

Read the full Star Tribune story here.

—Jake Anderson
(janderson@tcbmag.com)

Spirit Airlines Debuts in MSP with Mile Giveaway

The airline began service at the Minneapolis-St. Paul International Airport on Thursday and gave away 40 million frequent flyer miles to promote the launch.

Spirit Airlines has kicked off service in the Twin Cities by giving away 40 million frequent flyer miles to local residents.

The Miramar, Florida-based airline gave away 1,000 certificates worth 20,000 miles each at the Mall of America on Tuesday and another 1,000 at the Minneapolis office of travel agency Travel One, Inc., on Thursday. The certificates were handed out on a first-come, first-served basis.

Spirit spokeswoman Misty Pinson told Twin Cities Business that 20,000 miles is just enough for a free round-trip ticket from Minneapolis to Chicago.

Spirit began service at the Minneapolis-St. Paul International Airport on Thursday, offering three daily non-stop flights to Chicago and one daily non-stop flight to Las Vegas. In February, the airline announced plans to launch in the Twin Cities.

Spirit bills itself as a discount airline and is known for an a-la-carte approach to air fares, with low base ticket prices but added fees for services. For example, it charges a $30 fee for carry-on bags, according to the company’s website.

The airline offers flights to Denver, Dallas, San Francisco, Los Angeles, New York, and Washington, D.C., among other destinations. In the Twin Cities, Spirit will fly out of Terminal 2 (formerly the Humphrey Terminal), which is dominated by locally based Sun Country Airlines.

Learn more about Spirit’s business model and how its fares compare with other airlines by reading a story in the May issue of Twin Cities Business.

—Nataleeya Boss
(nboss@tcbmag.com)

Union Depot Selects Prop. Manager, Bike-Center Operator

Pending negotiations with the Ramsey County Regional Rail Authority, Jones Lang LaSalle will provide property management services for St. Paul’s Union Depot transit hub—and Minneapolis-based One on One Bicycle Studio, Inc., will design and operate a bicycle center there.

The Ramsey County Regional Rail Authority (RCRRA) has selected Jones Lang LaSalle (JLL) to provide property management and leasing services for St. Paul’s historic Union Depot—which is being transformed into a state-of-the-art transit hub.

The selection is pending negotiations with Chicago-based JLL—which employs more than 200 commercial real estate professionals in the Twin Cities area and has an office in downtown Minneapolis. It has managed and operated several other large transit stations, including Union Station in Washington, D.C., Chicago Union Station, and New York City’s Grand Central Terminal.

Locally, JLL is the property manager for Rosedale Center and Calhoun Square, and it’s the leasing agent for a 2.8 million-square-foot portfolio of office properties.

“Jones Lang LaSalle understands the importance of establishing Union Depot as a great public place in Lowertown and in downtown St. Paul, which should serve as a catalyst to spur nearby commercial and residential development,” RCRRA Commissioner and Chair Jim McDonough said in a statement.

If negotiations are successful, JLL will take over the day-to-day property management of Union Depot, including general facility management, building operations and maintenance, cleaning, and security. Additionally, the firm will implement a retail development plan for the transit hub and turn it into “a vibrant, active place for shopping and arts or cultural events.”

To that end, One on One Bicycle Studio, Inc., has been selected to design and operate a bicycle center on the ground level of Union Depot—a selection that’s also pending negotiations with the RCRRA. The center will have entrances and storefront windows facing Sibley Street, and it will feature secure bicycle storage, showers and lockers for commuters, and bicycle repair and retail services. One on One also plans to operate a café and art gallery that would offer various grab-and-go foods for consumers.

In 2003, One on One became the first combined bicycle and coffee shop in Minneapolis. It is located just a few blocks from the Hiawatha light-rail line downtown.

When construction on Union Depot is completed at the end of 2012, the 290,000-square-foot facility, which sits on a 33-acre site, will bring together riders of Amtrak trains, the Central Corridor light-rail line, Metro Transit bus routes, and Jefferson Lines bus service—plus bicyclists and pedestrians. Future regional transit ways and a planned high-speed rail service to Chicago also would stop there.

The Union Depot is located in downtown St. Paul’s historic Lowertown area, a vibrant neighborhood along the Mississippi River. It was built between 1918 and 1923 on the site of an earlier train station, which was destroyed by a fire in 1915. Prior to the renovation, the southern part of the property was occupied and used by the U.S. Postal Service. The northern section contains condos and restaurants, which will remain following the renovation.

—Christa Meland
(cmeland@tcbmag.com)

Central Corridor Light-Rail Line is 50 Percent Done

The Metropolitan Council said that the $957 million project is on track for the light-rail line to begin service in 2014, although a specific service date hasn’t yet been announced.

Construction on the Central Corridor light-rail line is half finished and on track to be three-quarters done by the end of 2012, the Metropolitan Council said Monday.

“The contractors really hit the ground running in March. We now have work occurring in all areas of the nearly 10-mile-long project, employing more than 3,000 workers to date,” Met Council Chair Sue Haigh said in a statement.

Utility relocations, roadway removal and replacement, track installation, and the structural elements of all 18 stations are on track to be completed by the end of the year.

In 2013 and 2014, installation of the electrical, signaling, and communications systems will take place—and the operations of the trains will be tested.

The Met Council said that the project is on schedule for the light-rail line to begin service in 2014, although a specific service date hasn’t yet been announced. The $957 million project will connect Minneapolis and St. Paul along Washington and University avenues. Construction began in late 2010.

Despite the progress that’s been achieved to date, highway closures associated with the project are imminent in St. Paul.

According to the Minnesota Department of Transportation, Interstate 94 between the Fifth Street/10th Street exit and the ramp to 12th Street will close at 8 p.m. Friday—as will Interstate 35E between 11th Street and the 10th Street/Wacouta exits. The thoroughfares will reopen at 5 a.m. next Monday.

The closures are due to light-rail construction work that will take place on the Cedar Street bridge over the Interstate 35E/Interstate 94 intersection.

For more specific information about upcoming road closures and corresponding detours, click here.

—Christa Meland
(cmeland@tcbmag.com)