Skybus deal worth up to $57 million

GREENSBORO - The cost of bringing a discount airline hub to the Triad could soar to nearly $57 million.

That's much more than officials said Monday , when Skybus announced that the airline would locate a hub at Piedmont Triad International Airport and fly to seven new destinations.

Skybus officials previously said the state and local incentives they've been offered are worth about $5 million .

But during its monthly meeting Tuesday , the Piedmont Triad Airport Authority approved an agreement including more than $52 million in airport construction and marketing efforts to support Skybus.

Skybus must attract at least 500,000 new passengers a year before the airport will make good on some major parts of the deal, including a new Skybus concourse and a $33 million parking deck.

That is about half the roughly 1 million passengers who flew out of PTI last year.

The airport hopes to pay for such construction projects through bonds.

Independent airline and business analysts say the deal is a risk worth taking.

"Airports across the country are very envious at what PTI has pulled off this week," said Anthony Tangorra , chief executive officer of Latitude Transport Advisory in New York.

Airport officials and representatives from Columbus , Ohio -based Skybus reached the agreement in late September , after three days of negotiations, said Henry Isaacson , chairman of the airport authority .

But they kept the details quiet until the board's vote Tuesday .

The deal comes in two parts.

The first phase starts immediately and includes giving Skybus four neighboring gates and gear to help passengers get from the concourse to planes.

It breaks down into:

l $6.3 million spent to fix up the gates and a ticket counter, add ramps and build at least 1,600 ground-level parking spaces.

l $300,000 in marketing and advertising for the new flights.

l $2 million or more from the airport's new program that pays airlines adding new nonstop service $2.15 for every passenger who boards a flight.

The second phase of the deal offers Skybus larger, long-term incentives if the airline can bring in new passengers and drastically increase traffic at PTI. It includes:

l A new ground-level Skybus concourse to be built north of the airport's north concourse at a cost of $7.2 million .

l A nearby parking deck with 3,000 new spaces at a cost of $33 million .

l $250,000 in marketing.

l Another $3 million or more from the airport's passenger incentive program.

The state already has offered Skybus up to $4 million in grants if the airline hires 375 workers. Regional groups have thrown in another $1.1 million .

Add that up, and Skybus was lured here by the possibility of more than $56.8 million in incentives.

Airport officials downplayed the cost of the deal Tuesday , stressing that the parking deck - worth more than half the package - has been on the board's agenda for some time.

"We did not wave a $50 million flag in front of these people," said Ted Johnson , the airport's executive director .

And the offer is not equivalent to a city or county incentives package, said Andrew Brod , director of the Center for Business and Economic Research at UNCG's Bryan School of Business and Economics .

When a county or city gives tax money to a business, it takes away from other taxpayer services, Brod said. But airports make their money off the airlines and from parking fees, and they invest those revenues to keep growing.

PTI officials may be taking a risk on an unproven airline, but it is a crucial risk to bring in passengers and compete with the state's larger airports, Brod said. That's the only way PTI can help the region's economy, he said.

"If PTI doesn't take some chances - and this seems like the right kind of risk to take - I don't think we're ever going to break out of that status as a second-tier airport," Brod said.

"The greater the chances of the airport moving up in that tier system, so to speak, the better the opportunities exist for Triad business."

Airline expert Tangorra agreed.

"If an airport is to reach its potential as an economic engine for the community, it needs to be able to support the service of innovative new airlines like Skybus," he said.

And PTI officials have reduced their risk by requiring Skybus to bring in a minimum number of passengers before they will fulfill some promises.

"In my judgment," Tangorra said, "the airport authority is making the right aggressive moves to not only help the airport but to help fuel the economic growth of the region perhaps for years to come."

Contact Richard M. Barron at 373-7371 or dbarron

Contact Michelle Jarboe at 373-7075 or mjarboe

nAn agreement signed last month and approved by airport officials Tuesday gives the airline incentives.