Airports Cautioned Not To Pay For Air Service

One common piece of advice to those small airports looking to gain additional air service: Don't pay for it.

Two airport executives and the administrator of the federal government's Small Community Air Service Development grant program cautioned airport directors attending the Federal Aviation Administration's (FAA) Forecast conference last week not to expect an airline to remain once the subsidy is spent.

The key to the federal grant program is to develop a local program that can sustain air service once the grant expires, said Michael Reynolds, the deputy assistant secretary of the Department of Transportation (DOT). The agency is now accepting applications for its fifth round of grants. It has $10 million available and it can fund up to 40 grants. The applications are due April 9.

Due to the multi-year nature of recruiting a new carrier, Reynolds said that many of the first year grants are just now reaching conclusions. "Several have gained air service. We will see if a carrier remains after the grant is no longer available. Anybody can offer money to an air carrier. Sure, they will show up while the money is there. The key is sustaining the service."

"I won't pay for service," said Alfred Testa, director of the Harrisburg International Airport. "If the market does not support the service, then what good is a grant? The airline will just pull out."

The Small Community Air Service Development grant program and the Essential Air Service program are forms of "corporate welfare," Testa said. "We have shown airlines that you don't have to make market-based decisions. Instead, they just have to wait and see who offers them the biggest check."

Although the Chicago/Rockford International Airport secured a $1 million grant last fall, the airport is not using it to underwrite service, said Robert O'Brien Jr., the airport's director. Instead, the grant is being used for marketing and market research.

While airport is 45 miles from Chicago O'Hare, United Airlines [UAUA] is the first scheduled carrier to begin regular service. Its first flights were on Friday. Carriers, such as Allegiant, which specialize in resort destinations, provide the bulk of the service out of Rockford. Last week, a new vacation carrier, Festival Airlines, announced that it would fly 80 percent of its Chicago service out of Rockford. The new carrier, which first must obtain federal certification, hopes to be in the air later this year flying Boeing [BA] 757s.

"One key thing a community learns is that it can energize a community," Reynolds said. "Local officials needs to be energized, not just airport officials."

As part of the grant process, local communities are required to provide local matching dollars. In many of the successful applications, real money is put up as the match on top of donated advertising space.

Obtaining new air service is not "rocket science," O'Brien said. "It is all about demographics. It is about having the right business strategy. It is also about having the political courage to understand that what may have seemed impossible in the past is now possible.

"He who controls the consumer wins - make no mistake about that," he added. "We work really hard to get close to the consumer. We have 30,000 active people in our community rewards program."

Testa faults the airlines for failing to take risks and innovate. "They have failed to learn the real lessons of the low-cost carriers' success. The future of aviation rests in the medium and small cities with the hubs serving as transfer points."

>>Contacts: Michael Reynolds, DOT, (202) 366-4551; Alfred Testa, Harrisburg, (717) 948-3900; Robert O'Brien, Rockford, (815) 969-4444.

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