Yakima, Wash. Air Terminal: Buying An Airline's Interest

YAKIMA, Wash. (AP) -- Rafe Hagel and Clif Gregory were waiting to board the 1:30 p.m. Horizon Air departure to Seattle last week. Like many business travelers, they were in Yakima for a one-day sales visit, but had to spend the night in Seattle in order to catch a flight east to Houston, and eventually home to Nacogdoches, Texas.

These molding and millwork salesmen found the idea of a direct flight from Yakima to Salt Lake City, where there's an easy connection to Houston, much more appealing than the itinerary they had.

''If it was a direct flight, we'd be home tonight,'' Hagel said.

Just such an itinerary has been contemplated in recent weeks as news that a major airline, widely assumed to be Delta, was looking closely at Yakima.

It was a welcome sign at the Yakima Air Terminal, which shortly before had hired a consulting firm to study the demand for expanded air service and eventually help the airport court prospective airlines.

But the airport has backed off from the full-speed-ahead approach to landing a new carrier. A deadline to apply for a federal grant that would make up a substantial part of an incentive package to entice the airline into this market was only a few short weeks away - not enough time to scrape together the $50,000 to $100,000 in required community matching funds.

Now the airport plans a marketing campaign to build support from local government and business - perhaps in the form of a large block of pre-purchased tickets, known as a travel bank - before it goes to the airline with a proposal.

''We have got to educate Yakima to the fact that we can bring in an airline that will benefit them (through) better connections and certainly improved fares,'' said airport manager Buck Taylor, ''But we've got to get the commitment from the community that yes, we can support it and we will support it.''

Anecdotal evidence and an analysis by national airport consultants Mead & Hunt suggest there could be demand for another airline, but so far Horizon hasn't seen a reason to expand its service.

''Everybody's been clamoring for a second air carrier,'' said Mary Lou Snyder, owner of Global Travel/Carlson Wagonlit.

United Express ended its Seattle-to-Yakima service in October 2001, as part of a wave of changes in the airline industry that followed the Sept. 11 terrorist attacks. Horizon currently offers six flights a day to Seattle, the Alaska Airlines/Horizon hub, which Dan Russo, the airline's director of marketing and communications, described as ''our most viable role in Yakima.''

The airline's Yakima boardings peaked in 1999 at 61,410 and have averaged 54,650 for the last four years. Boardings for the first two months of 2005 are ''slightly ahead'' of the same period last year, Russo said in an e-mail.

Since June 2003, the Airporter Shuttle has been ferrying a substantial number of passengers by bus and van from Yakima to downtown Seattle and the Seattle-Tacoma International Airport.

''We continue to see growth in the service and I think we have gained acceptance,'' said co-owner and general manager Richard Johnson.

The Airporter's passengers - 90 percent of whom go to Sea-Tac - are doing what the majority of local travelers do: going to another airport to catch their flight.

Some 56 percent of travelers drove to Seattle, Tri-Cities or Portland to catch flights, while only 42 percent flew out of Yakima, according to Mead & Hunt's analysis. The consultants reviewed about 15,000 airline bookings made in 2004 by travel agencies in the airport's service area, which includes roughly 260,000 people living in Yakima and portions of Kittitas and Lewis counties.

''We've got to change that habit,'' Taylor said.

One way would be to bring in another major carrier to take passengers from Yakima to a hub airport east of here. There's also the possibility of a carrier such as Big Sky Airlines, which recently began daily flights from Moses Lake to Boise, Idaho, and Portland. Other travelers would like to see a direct competitor with Horizon into Seattle.

Airlines must make a substantial upfront investment to set up service in a new market, and in many cases they've found that a community's rhetoric doesn't match its ticket purchases.

Now, Taylor said, airlines are asking communities to ''put your money where your mouth is.''

That usually means creating what's known as a travel bank, like the one Central Oregon recently used to secure twice-daily jet service on Delta between Salt Lake City and Redmond Airport, which serves 200,000 people, including the growing city of Bend.

Roger Lee, executive director of Economic Development for Central Oregon, said the community had been trying for years to expand its air travel options - which already included service to Portland, Seattle and San Francisco - but failed to generate interest from any new carriers.

Then they hired Mead & Hunt to make a pitch last August to Delta. Their proposal included: a $500,000 federal grant - just like the one Yakima decided not to apply for this year - that Central Oregon had secured nine months in advance; $450,000 in marketing support; and a commitment by local businesses to at least $500,000 worth of travel on Delta or its code-share partners.

By the first of the year, 116 local firms had put $626,000 in the travel bank. Lee said the size of the contributions was not as important as the number of businesses participating. Businesses that didn't fly on Delta's routes were not encouraged to make large commitments. Many companies made a minimum $2,000 advance purchase, with an eye toward attracting the new airline and thereby increasing competition and lowering fares on the carriers they use, he said, adding, ''We wanted to show broad support.''

The travel bank is designed to guarantee a minimum amount of revenue to the airline during the difficult six- to 12-month startup phase, when travelers are still getting used to the new schedules and routes.

Lee's organization manages the travel bank, protecting businesses from losing their money if the airline goes out of business or cuts service to the area.

It remains to be seen whether Yakima will be eager to create incentives, such as a travel bank, required to lure a new carrier.

''Knowing the corporates ... I don't think they're going to go for that,'' said Snyder, whose business is split evenly between corporate and leisure travelers.

''They want to fly on the airline that's cheapest or most convenient to them. They don't want to be tied to one airline because they've made an agreement with them.''

Dave McFadden, president of New Vision, the Yakima County Development Association, said, ''It's certainly plausible that we could develop a travel bank.'' Although his group is naturally positioned to manage such an effort, he said New Vision is occupied with its primary goal of marketing the Yakima Valley to outside companies and helping local firms expand.

''I've never been busier in my life,'' he said.

Lee acknowledged that launching a campaign to attract an airline and managing a travel bank is a lot of work. ''It's all-consuming,'' he said.

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