Florida to LVIA Flight Dilemma: Airlines Can Fill Planes, But Struggle to Make Profit

Airlines that offered nonstop service to Florida cities have come and gone at LVIA. One departed so abruptly it stranded Lehigh Valley residents in Florida and left LVIA with $1 million in unpaid bills.

Some observers say the so-called legacy carriers that have filed for bankruptcy could use financial assistance from the airport. Delta and Northwest filed for bankruptcy protection last year, and United just exited bankruptcy.

"The longer-term future is really with retaining a Delta, or a United, or Northwest, much more than with these come-and-go operations," said Dick Barsness, a former dean of Lehigh University's business school, who has studied the airline industry. "The impression one comes away with is the only market that really matters is the leisure market to Florida."

George Doughty, LVIA's top official, does not deny the airport needs to review its incentives policy. He now says TransMeridian was already in bad financial shape when it began service here.

"I think it's a legitimate concern," Doughty said in an interview last week.

But he said the airport cannot provide incentives for all the airlines that have been through bankruptcy. Instead, the airport has developed interest-free payment plans for the airlines as they've exited bankruptcy.

The airport never recouped $1 million in payments Southeast owed, and Hooters has a $1 million fuel bill that it has left unpaid since January. Despite the debts, the airport continues to operate with a surplus. It absorbed the Southeast debt by laying off employees in ground-handling and maintenance that were no longer needed.

Allegiant received modest incentives because it is flying to Orlando, a proven market that requires little marketing and is a winner for almost any airline.

Revolving door

The arrival and departure of airlines at LVIA has repeatedly left airport officials and passengers starting at square one. Most of the small airlines that have touched down in the Valley were not household names; it took time to market their flights, and time for customers to become acquainted with them.

Many passengers, however, are willing to try new carriers. Passengers interviewed before an Allegiant flight to Orlando on Thursday said their chief concern is price.

"For me, it doesn't matter who I go on, as long as I can get there and get back," said Don Stahley, 47, of Allentown, who was flying to watch his 12-year-old daughter, Shannon, compete in a cheerleading competition.

But it has affected how some travelers approach Florida travel. Dorrit Emerich, 23, and her boyfriend, Jared Gollie, 22, were left holding tickets on TransMeridian last fall when the carrier ceased flying. Dorrit received a refund but said seeking reimbursement and booking travel on another airline was a hassle.

"It makes me nervous," Emerich of Hellertown, a frequent traveler, said of the shutdowns. "Now we try to book at the last minute, with all the airlines coming and going out of Allentown. But then the fares are higher."

Even Allegiant officials acknowledge the difficulty of winning passengers over. Scott Tyra, Allegiant's director of planning, said he knows many passengers at LVIA might be thinking, "Oh here come's another."

"Over time that goes away but it is a problem," Tyra said. "We can tell customers in Allentown we are very profitable, and we don't pull out of markets willy-nilly. We are the polar opposite of Southeast or Hooters. But that's not going to register with them until we stay there for a while and the schedule stays the same for a while, and people get to make their second trip with us."

Hooters' experience provides a cautionary tale for any airline. It had an advantage that virtually no other airline has: a wealthy owner who was willing to indulge some losses. That's because the airline functioned largely as a flying billboard for the restaurant chain of the same name, known for its buxom, skimpily clad waitresses.

LVIA has turned its attention to Allegiant, which airport officials and others say has a solid business plan. Experts say Allegiant has distinguished itself by expanding slowly, and turning a profit. Tyra said the privately held airline has been profitable for 11 of the last 12 months, and expects to be profitable this year.

Allegiant has high hopes for the Lehigh Valley market. Tyra said LVIA is attractive because of the area's relatively large population base that is centrally located between Newark and Philadelphia.

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