Newport News considering redrawing enterprise zone for People Express airline

June 12--NEWPORT NEWS -- The city is considering redrawing the boundaries of an enterprise zone, mainly to grant tax breaks to the new People Express airline that will be based out of the Newport News-Williamsburg International Airport.

Newport News City Manager Neil Morgan said while the tax incentives weren't part of any negotiations with the start-up airline, the tax breaks could help People Express launch and stay in business.

"The upside of them being wildly successful is so significant that it's definitely worth doing," Morgan said Monday. Redrawing the enterprise zone boundaries would have to be approved by the City Council and the state.

Morgan said considering how historically difficult it is for new airlines to survive, the city wanted to do its part to see People Express -- slated to begin flying later this year -- succeed.

People Express was originally a 1980s low-cost airline that stopped operating for decades before the recent announcement that it would re-launch in Newport News.

Florence Kingston, the city's development director, said that the tax windfall for Newport News would be lucrative, even during the six years that People Express would receive tax breaks through the enterprise zone.

Kingston said 50 percent of new business personal property and real estate taxes would be abated for six years. The tax breaks are only for the new equipment purchased and upgrades to the property.

Kingston said in the case of an airline, most of the tax revenue would be based on how many airplanes were housed in Newport News, so she doesn't yet have an estimate on the dollar value of taxes abated for the six years. An airplane would be taxed under the business personal property tax.

"It really depends on how many airplanes they have," Kingston said. "One plane can cost $28 million."

People Express has indicated that it would purchase a fleet of 12 Boeing 737-400 airplanes, according to documents filed with theU.S. Department of Transportation.

Kingston said the state would also likely grant job training money to People Express as part of the enterprise zone package. People Express officials couldn't be reached for comment on Monday.

Morgan said the airport was always considered part of the midtown enterprise zone, so it's not a substantive change to the zone. He said they are deleting parts of the zone at the airport that wouldn't be related to economic activity, such as a retention pond, parking lot and control tower.

Also, Mary Immaculate Hospital would be drawn into the enterprise zone, to take into account the expansion of its surgery center. The hospital would be eligible for state but not local tax incentives.

Copyright 2012 - Daily Press, Newport News, Va.