AirTran to Seek No-Cap Subsidy

March 16, 2005
Discount carrier AirTran Airways is seeking at least $2.5 million in taxpayer funds -- and requesting that the subsidy not be capped -- to operate for a fourth straight year in Wichita.
Discount carrier AirTran Airways is seeking at least $2.5 million in taxpayer funds -- and requesting that the subsidy not be capped -- to operate for a fourth straight year in Wichita, city officials say.

To meet AirTran's no-cap demand, Wichita officials are discussing asking local businesses to contribute to the subsidy for the first time, according to city officials and business leaders.

Business leaders plan a fund-raising campaign that could begin next week and last up to six weeks, Wichita Area Chamber of Commerce president Bryan Derreberry said. The campaign, aimed at local businesses, is designed to encourage increased ridership.

"I think we'll get a very positive response," Derreberry said. "They get that $70 million has been saved in the community and that each of them has shared in that savings."

The current one-year agreement between the city and Florida-based AirTran provides $2.5 million in revenue guarantees, bringing the total to $7 million in city guarantees since AirTran arrived in 2002. The current agreement expires in May.

AirTran's spokesman could not be reached Tuesday.

The planned fund-raiser from businesses is important because there is not majority council support for a revenue guarantee beyond $2.5 million, said another elected official who requested anonymity.

"The people who benefit (from the subsidy) the most should help subsidize it," Council member Phil Lambke said. "They say they've saved hundreds of millions on ticket prices. The people who are saving the money ought to pay, not the average taxpayer, not Grandma Jones."

Council member Sharon Fearey said she favors business leaders securing increased passenger numbers rather than asking business leaders to support the public subsidy.

"The whole key is to get AirTran to be self-sustaining," Fearey said. "When we increase riders, then nobody pays."

Mayor Carlos Mayans could not be reached for comment. He has said he supports extending the subsidy for at least another year at the existing $2.5 million subsidy.

The subsidy must be approved by a majority of the seven-member City Council. In the past, most council members have been strong supporters of the revenue guarantee, which they view as an important economic development tool.

Elected officials say the revenue guarantees are a worthy investment because the airline's presence has lowered fares and led to record number of passengers at Wichita Mid-Continent Airport.

There is majority council support for extending the subsidy another year at $2.5 million, Lambke said. He added that he appeared to be the only opponent when the AirTran contract was discussed among council members last week..

Acting City Manager Cathy Holdeman, who has represented the city in recent meetings about AirTran, did not return a message seeking comment.

Neither did city economic developer Allen Bell who, according to several council members, has been meeting with elected officials regarding terms for renewing the contract.

AirTran began service in Wichita in May 2002. To lure the airliner, the city offered $4.5 million in revenue guarantees and publicly- funded advertising for the first two years. The airline exhausted those guarantees.

When AirTran's original two-year contract expired last May, the city offered an additional $2.5 million in guarantees.

The guarantees help underwrite AirTran's losses on routes. If there are no losses, the city does not pay the money.

AirTran officials have said they want to grow their business so they would no longer need public subsidies.