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More incentives OK'd

PTI offers money to airlines offering new service

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By Fran Daniel and Richard Craver JOURNAL REPORTERS

Published: October 18, 2007

GREENSBORO - GREENSBORO - The Piedmont Triad Airport Authority began playing the incentives game yesterday, offering money to airlines to provide nonstop flights to cities currently not served from the Greensboro airport.

The authority approved offering airlines $2.15 a passenger for each flight connected to new service at Piedmont Triad International Airport. Airlines already serving PTI and new entrants are eligible for the incentives, which will begin Jan. 1 and run through Dec. 31, 2010.

The money would come from operating income, mostly from parking fees and money spent by passengers in restaurants, gift shops and rental cars. The payout can't exceed the airline's landing fees in any quarter.

The incentives are for flights originating from PTI and contingent on airlines hitting goals for passenger boardings. The new service must be provided at least six days a week. The offer is good on a first-come, first-served basis for each new destination.

Driving the authority's decision is the bid to persuade low-fare Skybus Airlines Inc. to choose PTI for its second operational base.

Skybus, based in Columbus, Ohio, said in September that PTI was one of six cities it is considering for the second base, where it could offer as many as 22 daily nonstop flights. The airline has projected that more than 400 jobs would be created with the operation. A decision could be made as early as the end of the month, according to Skybus officials.

Winston-Salem Alliance, a nonprofit economic-development group, said in an Oct. 8 letter to the Forsyth County Tourism Development Authority that Skybus indicated that it has narrowed its choices to PTI and Richmond International Airport. "We have been reluctant to provide incentives, such as refunding landing fees and rental fees, because we haven't felt like we've had to do it," said Ted Johnson, the executive director of the airport.

But Henry Isaacson, the chairman of the authority, said that a substantial decline in boardings and the loss of passengers to airports in Charlotte and the Triangle forced the authority to be more aggressive. Boardings at PTI dropped from 1.9 million in 1995 to 1.1 million in 2006.

"In order to stem the tide of those losses, we felt like it was important to enact a program to offer some incentives to airlines for new routes to new airports," Isaacson said.

The incentive offer could be worth hundreds of dollars for each flight. For example, Skybus operates Airbus A319 aircraft, which typically carry between 144 and 156 passengers, depending on seating arrangements. That means that Skybus could get up to $335.40 in reimbursed fees for every full flight.

Skybus has had an occupancy rate of more than 90 percent on its flights from PTI to Columbus since service started May 29, according to the alliance. Skybus said Tuesday that it will offer a second flight from PTI to Columbus, beginning Jan. 6.

The airline offers at least 10 seats at $10 on every flight. One-way airfares between Columbus and Greensboro in October range between $55 and $200, with the majority at $95.

At least $650,000 in incentive commitments toward marketing campaigns have been offered by city and county agencies and private groups in Winston-Salem, Greensboro and High Point, according to the alliance. In September, Guilford County commissioners approved a $300,000 grant for PTI. The money will be distributed over three years for marketing.

The alliance's letter said that Richmond and the state of Virginia "have been very aggressive in the recruitment of Skybus," with a combined financial-assistance offer of $50 million over 10 years.

"If the airline delivers on the promised 1.2 million new passengers, then Skybus would be eligible for cost reimbursements that would make PTI competitive with the Richmond offer," according to the alliance's letter.

"I believe you will find that airport authorities and commissions are limited in what they can provide airlines - whatever they offer one they are pretty much required to offer all," said Robert Brammer, the executive secretary for the Southeast chapter of the American Association of Airport Executives.

"The way around that, of course, is to have local chambers of commerce, merchants' associations and other seemingly disinterested third parties to offer the incentives."

Bell said that the bulk of the incentives comes from a $950,000 federal grant from the Small Community Air Service Development program. To qualify for the one-time grant, an airport must prove that it has insufficient air-carrier service or have unreasonably high airfares. Grants can range from $20,000 to up to $1.6 million and can be used over several years.

Johnson said that the airport will take "another good, hard look at the grant now that the community pledges have been made."

Jessica Norton, a visitor from Germany, said yesterday that she prefers using PTI instead of traveling to Charlotte when she visits family in the Triad. She likes the idea of using incentives to attract airlines.

"Most people just think of flying into Charlotte when they come here," she said. "Maybe it would be more convenient for a lot of people to come in through Greensboro."

Fran Daniel can be reached at 727-7366 or at fdaniel@wsjournal.com.

■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.

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