Saturday, January 28, 2012

Taxpayers asked to put up $300K for new airline

Bloomington, Normal and McLean County leaders will vote Monday on kicking in $300,000 for an incentive package they hope will convince an unidentified airline to replace AirTran Airways at Central Illinois Regional Airport.

That money would be pooled with $150,000 already pledged by several local businesses, including State Farm Insurance Cos., in the new Community Air Service Initiative, or CASI. The money would then be used to temporarily subsidize new air service at CIRA, a strategy that successfully brought American Airlines service to Dallas-Fort Worth to the Twin Cities in 2008.

“An air transportation company (Airline) has expressed interest to CIRA in providing air transportation services in exchange for financial assistance to be provided by the Chamber,” city of Bloomington staff wrote in a memo provided to aldermen Thursday. “The term of such agreement shall be one year from the date Airline begins providing air transportation services at CIRA.”

Frontier Airlines has been approached about adding CIRA service, but officials on Friday declined to confirm reports it was close to finalizing a deal. Frontier ran daily service from CIRA to Denver until March 2001.

“Actually, there have been several airlines that (the CASI fund) been discussed with,” said Bloomington Mayor Steve Stockton. “It’s designed to be flexible in case one airline does not go forth.”

“Frontier has been on the list of airlines we’d like to consider, yes,” he added.

Special sessions are scheduled for Monday for the Normal Town Council (noon), Bloomington City Council (5 p.m.) and McLean County Board (6:30 p.m.). Each will consider a memorandum of understanding pledging up to $100,000.

McLean County Board Chairman Matt Sorensen said the reason for the special sessions were because of one specific airline expressing interest. But Sorensen declined to identify the airline and said it had asked not be named publicly yet.

Normal Mayor Chris Koos said Friday that negotiations have progressed further with one airline than they have with others, but said other carriers have been “reached out” to as well.

A message left with Frontier was not immediately returned Friday. CIRA spokeswoman Fran Strebing said Friday that officials there “have been talking to a host of airlines. Several of them have expressed interest in various things.”

Charlie Moore, CEO of the McLean County Chamber of Commerce, said Frontier is one of a “number of airlines that have been talked to.” But Moore said he didn’t know how far negotiations had progressed with any airline.

He stressed that the clock was ticking, with AirTran exiting in June.

“If we want to start having serious conversations with airlines while they’re considering their summer schedule, while they’re considering other communities that have also lost (air) service, we need to be prepared,” Moore said.

Financial incentives

Bloomington officials say the money could be used for what’s called a revenue-guarantee program, similar to what was used to bring American to CIRA in 2008. A certain revenue goal is set for a service, and the airline can withdraw from a community fund if the actual revenue falls short of that goal, Stockton said.

Bloomington and Normal each kicked in $200,000 for the American/Dallas service fund. The Bloomington airport used a combination of financial assistance, from marketing incentives to fee abatements, to land the American service, CIRA executive director Carl Olson said. That subsidized period lasted 12 months, and CIRA has retained the daily service.

“So for the last two and a half years, it’s survived on its own and been profitable on its own,” Olson said.

Low-fare carrier AirTran was CIRA’s second-largest airline in 2011, its 235,341 passengers making up about 40 percent of total airport traffic. Its low fares also were believed to lower the cost of flying on other CIRA carriers too.

The CASI coalition fears the economic impact of losing AirTran without lining up a suitable replacement.

Key CASI investors include the Chamber of Commerce, Economic Development Council of the Bloomington-Normal Area, the Bloomington-Normal Convention and Visitors Bureau, State Farm, Country Financial, Afni Inc., Illinois Wesleyan University, McDonald’s Corp., and Fox and Hounds Salon and Day Spa.

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