Thursday, February 09, 2012

Money guarantee could lure airline. Consultant: Best draw is cash, not terminal

By Andrew Denney
Thursday, February 9, 2012

An air travel consultant told business and government leaders yesterday that a second destination city for Columbia Regional Airport would be more likely to result from a revenue guarantee for an air service provider than from a terminal expansion.

Michael Boyd, president of the Evergreen, Colo.-based Boyd Group International Inc., has been working with the Columbia Chamber of Commerce on ways to improve air service. Yesterday, he lauded the airport for its ability to rebound — and attract a record-breaking number of passengers — after Delta Air Lines began providing service to the airport without the help of subsidies from a federal program.

“Once you go in, you’re never going to get out,” Boyd said about airports that depend on federal Essential Air Service funding to stay operational. “You know, it’s kind of like the Mafia or something.”

Business and government leaders had been focusing on expanding the airport terminal, originally built in 1969, to attract additional routes and flights to the airport. Boyd, however, said airlines are less concerned about the condition of an airport terminal and more about the profit they can make in providing service to a city.

A revenue guarantee is an agreement between an airline and an airport that a route will make a certain amount of revenue for the airline and that the airport will offer a certain amount of money as an insurance policy in case the airline loses revenue in providing service to an airport.

The Pittsburgh International Airport, for example, was able to start nonstop service to Paris through Delta after offering a $9 million revenue guarantee, according to a 2011 report in The Patriot-News, a Harrisburg, Pa., newspaper.

Delta Air Lines is the only company now providing commercial service to Columbia Regional Airport. The airline flies passengers to the company’s international hub in Memphis, Tenn., for connections to other destinations.

Boyd pointed out that Memphis is the closest hub to Columbia, but he said hubs in Dallas, Denver and Chicago also are within an appropriate range.

City officials have said that with a few easy fixes, the airport would be able to handle a second airline or additional flights. The fixes could include adding a trailer to the south side of the airport to accommodate additional passengers and staggered flight times to alleviate crowding in the terminal.

Don Laird, the chamber’s executive director, said offering economic incentives to airlines for service is the “way of the world.” However, he said terminal improvements should remain a priority as the condition of the airport is an “image issue” for the region.

Columbia City Manager Mike Matthes said finding ways to offer incentives to airports has become the highest priority in the city’s efforts to improve the airport. He said the city has been recruiting investors to help pool funds for the revenue guarantee.

“They’re not going to come on their own,” Matthes said. “We have to show them that we’re serious and we’re willing to make sure they won’t lose a lot of money.”


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