"City, state might face $400,000 airport bill"

Friday, February 14, 2003

City, state might face $400,000 airport bill
By DAN McGILLVRAY
The Portland (ME) Press Herald


AUGUSTA — The city and state may be hit with a $400,000 bill to keep Colgan
Air/US Airways flying in and out of Augusta State Airport.

Robert McGee, the airport's manager, said President Bush's proposed federal
budget for the Oct. 1 to Sept. 30, 2004, fiscal year includes significant
reductions in federal subsidies for commercial airlines that serve the
country's smaller airports.

The federal Essential Air Service account this current budget year was
funded for approximately $115 million. The administration is recommending
that $50 million be allocated for the next fiscal year, and that non-federal
money cover any shortfalls.

That could translate into a loss of $375,000 in federal subsidies for the
Colgan contract here and possibly much more.

"It could be $400,000 or $500,000, depending on their new contract," said
McGee. The air carrier receives the subsidies to help meet overhead expenses
because few passengers typically board their airplanes each day.

When the airline industry was deregulated more than 20 years ago, the
Federal Aviation Administration and Congress feared that major carriers
would concentrate on serving large airports and ignore smaller ones. A
subsidy program was established to encourage commercial passenger flights at
small airports such as those in Augusta, Rockland, Bar Harbor and Presque
Isle.

McGee said Colgan this fiscal year will receive $1.5 million from the
federal government for service in Augusta.

Mayor William Dowling said the airport is a vital part of the community. But
he said the city would be unable to pay $400,000 to keep Colgan here.

"We'll have to make a clear and convincing case to our federal delegation on
this," he said. In other years, Dowling has also talked with the state's
congressional delegation about other budgetary issues at the airport that
eventually were resolved.

The Augusta airport is owned by the state and managed by the city. Colgan is
the airport's only commercial passenger airline.

Although the contract specifies that no municipal money be spent at the
facility, the city has paid for some security and snowplowing costs that
were later reimbursed by the federal government.

The Maine Department of Transportation this year will spend about $200,000
to cover operating costs at the airport.

McGee said the Bush Administration is proposing that non-federal dollars pay
for 25 percent of Colgan's subsidy in Augusta, and for an identical amount
in the airports in Rockland, Bar Harbor and Presque Isle. McGee spoke
recently with managers at those other airports.

"Every one of them said, 'It's going to kill us,' " he said.

Colgan has been providing service in Augusta for eight years, and runs four
flights each weekday to Boston, and three each on Saturday and Sunday. The
company's subsidy contract with the federal government expired on Dec. 31
but terms in the agreement will remain in force until a new contract is
signed.

McGee said if a new Colgan contract increases to $2 million, and if the Bush
budget proposal is enacted, the non-federal portion of the subsidy would be
$400,000. He said the money could come from any source, public or private,
provided that no federal funds are involved.

Dowling said he expects the congressional delegation to intervene in the
matter.

"And we're going to talk to Ron Roy at the state Department of
Transportation to make our case," he said.

Dowling said local economic development benefits by having an airport in
Augusta.

With the Bush Administration proposing to cut the Essential Air Service
budget by about $65 million, the mayor noted that the federal government was
willing to spend billions after the Sept. 11, 2001, terrorist attacks to
help keep the major airlines in business.

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