"Knoxville, Tenn., Officials Hope to Offer Airlines Incentives to Use Airport"

Thursday, August 21, 2003

Knoxville, Tenn., Officials Hope to Offer Airlines Incentives to Use Airport
The Knoxville (TN) News-Sentinel


Attracting new air service to McGhee Tyson Airport could mean giving
incentives to airlines as Knoxville tries to keep up with its peers. 

Some airport officials want to offer incentives -- such as an allowance for
marketing expenses -- to airlines that bring new services or generate
additional traffic at McGhee Tyson. 

Metropolitan Knoxville Airport Authority President Bill Marrison said the
program is needed if Knoxville wants to stay competitive. Airports in
Lexington, Ky., Birmingham, Ala., and Baton Rouge, La., are among those that
have recently instituted similar programs. 

"It seems to be the trend in the industry," Marrison said, adding that
airlines have gone through a metamorphosis since Sept. 11, 2001, and many
are now demanding greater support from airports. 

Dave Conklin, Airport Authority marketing director, said McGhee Tyson is in
talks with an airline that wants to add service to Las Vegas but would need
an incentive to do so. He did not identify the airline. 

Conklin presented a program that offers monetary incentives to airlines
during an Airport Authority Marketing Committee meeting Wednesday. 

One of the proposals, for example, is that an airline that brings low-fare
service to a location served by McGhee Tyson could receive an initial
$30,000 allowance for marketing plus an additional $1-$1.50 per passenger
for every person the flight generates that exceeds the normal passenger
level. 

Conklin said the formula is based on the theory that nonstop flights and
low-fare service increase passenger traffic. 

When low-fare carrier AirTran Airways offered nonstop service from McGhee
Tyson to Orlando, Fla., from 1994 to 2000, passenger numbers nearly tripled
at one point. 

Conklin said the airport collects about $14 for each passenger through
ticket and parking fees,and the incentive program would simply be sharing
some of that money with airlines. 

Airlines that don't grow passenger traffic above the norm would not receive
the traffic incentive but could still receive the marketing allowance,
Conklin said.

"I personally have resisted incentives for a long time," Conklin said. "In
our peer group, this is what we are up against to try and solicit new air
service to this community." 

Marrison said if an airline is looking at whether to add service to
Knoxville, Lexington, Ky., or other cities, incentives would either make
McGhee Tyson more competitive or put it on even par with other airports. 

Airport Authority board member Richard Krieg said he is against offering
incentives because airlines could take advantage of the service and keep
demanding more from airports. 

Fred Forster, a board member who is also president of the Blount County
Partnership, said incentives are not new. In fact, he said he sees it all
the time in industrial recruitment. 

The Marketing Committee voted to allow the airport staff to develop a formal
proposal to be presented first to the committee and then to the board at a
future meeting. 

Conklin said this initiative is separate from East Tennesseans for Airfare
Competition, a nonprofit organization formed last year to bring a low-fare
carrier to Knoxville. 

The incentive program is another way for McGhee Tyson to try an increase its
traffic. 

Passenger traffic at McGhee Tyson for July was up slightly, with a 0.7
percent increase over July 2002. 

Year-to-date, however, traffic is down 0.14 percent. 

Airport officials recently began advertising on radio, in print and on
billboards to try and retain passengers being lost to Nashville. Nashville's
airport is advertising its flights in Knoxville. 

ETAC officials estimate McGhee Tyson loses up to 500 passengers a day to
Nashville's airport. 

During the Airport Authority's regular board meeting Wednesday, officials
held a lengthy debate on whether to lease space to Technical Aviation Group
LLC, an aviation maintenance company. 

Airport officials say the company's officials did not properly complete an
application or turn in proper financial documents. 

Technical officials say they are being unfairly singled out. 

The board decided to grant Technical Aviation a temporary lease and hear the
matter again in 60 days.


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