Sarasota Bradenton International Airport Wants to Subsidize Low-Cost Carrier

02/11/04

Airport Wants to Subsidize Low-Cost Carrier
Venice Gondolier, FL

Congress has been asked to change the regulations that
currently prohibit Sarasota Bradenton International
Airport from spending $2 million out of its reserves
in an attempt to stem a decade-long downward spiral in
passenger traffic by subsidizing a low-cost airline's
operations.

"We can't allocate the money because of Federal
Aviation Administration diversion regulations,"
Airport CEO Fred Piccolo said. "Certain practices are
all right, such as advertising a new air service. But
a direct subsidy is not allowed."

A one-time subsidy of up to $2 million would bring
low-cost AirTran Airlines to the business-starved
local airport for a year. If business picks up and the
air carrier decides the market is viable, it could
decide to remain on a more permanent basis.

"We have petitioned the federal government to changes
its rules," Piccolo said. "Our request is currently
under review. Some airports get around these rules
because they tax the cities and counties in which they
operate. But we don't levy a tax on our area
residents."

Florida lawmakers created the local airport as an
independent special district without taxing authority.
Manatee and Sarasota counties could adopt a tax to
help pay for airport operations, but there has never
been serious consideration given to doing so.


Doing the homework

On Jan. 27, the Sarasota County Commission briefly
discussed the airport's efforts to secure AirTran.

"The airport has $10 million it can't spend without
permission from Congress," commissioner David Mills
said. "Maybe we could front-end this."

Sarasota County Administrator Jim Ley said he had
talked to Manatee County Administrator Ernie Padgett
about the situation. "He expressed curiosity," Ley
said, "and indicated he'd have to see if there's any
interest among their board members."

Mills said Sarasota-Manatee Metropolitan Planning
Organization representatives from area cities and
counties were recently briefed about the situation.

"It takes governments a long time to respond," he
said. "If we do our homework, maybe we can have a
package ready."


$38 million jump?

It may not be that easy.

"The FAA would still consider it a revenue diversion
if the money were front-ended," Piccolo said. "It
would be considered illegal. If the local governments
think it's important enough to fund a revenue
guarantee, that would be permissible."

AirTran wouldn't actually be paid $2 million to set up
services at the local airport. It would receive a
subsidy to make up the difference for flights that
lose money.

"We might not have to spend any money," Piccolo said,
"but the FAA won't allow us to do this out of our
reserves."

A recent study indicated that the Sarasota-Manatee
market would gain 238 new jobs and experience an
annual $38 million jump in new revenue if a low-cost
airline -- such as AirTran -- were added to the
airport's dwindling fleet of passenger carriers.

The airport has lost 44 percent of its passengers
since 1990; seen daily carrier operations drop by more
than 75 percent; and reduced its nonstop service to
other cities by more than 77 percent.

Since 2000, TWA, AA Eagle, U.S. Express and Gulfstream
International have left.


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