"A worthwhile risk for Indiana airport"

Friday, March 19, 2004

A worthwhile risk for airport
The Fort Wayne (IN) Journal Gazette


The airport authority's plan to spend $2.5 million to lure low-cost air
carrier ATA to Fort Wayne International Airport is a risk. But it's one
probably worth taking.

With four round-trip daily flights to Chicago's Midway Airport, ATA
should lure some of the Fort Wayne area residents who now make the long
drives to Indianapolis, Toledo or Chicago to save money on air fare. At
Midway, ATA passengers can connect to more than 20 popular leisure and
business destinations, including Honolulu, Orlando, New York,
Philadelphia and Los Angeles.

The addition of a low-cost carrier generally causes competitors to lower
their fares as well. So passengers on United Express and American Eagle
flights from Fort Wayne to Chicago may find more competitive prices.

Convenient and low-cost air travel choices are also an important factor
for businesses scouting for locations and could well serve as a key
economic development tool for the city and surrounding area.

ATA's arrival comes with a price. The Fort Wayne-Allen County Airport
Authority, which levies a property tax in addition to collecting airport
revenues, will vote today on spending $2.5 million. Some of that will go
to permanent improvements like a new jetway. But $1.5 million will be a
direct cash incentive to ATA. In return, ATA commits to flying out of
Fort Wayne International Airport for a year.

With more mid-size cities using taxpayer incentives to lure low-cost
airlines, the practice is hardly unique. The danger is that the low-cost
carrier will either leave or demand further incentives when the original
payments conclude. For example, Wichita, Kan., paid $5.1 million in 2002
to lure Air Tran. After an initial boost of passengers, ridership fell,
flights were cut, and Air Tran received an additional $1.5 million for
another year.

Rob Young, president of the Fort Wayne-Economic Development Alliance,
acknowledges the risk. "It's the risk that you run with any economic
development project," he said. The airport authority has researched the
airline well, Young said, and the calculated risk is worth taking.

After years of area residents complaining about the fares out of Fort
Wayne International, the addition of a low-cost carrier is a chance to
boost the airport's desirability. The incentives carry risk, but they
appear to be worthwhile.


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