"Delta inquires about Wichita air service subsidies"

Friday, May 28, 2004 

Delta inquires about Wichita subsidies 
The Associated Press


WICHITA - In the wake of Wichita's decision to extend a subsidy given to
discount airline AirTran Airways, a competing airline has asked about
making a similar deal.
   
Mayor Carlos Mayans said he was interested in discussing the request
from Delta Air Lines Inc. and its vice president for network analysis,
Douglas Blissit.

Blissit didn't mention a figure or say how Delta would expand its
Wichita service, but asked for details about the city's agreement with
AirTran and any other possible incentive programs.

"After learning of the potential financial assistance being offered to
other airlines, Delta has completed a review of the Wichita market and
found additional capacity may be warranted," the letter said.

AirTran began service at the airport two years ago, a time when air
fares to Wichita Mid-Continent Airport were among the highest in the
country. Subsequently, fares dropped considerably and airport officials
estimate Wichita passengers have saved nearly $75 million.

AirTran has collected $4 million in subsidies so far and terms of the
first contract could mean another $500,000 for the discount carrier. The
recently signed contract provides AirTran a subsidy of $2.5 million to
keep operating three daily flights to Atlanta for another year.

A Delta spokesman wouldn't comment on Blissit's letter, which questioned
the legality of the AirTran subsidy.

"As you know, as the airport sponsor, the City must offer incentives for
air carrier service on a nonexclusive and nondiscriminatory basis,"
Blissit wrote.

Airport director Bailis Bell said the subsidy for AirTran was legal. The
city got around the requirement to be nondiscriminatory by using city
money rather than revenues generated by the airport.

Airline consultant Mark Sixel said cities have been able to give
airlines limited introductory subsidies, and that the renewal of the one
for AirTran may be trying Delta's patience.

"I think they are trying to force the city's hand, to get them to stop
offering the subsidy to a competitor," Sixel said. "They feel like they
can't compete on an unlevel playing field anymore."

Sixel said Delta might complain to the Federal Aviation Administration,
or perhaps pull some of its Wichita flights if that doesn't work.

Another airline consultant, Mike Boyd, said it would be "a disaster" to
drive Delta out of the Wichita market. He believes there's room for both
Delta and AirTran to operate profitably in Wichita.

"The market can support both," Boyd said. "I hate to break anybody's
bubble, but Wichita is not a small market."


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