"Airlines value the incentives, but treasure profit"

Sunday, October 9, 2005

Airlines value the incentives, but treasure profit
BY WAYNE T. PRICE 
Florida Today


Financial incentives to lure and keep airlines at Melbourne International
Airport -- in this case, Delta Air Lines -- aren't going away.

That's the position of Melbourne International Executive Director Richard
Ennis.

Other airport analysts agree with him, to an extent, saying incentive
programs can be important for small- to medium-sized airports, like
Melbourne International, to get a meeting with airline executives.

But that's a baby step to what airlines really seek.

"An airport seeking to market itself can often get a hearing from carriers
if it offers financial incentives. But unless the airline sees profit
potential down the road -- or unless you're prepared to offer an indefinite
subsidy -- it's hard for them to see the business proposition there," said
Richard Butler, a transportation economics professor at Trinity University
in San Antonio.

Jeff Miller, a Columbia, Md.-based lawyer and head of The Miller Travel
Group Inc., predicts that, for Delta -- Melbourne International's only major
commercial carrier -- financial issues always will be a consideration.

"More so now," Miller said, because Delta might begin to cut even more
flights to secondary airports during its restructuring after entering
Chapter 11 bankruptcy proceedings.

"Landing-fee restructuring is one way to attract or keep carriers," Miller
said.

Melbourne's airport gave Delta $2 million in financial incentives over a
two-year period, after Delta agreed to begin service to New York City and
Washington. The incentives are in the form of the waiver of various landing
and rental fees and in marketing support.

Ennis has said Delta would lose $625,000 in financial incentives for its
Melbourne-to-Washington flights when the airline reduces its service in
December and eliminates its Washington service of two round-trip flights a
day.

However, Ennis said Delta would continue to receive $1.375 million in
financial incentives for its service to New York's John F. Kennedy
International Airport. Delta plans to reduce that service in December to one
round-trip flight a day, down from the current three a day.

Ennis said incentives would continue to play a role in attracting and
keeping airlines at Melbourne International.

"The airline industry is in crisis," Ennis said. "For an airport such as
Melbourne, there is simply no choice. Airlines expect incentives, not just
from Melbourne, but small and midsize airports around the country."

Ennis said the financial trade-off "is worth it, when you consider how
important convenient, reliable air transportation is to this community."


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