"Skybus deal with Piedmont Triad Airport worth up to $57 million"

Wednesday, October 24, 2007

Skybus deal worth up to $57 million 
BY RICHARD M. BARRON and MICHELLE JARBOE
The Greensboro (NC) News & Record


GREENSBORO - The cost of bringing a discount airline hub to the Triad could
soar to nearly $57 million.

That's much more than officials said Monday , when Skybus announced that the
airline would locate a hub at Piedmont Triad International Airport and fly
to seven new destinations.

Skybus officials previously said the state and local incentives they've been
offered are worth about $5 million .

But during its monthly meeting Tuesday, the Piedmont Triad Airport Authority
approved an agreement including more than $52 million in airport
construction and marketing efforts to support Skybus.

Skybus must attract at least 500,000 new passengers a year before the
airport will make good on some major parts of the deal, including a new
Skybus concourse and a $33 million parking deck.

That is about half the roughly 1 million passengers who flew out of PTI last
year.

The airport hopes to pay for such construction projects through bonds.

Independent airline and business analysts say the deal is a risk worth
taking.

"Airports across the country are very envious at what PTI has pulled off
this week," said Anthony Tangorra , chief executive officer of Latitude
Transport Advisory in New York.

Airport officials and representatives from Columbus , Ohio -based Skybus
reached the agreement in late September , after three days of negotiations,
said Henry Isaacson , chairman of the airport authority .

But they kept the details quiet until the board's vote Tuesday .

The deal comes in two parts.

The first phase starts immediately and includes giving Skybus four
neighboring gates and gear to help passengers get from the concourse to
planes.

It breaks down into:

  $6.3 million spent to fix up the gates and a ticket counter, add ramps and
build at least 1,600 ground-level parking spaces.

  $300,000 in marketing and advertising for the new flights.

  $2 million or more from the airport's new program that pays airlines
adding new nonstop service $2.15 for every passenger who boards a flight.

The second phase of the deal offers Skybus larger, long-term incentives if
the airline can bring in new passengers and drastically increase traffic at
PTI. It includes:

  A new ground-level Skybus concourse to be built north of the airport's
north concourse at a cost of $7.2 million .

  A nearby parking deck with 3,000 new spaces at a cost of $33 million .

  $250,000 in marketing.

  Another $3 million or more from the airport's passenger incentive program.

The state already has offered Skybus up to $4 million in grants if the
airline hires 375 workers. Regional groups have thrown in another $1.1
million .

Add that up, and Skybus was lured here by the possibility of more than $56.8
million in incentives.

Airport officials downplayed the cost of the deal Tuesday , stressing that
the parking deck - worth more than half the package - has been on the
board's agenda for some time.

"We did not wave a $50 million flag in front of these people," said Ted
Johnson , the airport's executive director .

And the offer is not equivalent to a city or county incentives package, said
Andrew Brod , director of the Center for Business and Economic Research at
UNCG's Bryan School of Business and Economics .

When a county or city gives tax money to a business, it takes away from
other taxpayer services, Brod said. But airports make their money off the
airlines and from parking fees, and they invest those revenues to keep
growing.

PTI officials may be taking a risk on an unproven airline, but it is a
crucial risk to bring in passengers and compete with the state's larger
airports, Brod said. That's the only way PTI can help the region's economy,
he said.

"If PTI doesn't take some chances - and this seems like the right kind of
risk to take - I don't think we're ever going to break out of that status as
a second-tier airport," Brod said.

"The greater the chances of the airport moving up in that tier system, so to
speak, the better the opportunities exist for Triad business."

Airline expert Tangorra agreed.

"If an airport is to reach its potential as an economic engine for the
community, it needs to be able to support the service of innovative new
airlines like Skybus," he said.

And PTI officials have reduced their risk by requiring Skybus to bring in a
minimum number of passengers before they will fulfill some promises.

"In my judgment," Tangorra said, "the airport authority is making the right
aggressive moves to not only help the airport but to help fuel the economic
growth of the region perhaps for years to come."

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