Air Tran Subcontracts To Air Wisconsin

[Guest Nova Zemlya]

AirTran doing well, but not well enough

City still supporting airline up to $125,000 a month

By Rachel Sams

DEMOCRAT STAFF WRITER

Eighteen months after low-fare carrier AirTran Airways took off from Tallahassee Regional Airport for the first time, the carrier continues to rely on a city revenue guarantee.

City and airline officials say the carrier is progressing well in Tallahassee, given the difficult conditions facing the airline industry. Tallahassee's airport has seen traffic rise and fares fall during a brutal time for the industry, and officials credit much of that to AirTran.

AirTran recently added a sixth daily flight to Tampa on one of its large jets. US Airways ended its Tallahassee-to-Tampa service last fall, leaving AirTran the only carrier on the route.

"We're very pleased with our performance in Tallahassee," said AirTran spokesman Tad Hutcheson last week. The airline changed its service here this year, relying on more-frequent flights that are primarily on small jets. "Passengers in Tallahassee really wanted frequency," he said.

AirTran burned through its first-year Tallahassee revenue guarantee of $1.5 million in two and a half months, citing an industry-wide slump in passenger traffic after the 9-11 terrorist attacks. The airline received another $1.5 million revenue guarantee for its second year of service, and the city capped payments to AirTran at $125,000 a month. The city has paid that amount to AirTran for each month of its second-year contract so far.

"We could not have done this without our partnership with the city," Hutcheson said. "We hold it up as a model to other cities."

If AirTran is adding new flights in Tallahassee, why does it still need city money? "The economy has not been operating at peak performance, and the war has not helped traffic," Hutcheson said. "We're working to get the market sustainable long-term."

"Right now I would have to say I am very pleased with the service AirTran provides, and very pleased with its commitment to the city of Tallahassee," said Mayor John Marks. "I'm committed to seeing if we can keep them here."

Marks said the revenue guarantee appears to be working well for now. "I have no problem with providing a revenue guarantee in that fashion to help stimulate business development," he said, adding, "I don't know that it needs to continue forever and ever and ever."

Colorado airline consultant Michael Boyd says revenue guarantees can help a service get started, but Tallahassee may need to evaluate its situation. "Just throwing money at an airline cannot make traffic happen," Boyd said.

AirTran entered the Tallahassee market in November 2001 with two daily flights to Atlanta and three daily Tampa flights that continued on to Miami. All flights were on the airline's 117-seat Boeing 717 jets.

Earlier this year, the airline switched to primarily 50-seat regional jets in the Tallahassee market, operated by regional carrier Air Wisconsin Airlines. AirTran now has four daily flights to Atlanta, all on regional jets. It has six flights a day to Tampa; two are on AirTran's mainline Boeing 717s, and the rest on regional jets. Three of the Tampa flights - all on regional jets - continue on to Miami.

AirTran and partner Air Wisconsin carried about 20 percent of the traffic at Tallahassee Regional Airport in March, with 18,702 passengers using the carriers. That was a 7-percent drop in AirTran passenger traffic from March 2002. Delta Air Lines and its partners still carry nearly 70 percent of Tallahassee Regional passengers.

AirTran's contract with the city of Tallahassee guarantees it revenues of $4,154 per "block-hour," the scheduled flight time between two cities. If the airline's revenues on any flight fall below that amount, the city makes up the difference, up to $125,000 per month.

After US Airways left the Tallahassee to Tampa route last year, AirTran picked up the carrier's Tampa traffic. AirTran and Delta Air Lines continue to compete vigorously in Atlanta, which is a hub for both carriers.

Tallahassee may not have enough demand for service to Tampa and Miami year-round, consultant Boyd said. "Tallahassee could be a good AirTran market, to the right destinations," Boyd said. "I would focus on rebuilding what's going up to Atlanta. ... Focus on what you can do - wishful thinking isn't going to make it happen."

When the city renewed AirTran's contract, there was discussion about a "travel bank," in which businesses or individuals would make monetary pledges for travel on AirTran. But AirTran officials said that might not be the best model for Tallahassee, said Sue Dick, president of the Greater Tallahassee Chamber of Commerce.

The Chamber is continuing to encourage business people and local universities to use the services available from Tallahassee's airport and its airlines, Dick said. The Chamber also plans to work with AirTran and other interested carriers to hold a forum about the benefits of low-fare air service, she said.

Turbulence in Wichita

The city of Wichita, Kan., landed AirTran with a revenue guarantee of $3 million in its first year of service and $1.5 million in its second year. Local businesses also pledged millions of dollars to a travel bank for AirTran and other low-fare airlines. Two more discount carriers, Frontier Airlines and Allegiant Air, have since started Wichita service.

But AirTran earlier this year ended its service from Wichita to Chicago and cut one of its three daily flights from Wichita to Atlanta. AirTran has asked the city of Wichita for an increase in the revenue guarantee for its second year of service, The Wichita Eagle reported.

Despite the setbacks, Wichita airport officials remain optimistic about AirTran. Wichita's economy relies heavily on aircraft manufacturing, and the downturn in the aviation industry has hit the city hard, said Steve Flesher, air service development director at Wichita Mid-Continent Airport. But AirTran has helped Wichita get lower fares and more traffic, and the airport still thinks the airline can succeed, Flesher said.

AirTran spokesman Hutcheson said he couldn't speculate about whether AirTran will pursue further revenue guarantees in Tallahassee when its second-year contract is up. But things look good for the summer, he said.

"We're confident we're going to have a great summer in Tallahassee," he said. "We have strong advance bookings. ... We are confident we are going to have Tallahassee as a city long-term."

http://www.tallahassee.com/mld/democrat/5886946.htm

[Guest Nova Zemlya]

Air Tran, the "low cost" operator charges U.S. $4100 per hour while Air Wisconsin's rate is said to be in the area of $3700 per hour.

So in reality, Air Tran is offering frequency as a middle man and making a profit of $400/hour U.S. on the Talahassee municipal taxpayers. If the taxpayers only knew.

Does Jazz get paid anywhere near $5000 Can. per hour to operate for the mothercorp? Or does the mothercorp charge Jazz $5000 Can. per hour for the priviledge of having their flights handled by them?