Companies wave cash to lure airlines to their towns By Barbara De Lollis, USA TODAY No longer leaving airline recruitment to City Hall, local companies from=20 Pensacola, Fla., to Stockton, Calif., are making substantial financial=20 commitments to pull new air service to their communities. In some cases,=20 they are paying millions of dollars upfront for air travel a year or two in= =20 the future. Smaller cities say the "travel bank" strategy gets them=20 attention from AirTran, Continental, America West and other airlines that=20 would otherwise ignore them. Airlines say travel banks provide an important= =20 safety net during their most vulnerable period =97 the first year or two of= =20 operating, when a carrier builds name recognition and competes with=20 existing carriers for business travelers. "What we're interested in doing=20 is eliminating or reducing our risk going in," says AirTran CEO Joe Leonard. Travel banks are not a new idea, but they're gaining popularity in the USA= =20 and Canada. Examples: =B7 Pensacola. The airport lured AirTran last fall after 319= businesses=20 raised $2.1 million for two years' worth of prepaid travel. AirTran=20 initially flew three flights daily to its Atlanta hub but has since added a= =20 fourth. Airport officials credit the 50% drop in airfares along AirTran's=20 routes to its entry. More people also are flying out of the airport since=20 AirTran relocated from Fort Walton Beach, about an hour away. In May, a=20 record number of people =97 nearly 65,000, 26% more than in May 2001 =97= flew=20 out of Pensacola. =B7 Wichita. Nearly 400 businesses this year pledged $7.2 million to= =20 lure AirTran and a second carrier. Since AirTran started three flights=20 daily to Atlanta and two flights to Chicago's Midway airport in May, more=20 people are flying out of Wichita, and fares have fallen as much as 70% to=20 cities that AirTran serves from there. The airport had an 8% increase in=20 passengers in May over the same month last year, vs. about an 8% decline=20 for the industry. It's too soon to predict AirTran's success, airline=20 consultants say. AirTran is asking Wichita to reimburse it for $732,000 in= =20 losses for the first month, which included start-up costs. The city=20 promised to cover up to $3 million of AirTran's losses in its first year=20 and $1.5 million in its second. =B7 Stockton. In 2000, Stockton lured America West to provide flights= =20 to Phoenix by raising about $800,000 for prepaid travel from companies and= =20 individuals who wanted local air service. Stockton had lacked commercial=20 air service for about five years; residents had to drive at least an hour=20 to another airport. America West initially flew three flights a day but=20 dropped a flight after Sept. 11. Stockton had previously tried a similar=20 arrangement to attract American Eagle but fell short of the carrier's=20 financial requirement. =B7 Augusta, Ga. Last year, it formed a $600,000 travel bank that=20 persuaded Continental Express to provide non-stop service to Newark, N.J.,= =20 says airport director Ken Kraemer. "They said put your money where your=20 mouth is and show us with a pledge of support if your business community is= =20 serious," he says. Sept. 11 derailed the plan, but Kraemer says it's likely= =20 Continental will resume its plan and add service to Houston. =B7 Eugene, Ore. Eugene developed what's considered the model for=20 travel banks in 1998 when it persuaded America West to come to town,=20 joining United and United Express. The carrier started with three daily=20 flights to Phoenix and later cut one to improve its schedule. But next=20 month, with business recovering from Sept. 11, America West will restore=20 the third flight. Eugene made a similar arrangement in 2000 with Alaska=20 Airlines' subsidiary Horizon Air for service to Los Angeles, though that=20 service is not doing as well. Eugene is trying to form a third travel bank= =20 to lure an unidentified major carrier. =B7 Fredericton, New Brunswick. It is trying to form a $2 million=20 travel bank to lure a U.S. carrier for direct service. Other cities, from Santa Maria, Calif., to Twin Falls, Idaho, are studying= =20 the idea. "Given today's environment, we're especially keen on reducing our= =20 risk to initiate new service," says Buddy Anslinger, Continental's managing= =20 director of planning. "If you have two identical markets side by side, and= =20 one does something out of the ordinary, that makes our decision that much=20 easier." How travel banks work There are variations, but travel banks typically are formed by city,=20 airport and business leaders. Once a carrier is targeted, they mount a=20 fundraising campaign (like Wichita's "Fair Fares" drive). The money is=20 deposited in a local bank account. When someone charges tickets to that=20 account number, the cost is deducted from that account. Businesses usually= =20 have a set time to use up their dollars or forfeit what's left to the=20 airline. The interest earned on the account pays for administration costs.= =20 "We're not looking for a handout," AirTran's Leonard says. "We're looking=20 for people to fly with us. What we really want to get is a trial. That way,= =20 people will like what they see, and they'll come back on their own with out= =20 any inducement." Smaller cities often offer airlines a deal in which they=20 cover losses by guaranteeing a certain amount of revenue, but airport=20 consultant Mike Boggs, who helped create Eugene's travel banks, questions=20 that strategy because it doesn't address whether there will be enough=20 passenger demand to fill seats. Athens, Ga., for instance, paid out $90,000= =20 in three months to subsidize Mesa Air Group subsidiary CCAir, a US Airways= =20 Express carrier, for service to Charlotte, but in the end, CCAir couldn't=20 make money and pulled out in April, says CCAir President Carter Leake.=20 That's the kind of public relations nightmare airlines like to avoid.=20 "Unlike a subsidy program, a travel bank addresses the real reason an=20 airline might be forced to pull out of a community =97 an inconsistent= stream=20 of business-fare passengers," Leake says. But travel banks aren't always=20 surefire successes: =B7 Springfield, Ill., businesses pledged $1.6 million in 10 days to= =20 land Northwest Airlines' AirLink service to Memphis and ATA Connection=20 service to Chicago-Midway. While traffic is up 46% over the same period=20 last year, local Chamber of Commerce executive Brad Warren says getting=20 people to fly Northwest and ATA is "still an uphill battle" partly due to=20 high membership there in United's and American's frequent-flier clubs. =B7 Indianapolis is studying the travel bank concept but has concerns= =20 about administering one. It already had success this year luring Frontier=20 Airlines and Sunworld International without one. =B7 Attempts to form travel banks for AirTran failed in Dayton and=20 Toledo, Ohio, and AirTran eventually pulled out of Toledo due to a lack of= =20 business travelers. Valdosta, Ga., put its travel bank campaign to lure=20 Northwest on hold after Sept. 11. Aviation consultant Richard Golaszewski of GRA says that while smaller=20 cities will try anything to attract new service, not all of them can be=20 winners. "There's a limit to how much can be done," he says. "You can't=20 create demand out of thin air. There are only so many places that really=20 have enough travel that they can guarantee." The owner of Roger's Trinbago Site: Roj (Roger James) *************************************************** escape email mailto:ejames@escape.ca Trinbago site: http://www.tntisland.com CBC Website http://www.tntisland.com/caribbeanbrassconnection/ The Trinbago Site of the Week: (Solo) http://www.solobev.com/ (Solo Beverages) courtesy of Roj Trinbago Website & TnT Web Directory Roj's Trinbago Website: http://www.tntisland.com TnT Web Directory: http://search.co.tt *********************************************************