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Intense competition boosts airport incentives to airlines

Portland yens for flights to Tokyo. New Orleans had the hots for Mexico City. Tallahassee just wanted a few more planes from Florida cities to bring down fares.

The common denominator: a willingness by local officials to give airlines financial incentives to start or expand service.

Over the years, airports large and small — including Tampa International and St. Petersburg-Clearwater International — have waived charges and kicked in cash to help promote new routes.

Airport officials and local politicians love to celebrate a new airline or destination. Regular nonstop service to another city is a real economic stimulus, promoting new business. It also means travelers don't need to wait hours in some big airport for a connecting flight.

Intense competition among airports, especially for new international flights, has recently raised the stakes. Financially ailing carriers are cutting back routes. They demand that communities share the risk of launching new service.

Portland, Ore., this year agreed to give Delta Air Lines $3.5 million to continue nonstop flights to Tokyo through May. A business group and the state of Pennsylvania put up a $9 million revenue guarantee for Delta flights to Paris that began this summer.

Tallahassee, Leon County and the state agreed this year to cover up to $1.5 million in losses on Delta Connection flights from three Florida markets. Delta pulled the plug on money-losing Tampa and Orlando last week. One official put the government bill at "hundreds of thousands" of dollars.

So, are subsidies a good investment?

Noah Lagos, director of St. Petersburg-Clearwater International, likes the deal he cut to bring Allegiant Air to Tampa Bay. He waived landing fees and terminal rent. The airport and Pinellas' tourism bureau committed to give Allegiant $1.5 million to advertise the flights over five years.

The discount carrier now reigns as St. Petersburg-Clearwater's dominant airline. Allegiant flies to 20 destinations and in March, a peak traffic month, will average 10 departures daily.

Tampa International takes a more conservative approach. The airport waives its $3-per-passenger inspection service fee for new or expanded international service. Officials also kicked in $20,000 for billboards promoting JetBlue's daily Cancun flights that began in December.

The 100-seat jet service was catching on in the spring when the swine flu pandemic swept through Mexico, said airport director Louis Miller. Passenger loads plummeted. JetBlue stopped flying the route Sept. 9.

Incentives can help bolster a new route, but "you have to have demand for the market first," Miller says. Tampa International is often handicapped by its proximity to Orlando, a world-class tourist destination with connecting flights to cities across the United States, he says.

A critic of the airport's efforts to recruit international carriers says more needs to be done.

"The role of incentives is to prove the routes," says Jason Busto, owner of a Tampa plumbing company who sits on the airport's committee on developing international air service. "They're critical to economic development."

Steve Huettel can be reached at huettel@sptimes.com or (813) 226-3384.

Intense competition boosts airport incentives to airlines 10/06/09 [Last modified: Wednesday, October 7, 2009 11:07am]
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