Piedmont Triad International Airport officials recently told Guilford County officials that while 2008 was one of the airport’s most challenging years, hopes were high over the “magnetic effect” the new FedEx hub would have once it opens next year.
PTI board Chairman Henry Isaacson and Executive Director Ted Johnson presented the airport’s annual report to county commissioners at a December meeting. It was not exactly encouraging.
“This has been another challenging year,” Isaacson said. “High fuel costs sent all our carriers into a financial tailspin, and it was the direct cause of one of our low-fare carriers.”
That low-fare carrier would be Skybus, which declared bankruptcy in April, just months after establishing a hub a PTI with the help of a generous incentives package. Local governments and the state helped PTI offer up $57 million in incentives, including a new $7 million concourse and a $33 million parking deck.
PTI has had trouble competing with larger airports in Charlotte and Raleigh for years now, with passengers willing to make the hour-and-half drive in either direction for lower fares and more destinations.
PTI officials thought they finally had gained some ground when the airport landed Skybus. Analysts and local media cheered the move, taking care to note that the incentives were performance-based when saying that the move would help PTIA rise above its status as a second-tier airport.
There was initial success: Triad passengers eagerly took advantage of Skybus’ $10 flights. But things began to unravel in March as the price of fuel began to rise.
Ominous signs continued to appear as Skybus announced it was cutting flights out of PTIA and CEO Bill Diffenderffer announced he was leaving to resume his book-writing career.
By the first week of April, the airline was bankrupt.
Isaacson said in April that he didn’t regret recruiting Skybus and that he would put together another incentives package for another low-fare carrier “in a heartbeat.” Johnson told commissioners the airport was aggressively marketing the region to airlines and he “didn’t think you could do much better than our chairman” when it came to recruiting low-fare carriers.
“We’re constantly making proposals to these guys, trying to show them what’s happening in our area,” Johnson said.
Johnson said that carriers are interested in PTI because of the “magnetic effect” of the FedEx hub, which is scheduled to begin operations in July. The hub has been under construction for 10 years after it was recruited with the help of $270 million in state and local incentives. In addition to attracting carriers, local officials believe the hub will help attract companies with a vested interest in locating next to a shipping hub.
Expectations are extremely high, as local officials and economic developers promote visions of an “aerotropolis” that will revive an economy hard-hit by job losses in the furniture and textile industries. Airport officials are so confident that businesses will spring up around the hub that the airport discourages developers from building any facility not designed for a related use.
Another bright spot is the low-fare carrier Allegiant Air, which recorded a 180-percent gain in passengers at PTI from January to October.
Allegiant almost pulled out of PTI after Skybus set up operations. Allegiant officials would cite Skybus only as a “destabilizing factor,” but speculation was they were upset with Skybus’ incentives deal.
But a week after Skybus declared bankruptcy, Allegiant officials decided to stay at PTIA, citing the fact that Allegiant’s competition was no longer a factor at the airport.
Johnson told commissioners the airport’s financial strength was intact. Revenues are generated by tenant rental fees and additional fees for fuel, landing, and parking.
PTI’s operating revenue is $27.5 million, with operating expenses of $12.1 million and annual debt service and interest expense of $11.6 million. Revenue bonds total $169 million, while PTI received a total of $19 million in federal and NCDOT grant money.
Despite the hope for the economic development the FedEx hub will bring, at least one commissioner expressed concern that difficult times might still lie ahead.
“I hear the tone of your voices, and it doesn’t sound very uplifting,” Commissioner Bruce Davis said.
Sam A. Hieb is a contributor to Carolina Journal.