Airport officials are against U.S. Airways-Delta merger

Hank Hayes • Jan 18, 2007 at 9:30 AM

BLOUNTVILLE - Citing the damaging effect it could have on air service, the Tri-Cities Regional Airport Commission passed a resolution Thursday opposing a proposed U.S. Airways-Delta Air Lines merger.

Air service could be "significantly impacted" by the merger since U.S. Airways and Delta have a combined 87 percent market share at TCRA, Airport Executive Director Patrick Wilson said in a memo to commissioners.

"Since routes flown by both airlines overlap significantly and their hubs are relatively close together, it is highly possible that a merger could mean a reduction in frequencies and hub service, leading to less competition, higher fares and fewer route choices for passengers," Wilson said in the memo.

Delta has resisted merger overtures from U.S. Airways, but it faces an uncertain future and is currently in Chapter 11 bankruptcy protection.

Wilson told commissioners that a U.S. Airways-Delta merger, a Delta-Northwest Airlines merger, and a Northwest purchase of Mesaba Airlines would all impact TCRA. Mesaba operates as a Northwest Airlink affiliate at TCRA under an agreement with Northwest Airlines. "It is a very strange time in the industry. When you think it can't get any stranger, it does," Wilson said.

TCRA officials have joined peer airports in Knoxville and Chattanooga to work with industry group Airports Council International and convene a meeting with Delta and U.S. Airways officials to air their concerns. Wilson noted the TCRA commission also needs to get the airport's congressional delegation in on the discussions.

"We owe the region the duty to provide air service," Airport Commissioner John Gillenwater of Bristol, Tenn., said.

With merger talk looming, ridership at TCRA in 2006 was down more than 10 percent, but the airport's audit for the 2005-06 year showed a 4.3 percent upswing in operating revenues of nearly $6 million.

"The airport remained in good financial condition at the end of FY (fiscal year) 2005-06, even during a year of negative impacts on the airline industry," TCRA Finance Director Cathy Smith said of the clean audit.

Industry challenges noted in the audit included fuel price increases resulting in higher air fares, less flights and less passengers.

"Management and staff reviewed the budget during the year and made several adjustments to reflect the revenue and expense impacts," Smith said. "All departments were asked to carefully review all expenditures and maintain a conservative operation. The employees met this challenge."

Financial challenges, meanwhile, continue. TCRA is attempting to collect more than $130,000 in lost revenues related to Delta's and Mesaba's bankruptcy filings.

"We are getting offers from third parties who would pay us some portion of that," Wilson told commissioners. "We don't want to invest a lot in pursuing those claims, but we still want to be active in the process."

Airport officials are also beginning discussions with airline tenants about new rate agreements scheduled to go into effect in July.

Air service developments are focusing on niche carriers - with names like Allegiant and Direct Jet charter - in addition to select network carriers like United Airlines that could offer flights to Washington Dulles.

"United was just awarded a nonstop into China, which would be very beneficial to our corporations," TCRA's marketing report said.

Incoming TCRA Commission Chairman John Abe Teague encouraged commissioners to be forward-looking amid airline industry economic turmoil.

"You all recognize the importance the Tri-Cities Regional Airport plays in economic development for this region," Teague told commissioners. "We are going to face many challenges, but we are also going to face a lot of opportunities."

For more about TCRA, go to www.triflight.com.

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