Merger of Delta, Northwest is bad news for TCRA

Hank Hayes • Jun 12, 2009 at 12:00 AM

BLOUNTVILLE — The Delta-Northwest merger is projected to negatively impact Tri-Cities Regional Airport’s bottom line as the airport struggles to stay above the airline industry’s ongoing economic turbulence.

A working draft of TCRA’s 2010 operating budget says the merger will result in a $55,000 loss in rental income “as the merged airline consolidates ticket counter and operations space at the airport.”

Another “parameter” noted in the draft is that TCRA will lose $80,000 in landing fee revenue by losing direct Northwest service to Memphis and Detroit.

“Memphis (service) went away in March or April,” TCRA Executive Director Patrick Wilson said. “Detroit (service) will go away in July. ... They’ve not said it’s gone forever, but basically for the near future.”

Delta has acquired 100 percent ownership of Northwest and is integrating the airline into its name and brand.

The merger effect, detailed to airport commissioners on the Administration/Operations Committee last Thursday, is part of an estimated $738,000 revenue shortfall from what was budgeted in the current fiscal year.

“These negative revenue trends are being experienced at airports nationwide, with smaller airports seeing the greatest level of decrease,” Wilson noted in the draft document.

Wilson’s draft also pointed out airline ridership is expected to be down as much as 8 percent for the rest of this year while air carriers reduce the number of available flights and seats.

“The business travel is down more than any sector,” Wilson told the Administration/Operations Committee.

Reduced landing fees from Delta, Northwest and US Airways “are being somewhat offset” from increased flights from low-fare Allegiant Air, Wilson said.

“We’ve seen some increase from our service from Allegiant Air, although we know that coming up in the fall there will be some seasonal adjustments from that where they will move some of those flights during the slower season and then hopefully bring those back starting in December and carry them all the way through summer,” Wilson said.

The draft also noted TCRA will see revenue declines in air cargo, parking, rental cars and general aviation fuel sales.

To offset the revenue decrease, the draft emphasizes TCRA will continue a hiring freeze on various vacant positions and not give across-the-board or merit pay increases to its workers.

“Every department is running very thin,” Wilson said.

The committee’s chairman, Airport Commissioner Ken Maness of Kingsport, commended Wilson and his staff.

“If there is any good news in this, it is that we know we have a team here that can manage through very difficult times,” Maness said. “Our challenge will be ... if we see and I think we’re likely to see further pressures on our revenues and further pressures on our expenses, too.”

Maness suggested TCRA needs to partner with area tourism groups as part of a turnaround strategy.

“They’re probably struggling, too, with revenue,” Maness said of the groups.

Airport Commissioner John Gillenwater, of Bristol, Tenn., also noted TCRA’s owners need to be kept in the loop about its financial situation.

“It may be that we come to (the owners) and ask for some (cash) infusion every year off your budget while we still maintain our critical reserves,” Gillenwater said. “I think the owners recognize they may have to step up to bat. ... I think they need to be briefed.”

TCRA hasn’t asked its owners — area cities and counties — for taxpayer funds since the mid-1960s when the airport sought financing to build its main terminal building.

TCRA is supported by landing fees, terminal rents, parking and rental car revenue, and a passenger facility charge imposed upon travelers.

“The key, for us, is to get more passengers coming through the door. That generates revenue,” Wilson said.

The Airport Commission operates as an unincorporated joint venture between Bristol, Tenn., Bristol, Va., Kingsport, Johnson City, and Sullivan and Washington counties.

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