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Tue, Apr 19, 2005

The FAA Has An Answer To Wichita Airport Subsidy Issue

Official Says Subsidies Might Continue If City Reconstitutes Airport Board

If the city of Wichita, KS, would only reconstitute its airport authority as an entity completely separate from the city council, the FAA says it would probably have "no problem" continuing its multi-million dollar subsidies to AirTran.

"When we have an airport that's out of compliance, we want to bring them back into compliance," said FAA Airport Compliance Manager Charles Erhard, speaking to the Wichita Eagle. "Not punish them for some decision they made years ago."

As ANN reported over the weekend, the FAA says Wichita is favoring one airline over another -- violating the terms of its grants to Mid-Continent Airport -- by covering millions of dollars in losses incurred by AirTran on its route from Wichita to Atlanta. Only one other airline, Delta, flies that route and city officials said no other airline was willing to serve that route without subsidies. Wichita has paid AirTran $7 million over the past three years to fly the route, even though it's a loss-leader. In return, city officials say passengers on that route have saved $85 million.

But Delta executives, whose inquiry led to the FAA investigation, say they don't want the subsidies to end. They want a piece of the pie.

In a letter to city officials dated April 6th, the FAA told Wichita that it's subsidies to AirTran violated a pledge to treat all airlines equally and, in violating that pledge, has endangered millions in grants to Mid-Continent. "Treating these two similarly situated air carriers differently could constitute a violation," said the letter, quoted by the Eagle.

Wichita  city leaders don't deny subsidizing the AirTran route. Instead, they say the subsidies aren't coming from the airport, but are instead coming from the city itself. However, since Wichita dissolved the airport board in 1999, the city council has made all decisions concerning Mid-Continent. There's no FAA regulation against a city subsidizing an airline.

But FAA managers say that is, in effect, a ruse. "You (Wichita) provide minutes from the Aug. 10 City Council meeting purporting to show a separate City Council agenda and airport agenda," the FAA letter said. "Both agendas, however, are included under the broad title of 'City Council proceedings.' In addition, a notice immediately following the heading for the airport agenda states, 'The City Council is meeting as the governing body of the airport.' In our view, this statement supports our contention that the City Council is the governing body of the airport."

The solution? As Erhard said, simply reconstituting the airport authority as a totally separate entity would probably work. And on the surface, it appears city leaders have no problem with that.

"That's what I would do in a heartbeat," City Manager George Kolb told the Eagle.

But that won't satisfy Delta. "The FAA has said that these subsidies are illegal, and we're just saying either eliminate the program completely or offer it to everyone, including AirTran," Delta spokeswoman Benet Wilson told the Wichita paper.



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