Monday, December 31, 2007

I want my STC 

In our QBR we asked questions about the airport here in St. Cloud. I drive from here to The Patriot each Saturday, which takes me about 80 minutes. As you may know, the station is awfully close to MSP airport. When I buy a ticket to go on Northwest somewhere, I frequently add the commuter flight from STC to MSP; this is mostly for the free parking and the short security checkpoint wait. We asked about whether people would be willing to pay to park at STC, and amazingly, only 2/3 thought they should continue to get what they receive now for free.

Most people want a second carrier to serve STC, with Chicago and Denver the most frequent options sought. Right now the only scheduled service is to MSP via Mesaba Airlines, which operates as Northwest Airlink. Mesaba is one of the airlines that gets money through a grant program called the Essential Air Services Grant. There is a second program called the Small Community Air Services Development program that also funds regional airports subsidizing air travel from small communities.

How much is it? USA Today reports that over $100 million is used to subsidize these programs. Mesaba's parent, MAIR Holdings -- who also owns Big Sky Airlines -- earns some revenue from EAS payments, though others have done better:

One beneficiary of subsidies has been the airlines the DOT picks in competitive bidding to run the flights. Great Lakes, whose business is largely subsidized flights, went from post-9/11 red ink into the black in 2003, turning a small operating profit three years ahead of the rest of the airline industry.

The subsidies alone, excluding fares from subsidized flights, made up 30% of Great Lakes' operating revenue in 2002-06, company reports show.

That second carrier people want in St. Cloud? You'll probably need to find a grant to pay for that. And when airlines are cutting routes repeatedly and the regional carrier industry has three times the capacity as current flyers, good luck with that.

(h/t: Peter Gordon)

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