Airport Troubles Linked to Greenbrier Labor Dispute

By Christian Giggenbach, The Register-Herald, Beckley, W.Va.

Jun. 17–LEWISBURG — An emergency meeting of the Greenbrier Valley Airport Authority Monday over concerns that the airport’s lone carrier, Delta Airlines, may pull out by Aug. 1 left many members with more questions than answers.

At issue is the contract between The Greenbrier hotel and Delta Airlines in which the resort subsidizes empty airline seats depending upon a formula called “minimum revenue guarantee,” Jeff Booth, the resort’s vice president of marketing and sales, told the board.

Simply put, The Greenbrier pays the difference between how many seats have been sold on the flight versus the agreed upon “minimum revenue” decided by both parties.

The Greenbrier’s current contract states the minimum guarantee is $4,200 per flight — with a cap on the year not to exceed $300,000. However, the contract also has a “fuel escalator clause” built in, allowing it to be re-negotiated if costs of fuel for the airline rise more than 10 percent during the life of the contract.

This has occurred and Delta is asking for more money, or it will stop flying into Lewisburg, airport general manager Jerry O’Sullivan said.

“Now Delta wants a minimum revenue guarantee of 5,500 per flight day, not to exceed the cap of $400,000 for the season,” O’Sullivan said.

Since U.S. Airways wiggled out of its airport contract two months ago, Delta has been the only commercial flight touching down in Lewisburg. A replacement for U.S. Airways is not expected to begin until Sept. 3, O’Sullivan said.

Adding to the heightened anxiety is The Greenbrier’s apparent willingness to stop subsidizing the Delta flight without help from “outside partners.”

With varying “load factors,” or people in seats, Booth said the resort’s shortfall was $115,000 in 2007 and $23,000 in 2007 for the Delta flight.

But board chair and Greenbrier County Sen. Jesse Guills pointed out that the Greenbrier County Convention and Visitors Bureau has been subsidizing both Delta and U.S. Airways for about six years. The CVB’s main source of revenue is the hotel/motel tax garnered from the resort.

“I believe the CVB has been subsidizing the airlines with about $125,000 for the last five or six years,” Guills said. “But I was made aware … that the CVB was considering not funding the airline subsidy this year because of their drop in revenue.”

Some estimates say The Greenbrier has lost between $20 million to $30 million a year because of the ongoing labor dispute. Greenbrier officials have yet to respond to requests confirming these numbers.

“What Delta is saying is that they are making the decision on or about Aug. 1 and they want an answer by the end of next week,” Booth said.

Booth said The Greenbrier subsidized a U.S. Airways jet in 2006 with $1.16 million and subsidized a smaller plane to the tune of $88,000 in 2007 — along with the CVB’s $125,000 input each year — but because of the decrease in conference business and with the escalator clause being invoked by Delta, The Greenbrier must seek outside funding to help subsidize the flights.

Booth said he was unwilling to give an exact cost because the variables of how many people will actually be on the planes is “uncertain.”

Guills called for a special meeting among The Greenbrier, CVB, airport and county commission officials to see what plan of action should be taken.

“I think it’s time we started getting some hard numbers, and to me it looks like a pretty black picture to me. I don’t know if we can afford to do this or not,” Guills said. “We don’t have the ability to solve this ourselves … I can tell you this whole county is suffering (from the labor dispute). At this point, to wake up and have no flights in here is something we have to take a strong look at, even on a short-term basis.”

After the meeting, Booth told The Register-Herald that The Greenbrier has requested that the CVB appear before the county commissioners asking them to help subsidize the Delta flight.

When asked why The Greenbrier doesn’t personally appear before the county commission and beg for money, Booth said he could not answer that question.

— E-mail:

cgiggenbach@register-herald.com

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