Delta Airlines’ Subsidy Discussed

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

Jun. 27–LEWISBURG — Greenbrier officials say county organizations must ante up $225,000 to prevent Delta Airlines from pulling out of the Lewisburg airport.

At a meeting Thursday, called for by county Airport Authority chair Jesse Guills, three Greenbrier resort officials, airport manager Jerry O’Sullivan, County Commissioner Lowell Rose and three county convention and visitors bureau officials visited the issue of subsidizing Delta’s Atlanta flight.

Due to rising fuel costs, Delta has asked to renegotiate its contract with The Greenbrier that pays a revenue guarantee depending upon how many empty seats are on the flight. This could potentially increase the resort’s payout to the airline another $100,000 with the total amount in 2008 being $400,000.

“We are looking for financial assistance and we can no longer continue to foot the entire bill,” Jeff Booth, director of administration, marketing and sales at the resort, said. “In the last two years that cost was over $1.4 million.”

Booth said approximately 74 percent of all passengers on the subsidized flights stay at The Greenbrier, which translates into $5 million worth of gross revenue for the resort.

In 2007, The Greenbrier ditched the costly jet airplane it subsidized for over $1 million the previous year and opted for a smaller plane that cost only $88,000. Since 2002, the CVB has contributed $125,000 a year to the resort to help subsidize flights.

Last year, the total airline subsidy cost was $211,000, with the county CVB paying $125,000 and The Greenbrier paying roughly $86,000, vice president of sales and marketing Jerry Wayne said.

“In hindsight, that was probably a little out of balance,” Wayne said.

Wayne said The Greenbrier “budgeted $175,000″ this year for subsidies, based on the CVB’s annual $125,000 contribution and a total cost of $300,000. About two hours earlier, the CVB slashed that budget item for 2008-09.

“It looks like now we will hit the $400,000 ceiling (that needs to be paid to Delta) and we don’t have that in the budget and we are going to have to call Delta tomorrow and say we can’t go forward. The fact of the matter is we have $175,000 and we can’t come to the table with another $225,000.

Earlier in the meeting, Booth told the group that Delta’s deadline for a new contract was today. If the contract was not signed, Aug. 1 could possibly be Delta’s last flight of the year, Booth said.

Booth also laid out several other options for the group, such as a decrease in flights and the ability to renegotiate the contract with Delta should oil prices decrease in the future.

The question left lingering at the table was which organizations would pay out the $225,000 needed to keep Delta in Lewisburg. CVB officials said they would consider shifting marketing and advertising dollars to promote the Atlanta flight, but that’s all.

Guills said a legal question may need to be answered before the airport authority could dip into funds and asked The Greenbrier to buy more time with Delta while the authority researched the issue.

He also said by not helping with the request the airport stood to lose millions in federal funding because of the decrease in air traffic.

“I consider this to be a serious matter, one of which doesn’t only affect The Greenbrier, but everyone that lives in the Greenbrier Valley,” Guills said. “But we have to be realistic as to what this community can afford based on the population here … this would also be looking to put money toward the benefit of a private enterprise.”

Rose bluntly told the resort officials about “the hard spot” faced by those living here. He said his decision will be made from the standpoint of what’s best for the county citizens after weighing all the factors.

“We are already subsidizing the CVB because of your loss of revenue. I strongly look at it from the county’s perspective and what effect this will have on our airport. Your problems this year have devastated the county and it has affected a lot of taxpayers,” Rose said. “How much is losing this flight going to affect the airport? I know that you have agreed to a no strike, no lockout with the union, but that doesn’t mean that employees can’t be laid off for lack of work.”

Wayne said to make up for the lack of conference business the resort may be offering “special packages and offers” and that the sales department booked “1,000 room nights this month.”

Wayne said the $5 million in gross revenue brought in from the subsidized flight has a multiplying effect between “four to seven” times that amount for the community at large. He believes this is a key issue for the groups to consider.

“Some of the comments that I have heard (in the community) is that ‘this is a Greenbrier issue,’” Wayne said. “From my perspective this is a Greenbrier Valley issue and it’s a merchants issue.”

At the end, Guills asked O’Sullivan to call for an “emergency meeting of the airport authority.”

— E-mail: cgiggenbach@register-herald.com

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