Free money is not everything for US airlines when it comes to launching new routes.
Allegiant and US Airways both said that the recently awarded small community air service development programme grants from the US Department of Transportation (DOT) to six airports whose applications they supported are only one factor of many in their network planning decisions.
Executives from the airlines made their comments on the sidelines of the World Routes 2013 conference in Las Vegas.
“Generally, these [grants] don’t get you service if we’re not interested to begin with,” says Jason Reisinger, director of route planning at US Airways.
The Tempe, Arizona-based carrier supported winning applications from Gunnison, Colorado, for new service to Phoenix, from Springfield, Missouri, for service to Charlotte and from Wilkes-Barre/Scranton for increased service.
The DOT announced the grant winners on 27 September. Funds can be used for marketing activities and revenue guarantees, depending on what the airport laid out in its application.
Reisinger says that when US Airways considers adding a new route, grants, as well as local demand and other factors, such as notable improvements in the local economy, all come into play.
For example, Wilkes-Barre/Scranton’s recent economic growth from shale gas development in northern Pennsylvania would be a favourable factor that the airline would consider, he says.
Allegiant says grants definitely move a city up its list for new service but emphasises they are just “one of many factors” that it considers before launching a route.
“A grant can really help us get the word out about a new service,” says the Las Vegas-based ultra low-cost carrier. “[However], an airport that fundamentally finds a way to reduce its operating costs will leap-frog ahead.”
Saginaw is an example of where a DOT air service grant was not enough for Allegiant. The airline was unable to generate the demand it needed to sustain flights between Saginaw and Orlando Sanford despite spending about half of the $500,000 in marketing funds the airport received from the federal government, Allegiant says.
The balance was left unused and the service was terminated in September 2012 after operating for 10 months.
“We want to be known as an airline that when we have access to this money we spend it like it’s our own,” says Allegiant.
This year, Allegiant supported winning applications from Oxnard, California, for service to Las Vegas, and from both Wilkes-Barre/Scranton and Yeager airport in Charleston, West Virginia, for flights to Orlando Sanford.
Some airlines appear to jump at the chance of financial support for a new route. JetBlue Airways announced a new daily nonstop between Boston Logan International and Savannah International just 11 days after the Georgia airport won a $500,000 DOT grant for the route. JetBlue supported the application.
Flights will begin on 13 February 2014, the same day that the New York-based carrier begins twice-daily service to its base at New York’s John F. Kennedy International airport.
American Airlines, Delta Air Lines, Frontier Airlines and United Airlines also supported some DOT grant winners. These included new service on American from Del Rio, Texas, to Dallas/Fort Worth, on Delta from Lincoln, Nebraska, to Atlanta, on Frontier from McAllen, Texas, to Denver, and on United from Sun Valley, Idaho, to Denver.
The DOT disburses the grants on a reimbursement basis, so any funds not used for the proposed air service enhancements remain with the federal government.