Jackson-Orlando air service depends on how low Allegiant can keep its costs

Airbus_rgbProspects for Jackson Medgar Wiley Evers International Airport landing ultra-low-cost carrier Allegiant Air  for service to Orlando hinge on how well the airport can help the carrier shave its operating costs at the airport.

A U.S. Department of Transportation grant subsidy the airport expects to receive would ease the cost burden early. But  the Las Vegas-based Allegiant wants to ensure it can continue operating at Jackson-Evers and offering its deeply discounted fares after the subsidy expires after the first year, Allegiant spokeswoman Jessica Wheeler said last week.

A deal the Jackson Municipal Airport Authority green-lighted July 28 authorizes airport staff to seek the federal DOT Small Community Air Service Development Grant and reach an agreement with Allegiant for two weekly non-stop flights to and from Jackson to Orlando/Sanford International, a small airport in the Central Florida city of Sanford about 15 miles north of Orlando.

Jackson lost direct service to Orlando with the June departure of Southwest Airlines.

Airport Authority CEO Dirk Vanderleest emphasized that neither the grant nor a deal with Allegiant is firm. Authority officials have voiced confidence in getting the U.S. DOT grant, however. The designated carrier, in this instance Allegiant, can use the grant for everything from marketing and start-up costs to covering airport carrier fees.

The grant is the same one by which the airport gained service to New York City. “We feel fairly confident that we will be equally successful this year,” airport spokesman Gene Moore said in June.

Moore said in an email the airport was expected to file its grant application last week. “These grants are usually awarded during the first quarter of the federal fiscal year following the date on which the application is submitted.,” Moore said. “Therefore, if JMAA receives this grant, the funds will be expected during the first quarter of federal fiscal year 2015 which begins Oct. 1, 2014.”

Meanwhile, the Airport Authority must come up with ways to lower Allegiant’s Jackson-Evers’ operating costs. Otherwise, a deal won’t happen, said Wheeler.

“Our business is focused on very low costs and very low fares,” she said. “We need the airport as a partner in helping to keep our costs down.”

The loss of Southwest Airlines and its annual $800,000 in revenues to Jackson-Evers has led the airport to raise fees to carriers twice in the last 10 months. A new budget that begins Oct. 1 may include a further increase.

CEO Vanderleest insisted in an interview in early July that commercial carriers at Jackson-Evers have operating costs within airline industry averages.

Wheeler said Allegiant will not raise its ticket prices to cover the higher price of doing business at Jackson-Evers. “Our product offering is a low-cost, non-stop flight. We are not going to sacrifice our brand and what we are built on.”

The critical issue, she said, is that Allegiant can offer the Orlando service at a cost it can afford once the DOT subsidy expires. It does not make sense to come to Jackson and pull out when the grant ends, Wheeler noted.

“We don’t want to intentionally go into a market and know that after this grant expires we would have to leave the market.”

Airport officials say DOT could renew the grant, provided it has the funds.

Allegiant serves 96 airports large and small across the country. “Each airport is set up differently the way they structure costs,” Wheeler said.

Vanderleest, in briefing Airport Authority board members last week, cautioned that Allegiant is quick to leave an airport if expectations are not met. “If they like it, they will stay; if not, they pull out,” he said.

“I think that is probably a fair assessment,” Wheeler said.

“If it works, great. We will be there. If not, we will not hesitate to move on and do something else.”

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