April 6, 2004

Ithaca Tompkins Regional Airport Lands in Financial Problem

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Airline deregulation and economic downturn due to Sept. 11 have created a financial problem for the Ithaca Tompkins Regional Airport. Because of the larger number of flights and cheaper fares offered, people have been flying out of the airports in Binghamton or Elmira or using other methods of transportation such as driving to avoid the regional airport’s high prices.

At other airports, the cost of terminal rental space is divided between several carriers. Since the regional airport has only one carrier, U.S. Airways, it must pay all of the rent. The Air Service Task Force, an affiliation of interested business, government, educational institutions and economic developers is working with the airport to develop a new business model and contingency plan in the event that U.S. Airways were to leave the regional airport.

“Both Binghamton and Elmira have several airlines to share the fees. We only have one. Both get substantial subsidies from their county governments,” said Tompkins County representative Barbara Blanchard, also the Air Service Task Force chair.

According to Blanchard, Binghamton’s county has no debt and Elmira’s airport is subsidized with $550,000 per year. The Ithaca airport has always had a self-sustaining partnership with its airlines. Without enough airlines and flights to support this partnership, the airport has a difficult financial situation at hand.

“We have to look at a different way now of running this airport or else we’re going to not have an airport,” Blanchard said.

According to airport manager Robert Nicholas, the more customers an airline serves, the lower an airline’s profit margin needs to be. Airlines want to work for large airports because they can charge lower prices by serving a larger population. This makes it hard for the regional airport to compete with larger airports in costs.

According to Michael Stamm, Tompkins County area development president, many small airports have faced reduced air service since Sept. 11.

“That, coupled with a national recession, has caused pretty dramatic change,” Stamm said.

According to Blanchard, the Air Service Task Force was formed about seven years ago as a response to Continental Airlines withdrawing from the Ithaca Tompkins Regional Airport. The task force works on different projects and initiatives to benefit the airport. In the past, the Air Service Task Force has supported consultant studies and used them to develop marketing proposals to try and interest other airlines in providing service for the Ithaca airport.

“We’ve sponsored grant applications, advertising programs, and essentially we’ve served as sort of a kitchen cabinet for the airport manager,” Blanchard said. “What we expect to be doing as our next project is work with airport management to develop a new business model for the airport as well as a contingency plan in the event that U.S. Airways bankruptcy requires them to withdraw from the airport. And probably do some long range strategic planning for the airport,” she added.

At a joint meeting last Tuesday, Tompkins County’s Facilities and Infrastructure, Budget and Planning, Development and Environmental Quality committees sought out solutions to the airport’s problem. According to Nicholas, the assumption at the meeting was that taxpayer contributions would solve the problem.

Nicholas said it is not his intent to employ that idea at all — there are many other options, he said. More likely, those in the business community to whom the airport is important will be approached with the idea of subsidizing the airport. These businesses include Ithaca College, Cornell University and other local businesses.

Archived article by Amanda Chawla
Sun Contributor