Meridian Star

Local News

April 13, 2014

Silver Airways bailout prompts airport collaboration

MERIDIAN —     Officials with Meridian Regional Airport are partnering with their counterparts at Hattiesburg-Laurel Regional Airport to try to bring another commercial airline to the area, Meridian Airport Authority President Tom Williams said.

    "Meridian is a decent market for one of the big airlines. Hattiesburg-Laurel is a decent market with regional connections," Williams said. "Together we are a strong case for service by one of the larger carriers to serve our two airports."

    Williams and Hattiesburg-Laurel Executive Director Tom Heanue are working with a consultant who specializes in smaller airport service to make presentations to the larger commercial airlines, Williams said.

    "It is going to be tough to be successful, but we have determined the most likely way to succeed is by us working together," Williams said.

    On Wednesday, Silver Airways provided the U.S. Department of Transportation with a required 90-day notice of intent to discontinue service between Atlanta and Meridian and four other communities, including Muscle Shoals in Alabama and Greenville, Hattiesburg-Laurel and Tupelo in Mississippi.

    USDOT will issue request for proposals from airlines interested in serving the markets. There will be separate requests for proposals issued for each of the impacted airports, which means the same carrier may not serve all the markets.

    Williams said there are two possible scenarios in Meridian's case. There will be no bids from interested carriers or there will be one or more bids.

    Williams said it is unlikely that there will be no bids, but if that is the case, the USDOT could require Silver to keep serving the Meridian airport.

    If there are bids, there are three different classes of airlines that could submit requests for proposals:

    • Air carriers operating planes with fewer than 10 seats that require no copilot and fewer government regulations.

    • Mid-size carriers such as Silver Airways, which is the only airline serving that niche market in the region now.

    • Commercial carriers which, because of consolidation, are down to three companies: Delta Air Lines, American Airlines and United Airlines.

    Williams said local officials will have the right to reject any of the airline bids and he is not interested in any airline that doesn't meet federal guidelines required to allow members of the military to fly on the planes, which would eliminate all but commercial carriers.

    If there are multiple bids, the community gets to provide input on which company they would like to provide the service.

    Silver Airways replaced Delta Air Lines as the Meridian Regional Airport carrier in 2012 after Delta pulled out of the Meridian, Laurel-Hattiesburg and Tupelo markets.

    Silver could not meet strict federal requirements that allowed members of the military to board its flights and the Meridian Regional Airport lost half of its passengers that first year when members of NAS Meridian and the 186th Air Refueling Wing began driving to Jackson for air service, Williams said.

     "Prior to Silver we doing about 16,000 passengers per year," Williams said. "As soon as Silver showed up our passengers went down by just over half and that was because of the loss of the military."

    Although the number of passengers has rebounded somewhat since then, airport officials have said service has suffered since Silver took over.    

    In March, 47 percent of Silver Airways' flights in Meridian were canceled, Williams said, adding that nearly 40 percent of the flights that did take place were late.

    "They were having operational issues," Williams said.

    Silver Airways President and CEO Dave Pflieger has blamed the problems it experienced in the Mississippi and Muscle Shoals, Ala., markets on a nationwide shortage of regional airline pilots and more stringent federal regulations on pilot certification.

    "Those facts, coupled with significantly lower than expected passenger enplanements in most of our Atlanta-network cities have made it uneconomical for us to continue serving these communities,”Pflieger states in a press release issued following the announcement that the airline was shutting down its Mississippi-based operations.

    Heanue said he had been expecting Silver Airways' pullout, according to an Associated Press article.

    "Now, all we can do is wait and see who bids when the request for proposals is issued," Heanue said.

    Silver was getting paid a guaranteed federal subsidy for air service in each of the five airports in Meridian, Muscle Shoals, Greenville, Laurel-Hattiesburg and Tupelo under the federal Essential Air Service program, or EAS.

    The Airline Deregulation Act of 1978 gave almost total freedom to determine what markets to serve domestically and what fares to charge for that service, according to the USDOT website.

    The EAS program was put into place to guarantee that small communities were served by certified air carriers. Under the program, USDOT currently subsidizes 163 smaller airports across the country that might otherwise not have access to airline service.

     In early to mid 1970s jumbo jets such as the McDonnell Douglas DC-9 were common at the Meridian airport. But rural communities could no longer afford the price to pay for service by the large jets after deregulation. And even then, Meridian managed to forgo subsidies until 2008 when jet fuel prices soared to $4.35 per gallon.

    Delta Airlines was paid $678,936 annually in EAS funds under the program to provide air service to Meridian, according to 2012 figures on the USDOT website. When Silver was awarded the EAS contract in October 2012, the company asked for and received a $2.4 million subsidy for the same service.

    Silver was awarded similar increases in the other markets from which it is now withdrawing. Delta received a $1.7 million subsidy for operating out of Hattiesburg-Laurel. That figure jumped to nearly $3 million under Silver.

    Airline carriers who bid to provide service at Meridian and the other markets could seek even more EAS funds.

    On Feb. 14, 2012 President Obama signed into law the Federal Aviation Administration Modernization and Reform Act of 2012, that states, among other things, that communities that lose their EAS designation cannot reenter the program.

    Williams said, however, that Meridian "is not anywhere close to losing its designation."

    What local officials hope will happen is that one of the three main carriers will bid on and win the Meridian and Hattiesburg-Laurel guaranteed subsidies and contract out with another carrier to provide small, regional jets to service the markets.

    "Delta, for example, has no little jets so they will contract an airline to fly the 50, 70 or 90 seaters in smaller markets and the Delta logo will be put on those planes," Williams said.

    Getting a major carrier back in Meridian, won't be easy, Williams conceded.

    "It's going to be an uphill battle," he said.

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