City: CIRA in talks with airline, but incentives needed

Marty Vanags, center, with the Economic Development Council of the Bloomington-Normal Area, speaks during the Community Air Service Initiative press conference Thursday, Jan. 26, 2012. At left, Bloomington Mayor Steve Stockton. At right, McLean County Chamber of Commerce CEO Charlie Moore. (Photo by Ryan Denham/WJBC)

BLOOMINGTON — Bloomington, Normal and McLean County governments will meet in special sessions Monday and vote on offering hundreds of thousands of dollars to help lure an unidentified airline that’s in negotiations to replace AirTran at Central Illinois Regional Airport.

Normal Town Council will meet at noon, then Bloomington’s at 5 p.m. Both will vote on an agreement giving the McLean County Chamber of Commerce up to $100,000 each to lure air service at CIRA. The County Board meets at 6:30 p.m., though a dollar level was not available.

That money is on top of the $150,000 already pledged by others members of the new Community Air Service Initiative, or CASI, announced Thursday at the Chamber offices.

The money apparently will be used to offer one year of financial incentives — referred to in the industry as revenue guarantee programs — to convince the airline to come to CIRA.

“An air transportation company (Airline) has expressed interest to CIRA in providing air transportation services in exchange for financial assistance to be provided by the Chamber,” city of Bloomington staff wrote in a memo provided to aldermen. “The term of such agreement shall be one year from the date Airline begins providing air transportation services at CIRA.”

Big shoes to fill

CASI’s goal is to attract new service to CIRA to replace what will be lost when AirTran stops its local service by June. Low-fare carrier AirTran was CIRA’s second-largest airline in 2011, its 235,341 passengers making up about 40 percent of total airport traffic. Its low fares also were believed to lower the cost of flying on other CIRA carriers too.

“The end of the 16-year relationship could lead to lost jobs, lost revenues for businesses across Bloomington-Normal and Central Illinois, lost tax revenue for government, and potentially shift spending for those travelers currently flying in and out of CIRA,” Chamber chief executive officer Charlie Moore told reporters Thursday.

To counteract that, CASI’s members including State Farm Insurance Cos. and Country Financial have already pledged $150,000. CASI also plans to engage more local businesses to raise more.

CIRA itself is not directly involved with CASI, because of requirements associated with federal grant money it receives, CIRA executive director Carl Olson said.

“Those federal requirements prohibit the airport from doing certain things with air-service development,” Olson said. “So we’re doing everything we can internally in compliance with our statutes, but (CASI) has the opportunity to do things outside that compliance rope, because they’re not subject to FAA statutes.”

Subsidies used previously

The use of temporary subsidies would not be unprecedented at CIRA.

The airline used a combination of financial assistance, from marketing incentives to fee abatements, to land American Airlines service to Dallas-Fort Worth in 2008, Olson said. That subsidized period lasted 12 months, and CIRA has retained the daily service.

“We had been after Dallas service for 10 years,” Olson said. “This is what it took to finally get it done. And when the subsidy period ended, it’s been successful. … So for the last two and a half years, it’s survived on its own and been profitable on its own.”

Chuck Fisher, procurement program manager for Bloomington-based State Farm, said the insurer has employees going in and out of CIRA constantly – a “big part of our business,” he said. That doesn’t include the large amount of personal travel done by State Farm employees, he said.

He said AirTran’s departure would hit State Farm’s bottom line, but how much is unclear.

“I think that we’d have to look at a lot of different options, but this is the most attractive of them, in terms of bringing new travel in and out of Bloomington,” Fisher said. “Otherwise, we’d have to see if travelers would have to pay higher fares out of Bloomington, or fly out of somewhere else, which is not what we want to do.”

The other key CASI investors include the Economic Development Council of the Bloomington-Normal Area, the Bloomington-Normal Convention and Visitors Bureau, Afni Inc., Illinois Wesleyan University, McDonald’s Corp., and Fox and Hounds Salon and Day Spa.

Ryan Denham can be reached at ryan@wjbc.com.