Fresno OKs higher incentives to boost airline service

Fresno Yosemite International Airport is getting some more financial firepower in its efforts to encourage airlines to expand nonstop service to more high-demand destinations.

The Fresno City Council on Thursday approved an upgraded set of incentives that the airport can offer to carriers, offering to waive landing fees and providing as much as $300,000 in marketing assistance if an airline launches new flights to a destination not already served, or for a new airline – such as the oft-wished-for, low-cost Southwest Airlines – entering the Fresno market.

“We’re sending a message that we’re willing to share the risk when (airlines) desire to start new service or enhance existing service,” aviation director Kevin Meikle told the City Council.

If an airline can make a business case to enter the Fresno market, Meikle said, it has to pull the necessary aircraft and flight crews out of somewhere else. “They’re really saying, ‘We think we can do better in your market than some other market,’ ” he said. “There is considerable risk for them in making that switch.”

The old incentive level capped out at a maximum of $95,000 in combined marketing support and landing fee waivers. In a report to the council, Meikle said the new program “enhances (Fresno’s) ability to compete for limited airline resources.” Because it is more consistent with other airports’ incentives, he added, the incentive package makes Fresno more competitive.

In recent years, consolidation among the nation’s airlines has winnowed the field to four major players: American Airlines, Delta Air Lines, United Airlines and Southwest. Together, Meikle said they control 80 percent of the U.S. domestic airline market. Southwest is the only one of the four that isn’t serving Fresno, and Meikle said that aside from Cincinnati, Fresno is the largest U.S. airport not served by Southwest.

“We would love to have Southwest here; we talk to them on a regular basis,” Meikle said. In his discussions with the airline, the company has said it is focusing this year on modernizing its fleet, and in 2017 and 2018 it anticipates evaluating its route network with greater emphasis on markets in California. “That bodes well for us,” Meikle said.

The highest level of incentives, up to $300,000 and waiving landing fees for up to two years, is aimed at promoting new nonstop flights to priority markets that are not currently served from Fresno: Atlanta, Chicago, Houston, Minneapolis, Long Beach and John Wayne Airport in Orange County. A May 2015 study identified those as high-demand destinations for travelers from Fresno.

Incentives are available for airlines starting new service to airports not currently served with scheduled service; new airlines entering the market with flights to markets already being served; and airlines that replace small regional jets with larger jet aircraft with at least 107 seats.

Southwest has been on the wish list of airport and city officials for years. In 2002, then-Mayor Alan Autry led a delegation to the airline’s Dallas headquarters to meet with the company’s planners. But that was less than a year after the Sept. 11, 2001, terrorist attacks that sent a chill through air transportation and slowed airlines’ growth plans, and the meeting failed to yield the desired fruit.

Meikle said he is hopeful that as Southwest moves through its fleet upgrade and turns its attention to its route network, Fresno could find its way into the company’s Dallas boardroom once again next year for another pitch.

In the past, incentives have been useful in attracting airline service from Fresno to Seattle, Portland and Guadalajara, Mexico. Allegiant Air’s short-lived seasonal service from Fresno to Honolulu, in 2012, also received incentives, but the airline had to repay marketing-assistance money to the airport after discontinuing flights before completing its contract term, Meikle said.

Recycled water

Also on Thursday, the council awarded a contract for nearly $2 million to Kennedy/Jenks Consultants to design a portion of a recycled-water distribution system for the northern part of Fresno. The company will design some pipeline sections, as well as three pump stations, that will eventually carry treated water from the city’s sewage-treatment plant for outdoor irrigation use at parks and schools in northeast and northwest Fresno.

Sewer line restoration

In a third action, the council awarded a construction contract for more than $1.7 million to Missouri-based SAK Construction to rehabilitate an aging one-mile stretch of sewer main along Church Avenue, between Fruit Avenue and Martin Luther King Drive in southwest Fresno. SAK Construction submitted the lowest bid from among three companies competing for the work. The project will install a new liner inside the existing concrete pipe, which was found to have cracks and suffer from deterioration.

This story was originally published June 30, 2016 at 2:50 PM with the headline "Fresno OKs higher incentives to boost airline service."