How did Branson Airport land AirTran?

The general public will likely never know exactly how Branson Airport officials landed AirTran Airways as the privately funded airport's first carrier, but exclusivity rights and a major marketing campaign were among the carrots on the negotiating table.

Officials on both sides of that table, however, declined to say whether the airport agreed to subsidize a daily flight from Branson to the low-cost, Orlando, Fla.-based airline's primary hub in Atlanta. Initial fares will be $99 each way when the $155 million commercial airport opens in May.

Construction on the airport, which is located in the 8,000-acre Branson Creek development about 8 miles south of the well-known tourist destination, has moved swiftly since the July 2007 ground-breaking. Springfield-based general contractor DeWitt & Associates Inc. began work on the $10 million, 54,730-square-foot airport terminal in July. Another Springfield firm, Butler, Rosenbury & Partners Inc., designed the building.

AirTran's chief negotiator, John Kirby, said he began meeting with a group of airport backers led by then-director Rod Murphy in 2000.

Kirby acknowledged that the notion of AirTran adding service to a private airfield in Branson seemed "far-fetched" at the time.

"I was pretty skeptical, initially," he said. "It was clear to me that people come to Branson, but you question whether people will get into airplanes to come to Branson."

Throughout the years, airport advocates worked diligently to gather detailed demographic data for Kirby, who wanted to know the age range of Branson travelers as well as their average income and preferred mode of transportation. AirTran was even interested in the city's hotel occupancy rates, he added.

"The biggest eye-opener initially was just the volume of people that are coming to Branson," Kirby said. "We've been tracking that all along, and we could see that the destination was building strength, not slowing down."

Kirby said the parties finalized a contract in mid-September, but waited to announce the partnership until after the presidential election was decided.

Under the agreement, AirTran will ferry up to 117 passengers seven days a week between Branson and Atlanta on a Boeing 717-200, which has 12 business-class seats.

The incentive package

Affordable airfare has been the key to making the Branson Airport fly, said airport CEO and Chairman Steve Peet, a bond trader and investor who lives in Connecticut.

About 5 million people drive to Branson each year from farther than 300 miles, Peet said. And research polls conducted by the airport suggested up to 50 percent of travelers in that category would fly to Branson if low fares were available. Additionally, an estimated 50 percent to 75 percent of those polled said they knew someone who would make a first-time trip to Branson if fares were low enough.

"The demand already exists," Peet said. "And the exciting part is that if we build this market, it could turn out to be quite large. ... It all has yet to be proven, but I think the data is very compelling."

Airport officials have been sharing the information with low-cost carriers and, in AirTran's case, they offered exclusive rights to develop the route between Branson and Atlanta, where the airline connects to 58 other destinations primarily in the eastern United States.

AirTran's Kirby said the incentive - offered by the airport from the outset of negotiations - is virtually unheard of in the airline industry.

"You're used to seeing competition on every route," he said. "What exclusivity does is it allows you an opportunity to develop a brand-new market. ... This truly is a new market. And just like a child, you have to kind of nurture it along until it reaches adolescence and maturity and then it should be able to develop with full competition."

Having exclusive rights to an air-travel route mitigates AirTran's risk of adding service to Branson, Kirby said. Neither Peet nor Kirby would divulge how long AirTran would be allowed to operate without competition, but Peet said that, generally, the most attractive routes have the shortest terms of exclusivity.

"We're not anti-competition; we're very pro-competition," Peet said. "We need AirTran to be profitable. We need them to like flying to Branson."

Kirby said another selling point for AirTran was the airport's ability to secure $500,000 in state tourism funding to publicize AirTran's Branson connection in targeted markets. Aggressive marketing is vital to the airline's success in Branson, he added.

Peet also noted that the airport's "turnkey" nature enables carriers based there to keep their costs low, especially in terms of personnel. AirTran doesn't plan to hire local employees, and Peet said there are virtually no fixed costs of starting service at Branson Airport.

"All they have to do is dedicate an airplane and start taking fares," he said.

Revenue-sharing opportunities in the form of vacation packages involving Branson's many shows and attractions also may have appealed to AirTran, Peet added.

Subsidy suspicions

AirTran has relied on subsidies to provide service to airports in riskier markets, but Kirby said the airline has to be selective.

"We turn down probably 10 times as many offers as we take for revenue guarantees," he said.

"You don't want to be a carrier that just takes someone's money, burns through it and then leaves. I think that makes you look bad. ... It does us no good to take someone's money if we don't think something's going to work," Kirby added.

When asked if AirTran requested subsidies to fly into Branson, Peet suggested such requests are commonplace.

"Every airline asks for subsidies," he said. "It's the first thing you ask for."

Officials at Springfield-Branson National Airport, which likely will compete for at least some of Branson Airport's traffic, have their suspicions that AirTran was snagged with subsidies.

"The question is how viable is it for them to come in on their own dime into Branson - to a new airport - and not be looking for subsidy money?" said SGF Aviation Director Gary Cyr. "I'm quite certain they're being subsidized."

On his blog at www.flyspringfield.com, Springfield airport spokesman Kent Boyd pointed to AirTran's service in Wichita, Kan., where the city, county and state subsidize the airline to the tune of $6.5 million annually.

AirTran offers three daily flights out of Wichita Mid-Continent Airport on Sunday through Friday and two flights on Saturdays.

A study by Wichita State University released in March found that subsidies to AirTran in Wichita led to major economic gains for the region. The 2002 arrival of AirTran in Wichita resulted in some 9,700 jobs and $238 million in payroll, according to the study, which was commissioned by the government group that administers the county subsidy.

On his blog, Boyd speculated the Branson Airport could be paying AirTran an annual subsidy of up to $2 million.

Boyd also noted that AirTran has pulled out of subsidized markets - most recently Gulfport-Biloxi, Miss., where casinos decided not to renew an airline contract in place since 1999. Daily flights between Tampa, Fla., and the Mississippi Gulf Coast will end Jan. 5.

Cyr said the publicly owned Springfield-Branson National Airport doesn't offer subsidies because by law it can't subsidize one airline without subsidizing all of them. He also said subsidies are oftentimes the only reason airlines continue to provide service to an airport.

"Subsidies can go away if the airline becomes profitable," he said.