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Westmoreland subsidy that helps finance Spirit Airlines draws scrutiny

Westmoreland County officials say they’ll continue an unorthodox taxpayer-funded subsidy that attracted Spirit Airlines to Arnold Palmer Regional Airport but drew the attention of federal officials.

Citing the economic benefits of an ultra-low-cost carrier in town, the county spends about $700,000 annually to employ ticket agents and ground operators for Spirit. The program, called Latrobe Airline Services, supports about 40 authority employees a year. The money is part of $2 million to $2.7 million in annual funding the county pays to the Westmoreland County Airport Authority for general operations and debt service.

Spirit, a company valued at $3.6 billion that built its brand on cheap nonstop flights, serves more than 50 airports in the United States and internationally. In Westmoreland County, commissioners said they are eager to provide the appropriation and enable Spirit’s presence to grow.

“It’s money we put in to make the operation happen so that we could reap the impact,” said Commissioner Chuck Anderson. “It’s part of the cost of doing business.”

The county-to-authority money transfer caught the eye of the Federal Aviation Administration at least as early as 2013. In February 2014, the safety and standards branch requested information to determine “if the rates and charges at the airport are allocated in an unjustly discriminatory manner,” or were subsidizing the costs of an air carrier.

FAA spokeswoman Arlene Salac said the agency’s review of the program is continuing.

Spirit began serving the Latrobe airport in February 2011. The year before, the airport had 6,000 commercial passengers.

In related news, Few in Westmoreland County opposed to expansion plan for Mariner pipeline.

“We’re about to have balloons go up for the millionth passenger going through there,” Anderson said. “The impact is huge.”

This year, the airport has counted more than 250,000 passengers on Spirit flights to five destinations, although the airline will suspend nonstop flights to Chicago and Las Vegas in November because of low passenger traffic. Other destinations include Orlando, Myrtle Beach and Fort Lauderdale.

PennDOT gauged the airport’s economic impact at $158 million, according to the airport’s annual report, up from $98 million in 2011.

Ken Button, a public policy professor at George Mason University who studies aviation, said the lines are fuzzy regarding public support to airlines, but smaller airports are more likely to use local funding to lure carriers. The biggest concern, he said, is engendering unfair competition if nearby airports must one-up each other’s offers.

“These airports are desperate to have it,” Button said. “This doesn’t necessarily help other airports nearby.”

Westmoreland County has three regional airports — two of them county-run — and there are a dozen or so nearby in other counties.

Pittsburgh International Airport, the region’s largest, added ultra-low-cost carrier Allegiant Air this year. Allegiant gets no special subsidy from the airport.

Incentive programs vary among airports, Spirit spokesman Paul Berry said. Some have none. Spirit reported $76 million in net income in June.

The size of the airport and amount of traffic determines which employees work directly with the airline, Berry said. If the scale of operations is large enough, Spirit hires its own workers, as at the Fort Lauderdale airport where the airline has its headquarters.

In related news, Westmoreland officials fear loss of impact fees.

“At most of our other airports, we don’t have that much traffic, so we hire third-party vendors to handle that traffic for us,” Berry said.

That’s the case at Oakland International Airport, said Brian Kidd, marketing supervisor at the California facility. Major airlines can employ their own staff. Smaller airport incentives can be “a win-win,” but airports must be careful about regulations, Kidd said.

“Airports have to be fairly even-handed about this,” he said. “You can’t offer an incentive to one carrier that’s not available for another carrier.”

Gabe Monzo, executive director at the Arnold Palmer airport, said if another carrier came to town, “We’d serve them the same way.” The model drives traffic and economic development, he said.

“It’s unique,” he said, “it’s a new way of doing business. But it works for us.”

The county has an overall budget of $334 million. Anderson said this year the county is working around a $5.8 million deficit, which has shrunk to about $2 million because of higher-than-anticipated revenue from various sources, including the Marcellus shale impact fee. Commissioner Ted Kopas said the county evaluates its appropriation to the airport as part of its budget talks every year, as it does other county-related agencies.

“The way the airport has grown over the five years, the target investment has paid off,” Kopas said.

This article was written by Melissa Daniels and Stacey Federoff from Tribune-Review, Greensburg, Pa. and was legally licensed through the NewsCred publisher network.

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