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Focus Group supports sustainable funding recommendation

By LVEDC Staff on May 6, 2014

EDITOR’S NOTE: The following is a DRAFT of a letter of support crafted by members of the Air Service Focus Group. The group is comprised of staff members linked to some of the largest employers and institutions in the Lehigh Valley. Its goal: to boost business at Lehigh valley International Airport.

The Air Service Focus Group, a committee of the Lehigh-Northampton Airport Authority, which is composed of the largest employers and institutions in the Lehigh Valley, supports the recommendation included in A Blueprint for Success: A Sustainable Economic Development Strategy for the Lehigh Valley. The report was produced by Garner Economics LLC on behalf of the Lehigh Valley Economic Development Corporation.

The report recommended that in the event the region is able to obtain a sustainable funding source for economic development, one of the programs that should have priority is improving funding for the current air service incentive program.

Air service development is one of the activities in which airport operators who wish to increase air service at their airports are involved. An air service incentive may include waiving or reducing aircraft landing fees, rental fees, or fuel flowage fees. It can also include airport revenue used for advertising or promotional activities related to proposed or new air service.

A revenue guarantee is one type of air service incentive where an agreement establishes a target amount of revenue that a carrier will receive for operating a particular service to a particular destination over a given length of time.

The Lehigh-Northampton Airport Authority (LNAA), the local airport operator, has an Air Service Incentive Program which provides marketing assistance to carriers initiating new service at Lehigh Valley International Airport. The program provides funds up to $1,000 per seat for new non-stop destinations for a period not-to-exceed two years.

Currently, Allegiant Airlines participates in the LNAA Air Service Incentive Program for new service to Punta Gorda, Florida. In the past, several carriers have benefitted from the program, including Frontier Airlines, Direct Air and AirTran Airways.

The Revenue Use Policy of the Federal Aviation Administration prohibits airport operators from using airport revenues to fund air carrier subsidies. Subsidies include providing aircraft parts, free fuel, interest-free loans, payment for service or any other form of direct or indirect air carrier subsidy.

Revenue guarantees are typically provided by local businesses and institutions in a particular area to fund an air service incentive in order to prevent violating federal grant assurances and current airport revenue use guidelines.

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