Sedgwick County renews subsidy for Southwest Airlines

Sedgwick County commissioners voted 3-2 Wednesday to renew a revenue guarantee agreement for Southwest Airlines for fiscal year 2015.

The agreement, which is essentially identical to an agreement that expired June 30, assures the airline that the state, county and city will help underwrite any losses incurred from doing business in the Wichita market up to $6.5 million per year, said Chris Chronis, the county’s chief financial officer.

The Affordable Airfares program is expected to be funded with $5 million from the state and $875,000 each from the city of Wichita and Sedgwick County, he said. Funding for the program was appropriated by the Legislature earlier this year and was signed by Gov. Sam Brownback, Chronis said. The county’s share already has been added to the proposed 2015 budget, Chronis said.

Commissioners Karl Peterjohn and Richard Ranzau voted against the agreement.

Last year, the airline used all of the money allotted to it and still did not turn a profit, Chronis said.

“They have not gotten to the point where they are making revenue out of Wichita,” Chronis said. “Nationally, air travel has diminished and airfares have risen. That has been the case in Wichita as well.”

Southwest has been in the Wichita market for about a year, following its acquisition of AirTran.

Peterjohn said he has not seen any evidence that Southwest is not profitable in Wichita and that the airline did not come to Wichita specifically because of Affordable Airfares.

“We have to make a hard decision in terms of tradeoffs,” Peterjohn said. “We just shut down the Judge Riddel Boys Ranch.”

The Affordable Airfares program was initiated by the city in 2002 as an incentive for low-fare carriers to come to Wichita and provide service, Chronis said.

“At the time, airfares from Wichita to other destinations were among the highest in the nation,” he said. “It also was causing significant complications for local businesses who travel frequently.”

Chronis said the program has helped boost ridership and reduce airfare rates at other competing airlines in town.

AirTran Airways came to Mid-Continent in 2002 and made use of the program, as did Frontier Airlines in its two brief stays in Wichita. In 2005, the county joined the program as a financial partner, and by 2006, it was responsible for awarding contracts to carriers and obtaining funding, Chronis said.

Southwest Airlines acquired AirTran in 2010, and the carrier came to Wichita last summer. It offers nonstop flights to Dallas, Chicago and Las Vegas.

Last month, Mid-Continent reported an 8 percent increase in passenger traffic for the first four months of 2014 as compared to the same period in 2013.

Southwest did not respond to calls requesting information.

This story was originally published July 23, 2014 at 7:19 PM with the headline "Sedgwick County renews subsidy for Southwest Airlines."