Sedgwick County approves final year of Southwest Airlines subsidy

Sedgwick County extended one more year of financial support to Southwest to help cover the airline’s cost of operating in Wichita.

Commissioners voted 3-1 Wednesday to continue funding the Affordable Airfares program.

The revenue guarantee assures that the state, county and city will help cover up to $6.5 million a year in losses incurred by the Dallas-based airline from operating daily flights in Wichita, said Chris Chronis, the county’s chief financial officer.

It consists of $4.75 million from the state and $875,000 from both Wichita and Sedgwick County. The $875,000 from Sedgwick County will come from its 2015 budget.

Commissioners Tim Norton and Dave Unruh praised the program for helping Southwest provide daily flights in and out of Wichita.

“We got a new Eisenhower Airport that’s taken air travel to a new level in our Wichita regional area,” Norton said. “It is important that we don’t back off of having Southwest in our airport.”

Southwest Airlines used all the money allotted to it last year, Chronis said.

“They are operating at a loss from Wichita,” he said. “They said when they came to the market that they expected to be operating at a loss for the first several years as they built up their market share.”

Wichita created what is now known as the Affordable Airfares program in 2002.

“Airfares in Wichita were extremely high,” Chronis said. “Many people were traveling from Wichita to remote airports to do their air travel because it simply was so much cheaper.”

The county joined the program in 2005 and took over administering the contract the next year.

Southwest has served Wichita for about two years. This is the third and final year the program will fund Southwest Airlines.

Chronis said he did not expect Southwest to request another year of subsidies.

The airline provides multiple daily direct flights to Chicago, Las Vegas and Dallas Love Field under the agreement, Chronis said.

The money for Southwest benefits passengers on other airlines as well, he said.

“The introduction of low-fare competition has been shown to increase the number of passengers using our airport and substantially reduce the fares that those passengers have to pay,” he said. “The competition drives down fares from all other carriers.”

Airport passengers saved $127 million in airfare in 2014 compared to prices before the program started, Chronis said.

The program benefits the business community in Wichita, Unruh said.

“Before we had this program, we lost some major business partners in the community who pointed to the fact that high airfares is one of the reasons they had to leave,” he said.

Commissioners Karl Peterjohn and Jim Howell raised doubts about whether the last year of the Southwest subsidy was necessary. Chairman Richard Ranzau was absent.

“We don’t know right now whether this is still working and this is necessary,” Howell said. “Southwest is a very successful company. They’ve been here long enough that if they’re not turning a profit at this point, I don’t know if it’s going to change.”

Howell, who said he supported the program when he was a state legislator, voted against extending it.

“This is a program that is dwindling toward the end of its life,” Howell said.

Peterjohn said he had concerns about the program, but he voted for the final extension.

“We made an agreement,” he said. “I think we need to stand by and complete it.”

The state has already set aside its share for the 2015-16 program. Chronis said the city will vote on its $875,000 share next week.

This story was originally published July 8, 2015 at 11:53 AM with the headline "Sedgwick County approves final year of Southwest Airlines subsidy."