Affordable air service subsidy scheduled to expire

When low-cost airline Vanguard left Wichita in 1997, tickets out of Mid-Continent Airport increased drastically. And the city started hunting for ways to bring down fares.

In 2002, it succeeded in luring another low-cost carrier, AirTran, agreeing to put up millions to guarantee the company's revenue.

Then, in 2006, the city convinced state legislators that affordable air service in Wichita was vital not only for the region, but for the state. Lawmakers committed to spend $5 million annually to subsidize airfares in south-central Kansas.

That five-year commitment ends in 2011, and backers of Fair Fares in Wichita are lobbying for continued state support.

"You go back six years ago and a round-trip flight from Wichita to Denver would cost you $1,300 and you can now get that for $250 and $300 if not cheaper when someone is running a sale," said Jason Watkins, director of government relations for the Wichita Metro Chamber of Commerce.

The cost of air travel affects businesses as well as tourists, he said. He noted that when Rent-A-Center and Pizza Hut moved their corporate offices from Wichita in the late '90s, both cited the high cost of air travel as a factor in the decision.

"Lower airfares are vital to job creation in south-central Kansas, therefore it is vital to job creation in Kansas," he said.

The program is also an investment that helps bring money back into state coffers, he said.

Wichita attorney Tom Docking sat in on meetings for the Fair Fares program when it started and said he supports continuing the state funding.

Before the program was in place, "what I would see was people in my position who did have to fly would fly out of Kansas City or Oklahoma City to get a better fare," he said.

Now people are choosing to fly out of Wichita, he said.

"A relatively modest subsidy in Wichita has had many times the expected effect in savings for the passengers," Docking said.

A 2008 study by Wichita State University's W. Frank Barton School of Business showed that for every dollar the state spent on the affordable airfares program, it got back $5.25 in taxes.

That kind of immediate return makes the program more appealing to some lawmakers.

"Normally, I'm not a big fan of subsidies. In the case of the airfares for Wichita, just the withholding taxes alone from the entity that receives it, it more than pays for itself let alone the reduction in fares," said Sen. Ty Masterson, R-Andover, who sits on the Senate Ways and Means Committee, which handles budget issues.

No one seems to dispute that the airfares subsidy has been beneficial to the state, but Kansas is facing a budget shortfall for the third straight year.

Early predictions are that the state faces a potential budget shortfall of $500 million because of a combination of anemic state revenue and expiring federal stimulus money. The subsidy has come from the state's general fund in the past.

Gov.-elect Sam Brownback is crafting his budget proposal for the 2012 fiscal year, which begins July 1. The budget will be presented to the Legislature after it convenes Jan. 10.

"We are in a really tight budget atmosphere, but that is one of the things we have to have to be a globally competitive area," said Brownback, a Republican. "You need to have accessible air transportation at reasonable prices."

Although he supports the program, "it is a tight budget atmosphere this year."

Those budget concerns are part of the reason the state shouldn't cut back support now, Watkins said. If the state does not support the program, it will almost immediately lose $6 million from the taxes people would not be paying on airline tickets.

Other supporters say that continuing the $5 million subsidy doesn't just benefit Wichita, it benefits a large portion of Kansas.

Mid-Continent is the major airport in Kansas. The other major airports closest to Wichita are in different states — Kansas City International is in Missouri and Will Rogers World Airport is in Oklahoma City, said Joe Yager, CEO for the Regional Economic Area Partnership, which is made up of 37 city and county governments in south-central Kansas.

The closest airport for people visiting the casino in Dodge City is in Wichita, he said.

Because of Fair Fares, Wichita has been able to attract conventions that otherwise would have gone elsewhere, said Wichita Mayor Carl Brewer. The airport is now pulling in travelers from Oklahoma instead of people from Wichita driving to Tulsa or Oklahoma City for a flight, Brewer said.

"We have had businesses that have said we would not put our business here if you didn't have it (the affordable airfares program)," he said.

The $5 million price tag might seem like a lot, but the return on the investment is far greater, Brewer said.

"This isn't a Wichita issue. The impact is something that is going to help the state of Kansas recover... it is an investment they can make today that they can get a return on today," he said.