Taxpayers help subsidize empty seats from Kansas' largest airport

KANSAS CITY, Kan. - In May, Scripps National Investigative Correspondent Jim Osman uncovered hundreds of thousands of dollars of federal taxpayer money is being spent to pay for empty seats in airplanes that fly to rural communities across the country, at a time when budgets are tight.

A 41 Action News investigation discovered a similar program in Kansas that's not necessarily paying for empty seats on flights from small airports, but rather the state's largest airport.

Lawmakers created the Kansas Affordable Airfares Program in 2006, and set aside $5 million each year to help offset the losses airlines suffered from having empty seats on flights.

The legislature put the Regional Economic Area Partnership (REAP) in charge of distributing the funds.

REAP is an economic partnership between the counties in south central Kansas.

Each year, the organization receives applications from airports who wish to receive funds.

The REAP board then listens to the airports' presentations and decides how to distribute the $5 million from the state.

The aim is to give Kansans access to affordable air travel.

"Without the support of the Affordable Airfares program, we wouldn't be able to provide service to western Kansas," said Rachelle Powell, director of aviation for Garden City, Kan.

In 2012, Garden City was able to offer American Eagle flights to Dallas thanks to the grant.

It was the first time since the inception of the program that a rural Kansas community had received funds from the program.

A year earlier, the Kansas Legislative Post Audit committee had highlighted that as a problem.

The Legislative Post Audit committee is the auditing arm of the Kansas State government.

The law creating the Kansas Affordable Airfares Program recommended establishing a regional airport for western Kansas, but it also allows any community that can prove it is lowering fares for a significant amount of Kansans to apply for the grant.

41 Action News found all of the money from the program was awarded to the Wichita Mid-continent Airport from 2006-2011.

Airport officials say they used the money to lure low cost carriers Frontier Airlines and AirTran to Wichita.

They say the additional airlines helped increased competition and reduce air fare prices.

Valerie Wise with the Wichita Airport Authority explained, "Prior to AirTran starting service in 2002, Wichita had the 10th highest fares in the country."

"Our fares were 23 percent higher than the U.S. average so we can assume if we didn't have low cost carriers here today that our fares would again be about 23 percent higher than the U.S. average."

"They would be higher than they are today," said Wise.

In 2011, AirTran received $6.5 million from state and local funds to subsidize flights in and out of Wichita.

Frontier received $167,000.

Despite receiving the most money to subsidize flights, 41 Action News found AirTran's flights were relatively empty compared to other airlines flying in and out of Wichita.

In the first three months of 2012, the U.S. Department of Transportation shows both Delta and American Eagle flights in and out of Wichita were 74 percent full. Meanwhile, Air Tran flights were only at 44 percent capacity.

Statistics for Frontier from 2012 were not available through the U.S. Department of Transportation. However, the most recent statistics turned into the Wichita Airport Authority from 2011 show Frontier planes 84 percent full.

"I do know AirTran's loads have not been sufficient and that's why we have the guarantee program," Wise said.

"Frontier's loads have been pretty good all along…but again with high fuel costs and labor costs, increasing full loads do not mean profits for airlines," she said.

Kansas City, Kan. State Senator Chris Steineger (R- 6 th District) dislikes the program.

"I think folks that wanted the subsidy basically oversold the program and they told everybody this will benefit the whole state except the KC metro area because we have KCI," Steineger said.

He called for an audit of the Kansas Affordable Airfares Program. The Kansas Legislative Post Audit Committee finished the audit in February of 2011.

"That [audit] exposed some things that weren't exactly great about the fair fares program," Steineger said.

The audit found the program's administrators overstated how much the additional funding helped lower airfares.

The audit found that Wichita airport officials reported figures that showed fares went down by 17 percent, but U.S. Department of Transportation documents showed the fares decreased by 12.7 percent.

The audit also pointed out inaccuracies in the estimated number of jobs the program was credited with creating.

It also revealed figures stating Kansas' return on its investment were overstated.

With the state's pending tax cuts, Steineger believes the money put toward the Kansas Affordable Airfares Program is needed elsewhere.

"The program is in place in Kansas for fair fares even in this year's budget and last year's budget when we were cutting

aid to public schools," he said. "The Wichita Airport subsidy stayed alive in the budget and I just think that is a matter of bad priorities."

Figures from The Bureau of Transportation Statistics show the difference show price of airfares in and out of the Wichita Airport is $50 less in 2012 than it was in 2000.

Air Tran began receiving incentives from the city of Wichita in 2002.

We used prices from the year 2000 because the events of September 11, 2001, make many of the statistics from the year 2001 inaccurate due the decline in travel that year.

We also discovered last year the Kansas Legislature approved the Air Service Incentives Program. That provides $1 million to bring air service back to the Metropolitan Topeka Airport.

MTA Director Eric Johnson told us that he is supportive of KAAP offering incentives to bring a low cost carrier to Kansas.  However, he says that is not the direction the Topeka Airport is planning to take with its funds. He says the Topeka community wants air service to eventually support itself.

We spoke with other airport officials in Kansas about the funds and whether they had ever thought of applying for the Kansas Affordable Airfares Program.

Manhattan Regional Airport director Peter VanKuren told us his airport had never considered applying for the grant but was supportive of the fund because they may need to apply for subsidies in the future.

The Hays, Kan., airport also said they had never applied for the grant but would continue to review the process and the availability of funds for future opportunities.

Meanwhile, Great Bend Airport director Martin Miller told us the airport had never considered applying for the grant because they assumed the priority was to subsidize Air Tran in Wichita.

Martin told 41 Action News the Great Bend airport only serves 1,000 passengers each year.

Martin said his staff figured the airport would have no chance at those funds so they decided it was not worth spending the time to apply.

Kansas City International Airport told 41 Action News state funds have never been made available to subsidize airlines in Missouri.

At one point, the Missouri Legislature did put aside matching funds for marketing campaigns if airlines added new routes at Missouri Airports.

However, those funds have since dried up.

Links:

REAP'S INFORMATION ON THE KAAP

http://www.reap-ks.org/kaap.html

Legislative Post Audit Committee's report

http://www.kslpa.org/docs/reports/10pa15a.pdf

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