Skift Take
This dynamic of small airports trying to retain a reluctant airline, which isn't getting enough business, is being played out across the country. The withdrawal of an airline can be a death knell for a community and its travelers.
Officials in Brownsville, Texas, hope they can convince AeroMexico to reconsider pulling out of the Rio Grande Valley.
Larry Brown, director of aviation at Brownsville South Padre Island International Airport, said the airport has a solid economic argument for convincing AeroMexico to resume service to the city.
The airline, meanwhile, has so far collected none of the ticket subsidies it has coming to it through the terms of an agreement with the Brownsville Economic Development Council — though it still could.
Mexico’s largest air carrier initiated service two days a week between Brownsville and Monterrey, Mexico, in July 2011 for a three-month trial period. With the subsequent offer of an incentives package from BEDC, funded through the Greater Brownsville Incentives Corporation, AeroMexico announced it would extend the trial period by a year, Brown said. AeroMexico also added a third weekly flight.
The airline doubled its number of flights in the run up to Semana Santa last year, but then suspended flights altogether earlier this month, citing falling ticket sales. Brown said the carrier left open the possibility that it would resume service to Brownsville, and he intends to leverage that opening for all it’s worth.
“We are interested in having AeroMexico start up service again and taking to them additional information regarding the business market,” Brown said. “We trust that they will be interested in hearing what we have to say. If they weren’t interested we wouldn’t be going to all this trouble.”
He declined to offer details of the pitch, citing the need to avoid tipping off the competition. Brown likewise declined to specify when airport officials would take the case to AeroMexico executives, other than to say it would be “soon.”
“The most important thing is to be able to demonstrate to AeroMexico that they have the ability to make a profit, and we believe that by emphasizing a different way of doing business we will be able to show that they can make a profit,” Brown said.
In an earlier interview he said it boiled down to structuring service around business rather than leisure travel and scheduling flights accordingly. Brown said he feels the airport has a solid economic argument for persuading the airline to resume service to Brownsville. AeroMexico did not respond to requests for comment.
Under the agreement with BEDC, AeroMexico was eligible to receive up to $500,000 in subsidies through GBIC if ticket sales didn’t live up to expectations. Another $175,000 in marketing funds were approved, $100,000 of which went to Brownsville advertising firm Breeden McCumber and $44,000 of which went to AeroMexico for marketing its Monterrey-to-Brownsville service in Mexico.
GBIC’s financial incentives are funded by a quarter-cent city sales tax allocated to the group, whose primary mission is to recruit manufacturing and industry to the area. BEDC makes recommendations to GBIC on where to apply incentives.
Gil Salinas, BEDC’s executive vice president, said AeroMexico had collected no subsidies “to date.” The portion of the $500,000 in subsidies the airline could demand depends on how much ticket sales fell short during the trial period under terms of the agreement.
Asked how much the airline stands to receive if it chooses to collect, Salinas replied in an email that “we haven’t executed any part or form of the incentives program; hence, we cannot disclose such information due to the confidentiality agreement.”
Brown said AeroMexico may submit an invoice to GBIC for the promised subsidies or could hold off pending new negotiations to resume service.
He acknowledged fierce competition among Brownsville’s airport and its two competitors in the Rio Grande Valley. For instance, Mexican carrier Aeromar began service between Mexico City and McAllen in April, announcing earlier this month its intention to add more flights this summer to meet higher demand.
Asked about the chances of a competitor snapping up AeroMexico, Brown chuckled, then invoked America’s pastime.
“Imagine that the Valley’s three major airports are baseball teams,” he said. “We all play baseball against one another. We all compete every way, every day.”
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Tags: aeromexico