Branson Day 2: Buying Service?

 

Mike poses an astute question : "Are you certain they [the Branson airport] are subsidizing [AirTran]? USA Today quotes, “We’re not writing a check for $5 million or anything crazy like that. That’s all I can say” To me, when you are talking millions, even $2 million is pretty crazy."

 

It may not be "a check for $5 million," but you can be sure that AirTran isn't doing it for free. Consider the case of Gulfport, Miss. AirTran is ending its service to the casino laden area in January. Here's what the Atlanta Business Chronicle had to report on December 3: "It is an unfortunate but necessary decision to discontinue AirTran Airways’ service to Gulfport-Biloxi,” AirTran said in a statement. “We have flown under a contract with the casinos since we began the market in 1999, since that is the bulk of the business flying into the market. The casinos have made the decision to operate without a contract for flying, and the market is just not financially viable for us without that support especially in today’s volatile economic times."

 

Does it sound to you like the casinos were buying (AKA: subsidizing) the service? Look, it's in the airline's best interest to take a deal if it's offered. After all, AirTran reported a net loss of $107.1 million in the 3rd quarter. Today its stock closed at $3.64. That compares to American at $9.53. United at $9.94. Delta at $10.50. Allegiant at $43.08. Southwest at $7.30. JetBlue at $5.55. Alaska Air at $26.48. As I look at a list of airline stock closings, it appears that only Frontier closed lower: 0.185 ! 

 

 

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