[August 25, 2008]

Airlines ink lease deals

(Knoxville News-Sentinel, The (TN) (KRT) Via Acquire Media NewsEdge) Aug. 21--Flexibility seemed to be the goal for several airlines that just concluded lease agreements at McGhee Tyson Airport.

And they got it, too, although not without some price.

The Metropolitan Knoxville Airport Authority board of commissioners met Wednesday afternoon and approved five-year lease and use agreements with Northwest, US Airways, Continental and Allegiant Air. The leases were fairly standard except for those signed with Northwest and Allegiant, as Bill Marrison, Airport Authority president, outlined for board members.

Northwest, which is in a pending merger with Delta Air Lines, received the same deal the Airport Authority gave Delta in July -- a five-year lease with stipulations that would let the new airline renegotiate its space requirements if the merger goes through as expected.

The Airport Authority manages McGhee Tyson and Downtown Island airports for the city of Knoxville. Delta and Northwest have operated out of McGhee Tyson for years, leasing gates and ticket-counter space. The Airport Authority also receives revenue from the airlines from landing fees.

The leases signed with Delta and Northwest are designed to give them flexibility as they merge. According to the agreement, for 24 months beginning with the closing of the merger, the Airport Authority will cooperate with Delta and Northwest as they try to consolidate operations. The cost of any relocation or consolidation would be shouldered by the two airlines, though.

The board did not discuss financial terms of the airline contracts.

Prior to moving in the renovated McGhee Tyson terminal in 2000, many lease and use agreements with airlines at McGhee Tyson were for 20 years or more.

Allegiant also signed a five-year agreement, but one that allows the airline to operate at McGhee Tyson on a month-to-month basis and pay its terminal fees and charges on the basis of each arrival and departure. For the price of this flexibility, Allegiant must pay a 25 percent surcharge on terminal fees and charges and agreed to give up any say in physical changes the Airport Authority might make to the terminal for the five years of the agreement.

Marrison said this is not a new development. Allegiant has been pursuing this type of arrangement at airports across the country. It was operating under a similar agreement since beginning service at McGhee Tyson in 2007, and the Airport Authority tried to negotiate a standard five-year lease with the airline this time, but "because of their policies at other airports, they elected not to do that," Marrison said.

"It doesn't mean they are not committed to the Knoxville market," Marrison said. "They are being very successful. They like the Knoxville market very much, it's just the way they do business throughout their system."

In other action Wednesday, the Airport Authority:

-- Toured a new aircraft rescue and firefighting facility that is nearly halfway completed at McGhee Tyson.

-- Swore in new board member Kathleen Finch, who is senior vice president and general manager of DIY Network.

-- Accepted a $65,226 state grant for taxiway construction.

-- Awarded a $30,852 contract to The Garland Co. to repair firefighting foam water storage tanks.

-- Awarded a $35,875 contract to COMPCO/DCI for telecommunications system software upgrades.

-- Awarded a $31,745 contract to Lockwood Greene/CH2M Hill Co. to update the airport's design guidelines.

-- Awarded a $48,262 contract to Messer Construction Co. to upgrade wall protective coverings in stairwells throughout the terminal building.

To see more of The Knoxville News Sentinel or to subscribe to the newspaper, go to http://www.knoxnews.com.

Copyright (c) 2008, The Knoxville News Sentinel, Tenn.
Distributed by McClatchy-Tribune Information Services.
For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

[ Back To TMCnet.com's Homepage ]

Discussions: