HED:Tupelo approves airline deal; county postpones decision
By Marty Russell
Tupelo City Council members agreed Monday to put up half of the $400,000 officials say is needed to lure Mesa, a New Mexico-based airline, to Tupelo but the Lee County Board of Supervisors postponed any action saying it wants the Community Development Foundation to put up part of the county's half.
In separate meetings Monday, the city council and supervisors discussed a plan that would bring Mesa to Tupelo with three flights daily to Nashville by establishing a $400,000 shortfall fund that would guarantee the airline a profit should boardings fall below the level required for Mesa to make money on the route.
Officials are counting on the airline being successful and said, if that happens, the money would eventually be returned to the city and county.
Tupelo council members, who had been briefed on the proposal last week, voted 8-1 to contribute $200,000 to the fund, which will be administered by the Three Rivers Planning and Development District. The city can not legally provide direct subsidies to the airline.
The board of supervisors, however, has asked CDF to pay some or all of the county's share out of the $250,000 to $300,000 the county contributes to the economic development agency each year. Supervisors' attorney Bill Beasley said CDF has asked for time to make a decision while the agency works on its new budget.
At least three of the five supervisors expressed support for the airport's proposal but took no action Monday.
"You'll know in a short time what CDF is bringing to the table," Beasley told the board.
Randy Kelley, director of Three Rivers, said time was important because Mesa would like to begin service June 1. Jim Newman, marketing director for the Tupelo Regional Airport, said the airline must program the new routes into its reservation computers and hire personnel for the Tupelo operation by the June 1 start-up date.
"Two or three days isn't going to make or break the deal," Kelley told the supervisors. "It can't go two or three weeks though."
Harry Martin, CDF president, said his officers are working this week analyzing the proposal but couldn't predict when a decision on his agency's participation would be made.
"We're aware that they're operating under a very definite schedule," Martin said. "Whether we get it done this week, I don't know. ... I would think (Monday) is probably when it will come up again."
The supervisors have scheduled their next meeting for Monday.
County likely in
Supervisors president Billy Davis said he believed the county would go along with the airport's proposal.
"I believe it's a workable deal," Davis said. "I think the money is going to be there. It's just figuring out who is going to do what."
District 5 Supervisor Thomas Kennedy agreed.
"I'm pretty sure our part will be coming," Kennedy said.
The only dissenting vote on the city council was by Ward 5 Councilman Tommy Doty, who said he did not believe the majority of taxpayers should be subsidizing air service for a few travelers.
"I still don't think it's right that 95 percent of the people in Tupelo should subsidize the 5 percent who do" use the airport, Doty said.
He also said he did not believe airport officials who said that, if the new airline is not successful and the shortfall fund is depleted, they would not ask for additional monies.
But Ward 4 Councilman Steve Mayhorn said he was willing to spend the $200,000 to find out if the city could support the airline.
"If it doesn't work then we need to, like the mayor said, plow down the (airport) buildings and do something else out there," Mayhorn said. "This way we'll find out if it can work."
Getting travelers to use the Tupelo airport has been difficult since the opening of four-lane U.S. Highway 78 has made access to Memphis and the lower fares there easier. That problem has been exacerbated by the fact that Northwest Air Link, Tupelo's only existing carrier, uses Memphis as its hub.
Ward 3 Councilman Smith Heavner also questioned what impact the city's and county's subsidy of Mesa might have on Northwest.
"I don't know how it will affect us when Northwest pulls out as they most likely will," Heavner said, saying if Mesa pulls enough of Northwest's passengers away, Northwest is likely to shut down its Tupelo operations.
But council President James Williams said doubts about Northwest's future in the city were just another reason to support the Mesa proposal.
"If you doubt they're going to stay, that's all the more reason to tie Mesa down," Williams said.
Tupelo has been served only by Northwest since January of 1996 when American Eagle pulled out of Tupelo after shutting down its Nashville hub operations.
Mesa would provide three flights a day to Nashville where travelers would have access to low-fare Southwest Airlines. Tupelo officials said the one-way fare from Tupelo to Nashville on Mesa would be about $65 and about 60 percent of the 19-seat planes would need to be filled for the route to be profitable.
Daily Journal staff writer Philip Moulden contributed to this report.