South Lake Tahoe lukewarm to Allegiant's return

Despite Allegiant Air's reinstating commercial air service to South Shore, the future of the Lake Tahoe Airport remains uncertain.

Some South Lake Tahoe City Councilmembers said Tuesday that they are unclear about the validity of last year's contract between the city and the airline. Members are also skeptical about the viability of the airline and if it will stay long enough this time around to make any difference in the airport's finances.

"Granted, Allegiant Air did a better job than Tahoe Air, and they will bring some dollars to the airport, but they probably won't be able to sufficiently cover the debt the airport owes to the city," said Councilmember Bill Crawford. "(With Allegiant's return) we probably won't make enough to break even for the year in operating costs."

Crawford said the city needs to explore other possible uses for the airport. Currently, the city spends about $300,000 a year to operate the airport, depending upon the amount of air service.

"It's impossible for the city to pump $300,000 into the airport each year," Crawford said. "We need to attempt to look in new directions."

General aviation and the use of the main terminal for commercial use or even a visitors' center may be more lucrative than having commercial air service, he said.

Last week, Jim Patterson, president of Allegiant Air, spoke at the South Lake Tahoe Chamber of Commerce and the Lake Tahoe Visitors Authority to give an update about the new marketing plan the airline is implementing. Crawford questioned Patterson's approach on discussing Allegiant's comeback with the community before addressing the City Council.

"If he (Patterson) wants to do business with the city then he needs to talk to the city and make a presentation," Crawford said.

Patterson, however, said he wasn't invited.

"I would have been more than happy to make a presentation to the City Council but I was not invited," Patterson said. "Duane Wallace of the chamber called me and asked me to come up and make a presentation, which I was then asked by the LTVA. It was not an intentional oversight on my part. I wouldn't have been up there in the first place if I hadn't been called."

Despite the concerns raised at Tuesday's City Council meeting about Allegiant's air return, airport manager Rick Jenkins is confident revenues will increase with commercial air service in place that will benefit not only the airport but the community as well.

"In 1978 we had about 600,000 people coming through this area and I think we have at least that much demand now," Jenkins said. "Once an airline stays and does well I expect others to follow because they will want to get a piece of the action. We have a very lucrative market here and with things like redevelopment, it will only get better."

The late 1970s were Tahoe's heydays with headliner celebrities, such as Frank Sinatra and Dean Martin, playing at the casinos. Gambling was also more of a novelty and wasn't as widespread as it is now. This helped to attract people from all over the country.

With deregulation of the airline industry in the early 1980s and gambling's becoming more accessible in other states, the attraction to Lake Tahoe via aircraft dwindled over the years.

Before Allegiant and Tahoe Air's first attempt last summer, the last commercial airline to offer service to Tahoe, was Reno Air. A 1994 independent study by the LTVA determined that service was possible if it was paid for. In other words, major business owners would have to pool money and pay for each empty seat on scheduled flights. With this subsidy program in place, Reno Air began service in 1994, and pulled out one year later.

Even though only 12,000 people passed through the airport last year under limited commercial service, it is difficult to make comparisons with 1978 when commercial air service and entertainment was at its peak. Jenkins is hoping South Shore can regain its niche and attract people for its recreation, and once redevelopment is complete, as a major destination resort.

Jenkins said when the 2000-01 fiscal budget was approved last year, it was optimistic in that it was based on projected revenues of the two airlines - Allegiant and Tahoe Air - that were operating at the time.

"The assumption was since they would be operating here other money would be generated, like in rental cars. Everything would work together to create more revenues," Jenkins said.

When the two airlines closed their operations, the city had to make up the loss in projected revenues by significantly reducing its expenses, but somehow it still maintained the airport. The Federal Aviation Administration has been funding 90 percent of the airport's capital projects, which include runways. Along with subsidies from the Transient Occupancy Tax, the airport had to pick up a small percentage of the cost. It originally came up with its share of the money through a passenger facility charge, which took $3 from the ticket price of passengers going through the airport.

When passengers stopped coming, the city increased its funds for the TOT subsidy to help maintain operating costs and capital improvements.

"We have to look at it as a gift, because the loan will probably never be paid back," Crawford said.

Although no air service was being provided, the FAA also conducted a benefit cost analysis earlier this year to determine the amount of monies that should be directed to the tower. Funding was slated toward weather and air traffic control services, for which the airport still pays a small premium of less than $2,000 a month to maintain a watch 12 hours a day. The FAA pays about $7,000 a month.

With the three-day a week schedule Allegiant plans to implement, Jenkins said there will be no immediate need to add more tower time.

Regardless of the issues at hand, at least one City Councilmember is happy to have them back.

"I think it's wonderful and a step in the right direction," said Councilwoman Judy Brown. "This just means that more revenue will come back into the airport. Allegiant has been our most responsible tenant and has paid their bills on time."