Hartford Business Journal

www.HartfordBusiness.com • February 19, 2018 • Hartford Business Journal 19 flight (assuming an exchange rate of 1 Euro = $1.15). Aer Lingus' contract required it to run about 300 round-trip flights in its first year, producing an annual revenue target of approximately $40 million. While a $4.5 million payment means Aer Lingus missed that target by at least 10 percent, the exact extent of the gap is unknown. Neither DECD nor Aer Lingus would say how much revenue the flights brought in during the first year. Aer Lingus Chief Commercial Officer Keith Butler (who has since left the company) told HBJ in 2016 that the the airline hoped to fill 105,000 seats in its first 12 months. Bradley data shows that it filled about 77,000. Dillon: Get used to incentives The Connecticut Airport Authority has sought to leverage Aer Lingus' Dublin service as a way to attract other flights for which it says there is demand. International flights have a positive impact on Connecticut's economy, and Aer Lingus' service has caused other airlines to kick the tires, said Dillon, the CAA chief. CAA is pursuing nonstop service to the European hubs of London, Paris and Frankfurt. On the domestic side, it wants to attract more frequent service to Los Angeles and San Francisco and new nonstop service to Seattle. But even strong demand indicators and a great pitch are often not enough to convince airlines to launch or expand service out of Bradley, Dillon said. Desirable routes are highly sought after, and airports and economic development agencies in other states are increasingly willing to make counter offers. In that environment, airlines can afford to shop around, Dillon said. Dillon said in written testimony this month to the state Commission on Fiscal Stability and Economic Growth that for international and domestic flights alike, many airlines are looking for minimum revenue guarantees, akin to the Aer Lingus deal, in addition to marketing incentives and fee waivers. "Unfortunately, the competitive nature of the industry has created expectations for airports to offer incentive assistance when pursuing new services," Dillon wrote to the CEO- led commission, which is expected to make recommendations to the legislature soon on how to make the state more economically competitive. "It has become readily apparent that all of these services may require new revenue-guarantee arrangements." Dillon wants the legislature to do what a handful of states have done, including Rhode Island in 2016: establish a "route development fund" to help draw new routes to Bradley. The legislature could seed the fund or provide initial appropriations, while businesses could also donate money. Bradley has intensified its outreach efforts to businesses in recent years, but Dillon says a fund is needed to combat Bradley's tough competition from Logan International Airport in Boston and John F. Kennedy International Airport in New York. Though Bradley is closer for many, and offers cheaper parking, corporate travelers often choose to fly out of New York or Boston airports because of differences in fares, flight times or other reasons, he said. "We understand that our fares may not always be the absolute cheapest in the region. We understand that sometimes we offer a red-eye rather than a more desirable flight time," Dillon wrote. "But, if you choose another airport instead, we will never be able to demonstrate to the airlines that our market is strong and that our airport is ready for the services that you seek." Asked about Dillon's recommendation, DECD's Smith was hesitant. "I see Kevin's point, but I don't know if we want to get into a bidding war in airline service as we have in other ways in economic development," Smith said. She said Bradley has managed to attract new service without revenue subsidies, including United's seasonal service to San Francisco and Spirit's seasonal service to the Gulf Coast. It also landed Norwegian Air service to Scotland, but that route will end in March, blamed on high air taxes charged by the Scottish government. "I don't think it's necessary all the time and I don't think they expect it all the time," Smith said. She said she would prefer assessing such deals on a limited, strategic basis. Dillon said not every flight will need a subsidy and that market forces and demand will drive the decisions. "The reality is, no flight is going to survive solely on a revenue guarantee," he said. Aer Lingus' spending requirements In exchange for its revenue subsidy, the state Department of Economic and Community Development requires Aer Lingus to contract with a variety of Connecticut companies. The airline is required to spend at least $3.3 million a year for the following services: • At least 135 man hours per week with a Connecticut-based ground handler for check-in, boarding and passenger service requirements; • At least 13 man hours per week with a Connecticut-based cleaning company; • At least 221 man hours per week with a Connecticut-based catering company; • At least six man hours per week with a Connecticut-based transport company to transfer crew from Bradley to hotels and back; • At least 42 hotel rooms per week on average for Aer Lingus' crew at downtown Hartford hotels; • All fuel and food consumed on outbound Dublin flights must be purchased from a Connecticut-based company. Aer Lingus Passenger Counts Here's a look at the number of passengers who have taken Aer Lingus' Bradley International Airport-Dublin, Ireland flight since it began Sept. 28, 2016. Source: CT Airport Authority 0 2,000 4,000 6,000 8,000 10,000 Total passengers Sept. Oct. Nov. Sept. Oct. Nov. Dec. Dec. Jan. Feb. March April May June July Aug. 2016 2017 Year one Year two (to date) 560 6,976 4,106 3,893 3,586 2,740 5,354 7,408 9,428 9,738 9,702 9,366 9,357 7,913 4,468 3,866 Connecticut officials, including DECD Commissioner Catherine Smith (left), have been encouraged by Aer Lingus passenger traffic as the airline turned the page on its first full year of operations out of Bradley International Airport. PHOTO | CONTRIBUTED PHOTO | CONTRIBUTED

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