Article originally posted on August 30, 2013 to WYMT-TV Web site http://www.wkyt.com/wymt/home/headlines/Commercial-air-service-landing-in-Pikeville–221852021.html

PIKEVILLE, Ky. (WYMT)   It is a day city officials in Pikeville say they have waited years for. A new program approved by the Federal Aviation Administration is in place that will bring commercial air service to the region.

A specially called joint meeting between the Pikeville City Commission and the Pike County Regional Airport board was held on Friday. The meeting was called to review and vote on two contracts that will bring commercial air service to the airport.

For years plans of bringing the service to Eastern Kentucky have been discussed and that is why Pikeville officials say Friday’s meeting was monumental for the region.

Project Consultant Luke Schmidt says, “We have reached a critical milestone in this project and were able to present a contract for use of the airport as well as a contract for air service.”

Both contracts passed, and the plan is to begin daily roundtrip service to Nashville International Airport beginning in March 2014.

“This is not only providing service but also opening ourselves up to the rest of the world for trade and working on a way to diversify our economy,” explains Pikeville City Manager Donovan Blackburn. “With the war on coal, we are losing jobs. We have to find a way to open ourselves up and make the area more enticing.”

Officials say none of this would have been possible without the help of Congressman Hal Rogers and support from the community which allowed them to receive a $750,000 federal grant.

Blackburn says, “Over 200 businesses worked with the chamber to write letters, the power of business…asking for the service, writing about what it would mean to their businesses. We had more letters submitted for that federal grant than any other community in the entire nation.”

Officials say it is a risk, “Will it work? We don’t know, but if we don’t try it shame on us because our community deserves quality healthcare, a quality education, an expo center for good entertainment, and quality services such as commercial air,” says Blackburn.

However, it is a risk officials say they are willing to take to help improve the region.

Officials are planning an formal ceremony for October 17th. The aircraft and its local brand name will be unveiled at that ceremony.

The flight will be operated by Public Charters.

Press Release

EMBARGOED FOR RELEASE UNTIL SATURDAY, AUGUST 31, 2013

Pikeville – Pike County Airport Board, City of Pikeville Sign Agreements to Facilitate New Air Service

Agreements are the First of Several Steps to Bring Passenger Air Service to the Central Appalachian Region

Pikeville, Kentucky (August 31, 2013) – The group leading the development of commercial air service in Eastern Kentucky today announced that the Pikeville – Pike County Airport Board and the City of Pikeville have each signed agreements with Public Charters, Inc. (PC) of Avoca, Pennsylvania.  PC will facilitate the development of new air service at the Pikeville – Pike County Regional Airport (PBX), which will be operated under contract by Corporate Flight Management (CFM) of Smyrna, Tennessee.  The first agreement outlines various airport services, such as fueling, deicing, aircraft ground handling, terminal space, etc., that the airport will provide to PC and the fees that the airport board will charge for such services.

“The airport board is pleased to take this first and historic formal step towards the establishment of passenger air service in Eastern Kentucky,” said Bill Hickman, Chairperson of the Pikeville – Pike County Airport Board.  “This new service will link the region directly to the domestic and global air service systems and will provide a seamless and easy to use service for all of our region’s air travelers.  This new service looks to the future of the region and will help to create new jobs,” Hickman continued.

The second agreement outlines how the City of Pikeville will manage its revenue guarantee fund to support the start-up of new air service at PBX.

These two agreements are the first of what is expected to be a series of three agreements to be developed between PC and the airport board, the City of Pikeville and the Southeast Kentucky Chamber of Commerce.

In 2011, the City of Pikeville was awarded a $750,000 USDOT Small Community Air Service Development grant for the purpose of funding the City’s revenue guarantee to the first company to commit to providing service.  This grant was augmented with a multi-county coal severance tax grant of $1 million, which was announced last year by Kentucky Governor Steve Beshear.

(Since the governor’s announcement, the state grant has been reduced to $670,588, due entirely to the reduction in coal mining and receipts to the state’s multi-county coal severance tax fund)

“Each of the project partners has approached this project very carefully in terms of recruiting a provider to the community that will best meet our needs,” said Donovan Blackburn, Pikeville City Manager.  “By working together, Corporate Flight Management and Public Charters will bring new air service to Pikeville which will become an important tool in our toolbox when it comes to creating new jobs throughout the region,” said Blackburn.

The third agreement, expected to be signed at a later date this Fall, will be between PC and the Southeast Kentucky Chamber of Commerce.  This agreement will cover marketing and promotion of the new service.  “The Chamber looks forward to playing an active role in helping to develop and promote the new service throughout the region,” said Jared Arnett, President/CEO of the Southeast Kentucky Chamber.

The new service, which is expected to begin in March 2014, will feature nonstop turboprop flights operated by CFM under contract to PC from PBX to the Nashville International Airport (BNA).  PC will provide all ticket distribution, ticket counter, and check-in services, as well as coordination of ground handling and fueling services in both Pikeville and Nashville.  PC will also develop sales platforms for tickets for the new flights on virtually every Internet travel site, such as Travelocity, etc., (tickets will also be available for sale via PC’s web site and over the telephone).  CFM will conduct all flight operations using their BAE Jetstream 19-passenger turboprop airliners.

“The new flights to Nashville will be timed to allow Pikeville travelers to connect to nonstop connecting flights to 49 destinations throughout the U.S., Canada and Mexico,” said Luke B. Schmidt, President of L.B. Schmidt & Associates, LLC and project consultant.

“Travelers will be able to connect to any of the nine airlines which serve BNA, including low-cost carrier Southwest Airlines which has a major presence in Nashville,” Schmidt continued.  “Fully 23 of the Top 25 business destinations for Pikeville travelers will be only one stop away by connecting in Nashville.  This new service will eliminate the need to drive to Lexington, Charleston and Huntington/Ashland when it comes time to travel,” said Schmidt.

Public Charters, Inc. has been offering charter flights by partnering with numerous air carriers since 1999.  PC focuses on markets that are underserved by major airs’ scheduled services.  The company partners with companies such as CFM to provide regularly scheduled public charter flights and provides support in the area of ticket sales and ground handling.  PC’s services are offered on a fleet of aircraft ranging from turboprops to Boeing 737s.

Corporate Flight Management is the largest operator of BAE Jetstream J31/J32 and J41 turboprop aircraft in the U.S.  The company has provided unique scheduled passenger air service from Austin and Nashville to the new regional airport in Branson, Missouri.  The company holds the coveted ARGUS Platinum safety rating and operates a substantial aircraft maintenance and overhaul facility in Smyrna.  The company also manages a fleet of privately owned aircraft, ranging from piston twin engine aircraft to light and medium jets, operating from five bases in the Eastern United States, and holds numerous charter contracts with the State of Tennessee, the U.S. federal government and several collegiate sports teams.

A formal community announcement with more details on the new service is scheduled for October 17, 2013 at the Pikeville – PikeCountyRegionalAirport.  Schedules and ticket prices will also be announced at a later date.

The City of Pikeville is a Fourth Class City and is the county seat of Pike County, the largest geographical county in Kentucky.  Pikeville is the regional center for education, employment, health care, manufacturing, mining and tourism in a region comprised of nine Kentucky counties, three Virginia counties and one West Virginia county with a regional population of 345,000 people.  The Pikeville – Pike County Airport Board owns and operates the city/county airport.  The Southeast Kentucky Chamber of Commerce represents 500 members in eight Kentucky counties and has established a support network for businesses in Southeast Kentucky that are committed to improving the local economy, regional unity, political advocacy and economic development. By working together, these three entities are leading efforts to establish scheduled commercial air service in Eastern Kentucky.  L.B. Schmidt & Associates, LLC is a full-service management consulting company based in Louisville, Kentucky and provides consulting services to this group in the area of facilitating air service.

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Article originally posted on August 31, 2013 to the Appalachian News-Express Web site http://news-expressky.com/

BY RUSS CASSADY

EDITOR

The first concrete steps toward establishing a commercial air service out of the Pikeville-Pike County Airport were taken Friday, with two bodies approving agreements with a company which wishes to have a daily service out of, and back into, Pikeville.

During a special joint meeting on Friday of the Pikeville City Commission and Pikeville-Pike County Airport Board, the agreements and funding sources were approved to get the project off the ground.

According to documentation obtained by the News-Express, the two companies involved in the project, Corporate Flight Management (CFM) of Smyrna, Tenn., the service provider, and Public Charters, Inc., of Avoca, Penn., the ticketing and ground service company, plan to have the service operating by March.

The agreements approved on Friday outline airport services that the airport will provide to the airline and the fees the airport board will charge for the services, as well as how the City of Pikeville will manage its revenue guarantee fund to support the service. 

How the service will operate

The service, according to a statement from the organizations working on the project, will feature nonstop turboprop flights operated by CFM to travel from Pikeville to the Nashville International Airport. Because of the involvement of Public Charters Inc., the statement said, sales platforms for tickets for the new flights will be available on virtually every Internet travel site, such as Expedia, Kayak, Travelocity and others.

From Nashville, passengers can reach the world, officials said.

“The new flights to Nashville will be time to allow Pikeville travelers to connect to nonstop connecting flights to 49 destinations throughout the U.S., Canada and Mexico,” said Luke B. Schmidt, the consultant for the City, Chamber and airport on the project. “Travelers will be able to connect to any of the nine airlines which serve (Nashville), including low-cost carrier Southwest Airlines, which has a major presence in Nashville.

“Fully 23 of the 25 business destinations for Pikeville travelers will be only one stop away by connecting in Nashville,” Schmidt continued. “This new service will eliminate the need to drive to Lexington, Charleston and Huntington/Ashland when it comes time to travel.”

Those flights, unlike a charter service, will operate seven days a week, with one flight departing Pikeville and traveling to Nashville, and another flight returning from Nashville later that day. The flights, officials said, will run seven days a week, and, because of the regulations under which the service will operate, flights can only be cancelled because of extreme circumstances, such as weather or a nationwide or regional grounding of flights.

The service, officials said, differs greatly from a proposal made a few years ago by a company called Locair.

According to documents provided to the News-Express, the current proposal differs from what Locair offered in “every” way, including:

• The airports and flight schedule are approved by the U.S. Department of Transportation (DOT) Special Authorities Division; no changes can be made to either without DOT approval.

• The service will be daily, including weekends.

• All passenger seats on the aircraft are available for sale on each flight.

• There will be combined itineraries with many carriers, including Southwest.

• There will be connecting service at the hub airport’s main terminal — in Transportation Safety Authority “sterile” conditions to hundreds of destinations.

The sterile conditions will mean TSA screeners and inspectors, who will be employed and paid by the TSA, and stationed in Pikeville. Because of the “sterile” treatment, Schmidt said, the planes from Pikeville to Nashville will actually pull up to a terminal, eliminating the need for a second security check to get on another flight. 

Funding source has changed

When the project was in its early stages, it was subjected to a high level of controversy, when it became clear to organizers that they would have to have the support of the Pike Fiscal Court to apply for a $1 million multicounty coal severance grant.

After weeks of controversy, the fiscal court approved by a 5-2 vote applying for the funding for the project, which was later received.

However, this week, documents show, the full $1 million in funding was not obtained through coal severance.

According to a letter obtained by the News-Express, earlier this week, Pikeville City Manager Donovan Blackburn was notified by the Kentucky Department for Local Government that the agency would be funding a grant for $200,000 for the air service project from coal severance.

The reduction in coal severance, Schmidt said, is a direct result of the reduction in mining in the region, which has caused severance tax receipts to fall.

In the same letter, the agency confirms that it is the intent of the Kentucky Transportation Cabinet to fund the rest of the project, contributing a total of $470,588 to ensuring the operation of the service.

The funding, according to documentation provided to the News-Express, will be used to fund a monthly revenue guarantee program, which officials said will only be paid to the carrier if the company’s actual revenue trails the agreed upon monthly revenue target, and in an amount equal to the shortfall.

The service, according to the documents, is projected to carry a total of 5,244 passengers in the first year, with that number climbing to 13,223 the following year.

“The service should start with an average of three revenue passengers per flight in month No. 1 and build to an average of 18.5 revenue passengers per flight in month No. 14,” the documents said.

According to documents, the total amount of revenue guarantee which is planned to be available to the company is $1.425 million, between March of next year through February of 2016, the end of the agreement, with city officials planning to ask the state legislature to fund an additional $104,412 to bring the total available to that amount.

Approximately $750,000 is coming from the U.S. DOT’s Small Community Air Service Development Grant Program, from a grant first approved in 2011. 

Not all convinced of the good of the project

While the Pikeville City Commission unanimously approved the agreements during the meeting on Friday, the Pikeville-Pike County Airport Board approved the agreements by a 5-1 vote, with member Brent Wagner voting against the measure.

During the meeting, Wagner questioned Schmidt on several points of the airport’s end of the contract, including what the airport’s rights and responsibilities are.

Wagner told Schmidt that he was disappointed the board had only received the agreement 16 hours before the meeting.

“It’s hard to prepare and have valid questions when you don’t have the documents in front of you,” Wagner said.

However, Wagner pointed out that one part of the agreement commits the airport board to spending a maximum of $210,000 to bring the service to Pikeville. In response to Wagner’s questioning, Schmidt said that no matter what, the amount the airport would have to contribute cannot exceed that amount.

Also, Wagner pointed out that the contract is written in such a way that it would prevent the airport board from backing out without the city’s permission and that it would lock the airport board in to only being able to add a “mark up” of 50 cents per gallon on the fuel sold to the airline.

Schmidt said the fuel cost being locked is simply an incentive to attract the company, which wants to purchase fuel from the Pikeville Airport to contribute back to the community. The plane, Schmidt said, could fly from Nashville and back without having to fuel up in Pikeville.

“In reading this, I get the impression that there’s a lot of things in line for this company … to make it work,” Wagner said. “But we’re being restricted in many ways. We’re restricted on our profitability. We’re restricted about not being able to take this agreement and speak to the public, the people that’s spending the money for it.” 

Project first-of-a kind

According to Schmidt, the project to bring air service to Pikeville, as far as he is aware, is the first of its kind, in that the airline expects its involvement with the Pikeville-Pike County Airport to be profitable and it could become a model project for the nation.

But, he said, it doesn’t come without risk.

“All this requires a bit of a leap of faith,” Schmidt said.

Pikeville Mayor Pro-Tem Jimmy Carter agreed there is some risk before casting his vote, but said that the possible reward makes the risk worth it.

“We have to take the calculated risk to make sure that we succeed here in Eastern Kentucky,” Carter said. “If we don’t, we’re dead in the water.”

A formal community announcement of the project is currently scheduled for Oct. 17 at the airport. Schedules and ticket prices will be announced at a later date.