Pittsburgh Pours Money Into Delta's Paris Flight and It Might Work

(MoneyWatch)  Recently, Delta announced that it would begin flights from Pittsburgh and Raleigh/Durham to Paris. These flights are unique in that they don't touch a Delta hub, but the fact that they touch partner Air France's hub in Paris makes them interesting. This is a new concept that may be a massive failure, so is it worth the risk? Most definitely.

I say it's worth the risk because there's just about none for Delta, at least not on the Pittsburgh service. Details have been released about the deal Delta made with the Allegheny County Airport Authority. With these terms, I'm thinking about starting a flight myself.

Delta committed to operating the flight from Pittsburgh for two years. In exchange, it gets landing fees waived and $600,000 in direct marketing support from the Authority. On top of that there are revenue guarantees in place. If Delta doesn't meet certain revenue thresholds for the flight, the airport will subsidize the difference up to $2.5 million the first year and $2 million the second. As you can see, this is a great deal for Delta, but for once, it might be a great deal for the airport as well.

Now I'm usually not a fan of subsidies because they usually just prop up a failing flight until the money runs out (see Palmdale). At that point, the airline leaves and you're back where you started but with a lot less money. But in this case, it could actually produce a successful flight.

The idea of a US airline connecting spoke cities with partner hubs in Europe is a relatively new one. Northwest has really been the only one to do it with their tight KLM partnership, and it has had mixed results depending on the city. With Delta's strengthening partnership with Air France, these types of routes have a shot at working, but the risk isn't trivial if the flight fails. So, with Pittsburgh's money on this particular flight, it was enough to convince Delta to try it, and I think it could end up being sustainable.

Of course, Pittsburgh would have offered this money to anyone who wanted to start an international flight, but at least in this specific case, the money is going to a potentially successful cause.