Melbourne Offers US Airways an Incentive that May Actually Work

I'm often very critical of the landing fee waivers and revenue guarantees that airports offer to airlines in order to encourage them to start service. In general, this results in airlines simply coming in for the time period specified, barely breaking even, and then walking away at the end of the period. Every so often, however, I see one of these that might actually work. I think the one that Melbourne, Florida has offered to US Airways (NYSE: LCC) is one of those.

US Airways will begin flying between Charlotte and Melbourne three times a day on February 11. They promise to serve the airport for two years, and in exchange, they'll have landing fees waived and ground service provided. Melbourne will also be able to use some federal money from its Small Community Air Service grant to market the new service.

So why do I say that this one might actually work? Well, Melbourne is a beach town, and Florida beaches usually do well. Melbourne's problem is that it's too close to other places. It's only about 62 miles from Orlando's airport, 88 miles from Daytona Beach, and 115 miles from West Palm Beach. Because of that, only Delta (NYSE: DAL) serves the airport today.

It also doesn't help that Melbourne has long been tied with the space industry, being just south of Cape Canaveral. And the space business isn't exactly a booming one these days. So, Delta has maintained its monopoly there for quite some time.

If any legacy carrier is going to mount a challenge to Delta, it should be US Airways. Charlotte is an ideal connecting point to reach much of the country, and it will provide good competition for Delta. US Airways pulled out of Melbourne years ago, so I imagine that they were gunshy going back in there. But with this boost, they had enough of a push to try it again.

We'll have to look in two years to see if the service is viable or not, but I think there is a better shot than I give to most of these deals.