Live

Watch CBSN Live

Port Columbus Airports Turn to Profit Sharing to Woo Airlines

Port Columbus International Airport (Ohio) is turning to profit sharing as a way to get airlines on board and hopefully lower fees. It's an approach that has led to happy employees in some companies, but will this actually lead to happier airlines? Possibly.

Columbus has had a hard life over the last few years. It used to be a hub for America West Airlines, but they pulled up stakes back in 2003. More recently, there was a buzz in town over the arrival of new hometown airline Skybus. The fanfare lasted for a very short time - they went bankrupt before they flew for even a year.

Traffic levels are much lower in Columbus these days. Back in 2007 when Skybus was up and running, the airport saw a total of 7.7 million passengers. In 2008, it dropped to 6.9 million. Through October, traffic was only at 5.2 million. That's a drop of 11.3 percent versus 2008. If that trend holds, full year traffic will come in at 6.1 million, a good 10 percent below the previous worst traffic numbers this decade.

Clearly, they want more traffic, so now they're turning toward profit sharing. Signatory airlines (Air Canada Jazz, AirTran, American, Chautauqua, Continental, Delta, Midwest, Southwest, United and US Airways) will receive 75 percent of the airport's profits after debt service and capital fund requirements. They aren't actually getting cash but rather rent credits. Smart move, Columbus. They have to stick around if they want to take advantage of the deal.

Will this work? It might. Airlines like profitable flights (brilliant observation, I know), and lower costs make profitability more likely. Columbus projects that they will rebate up to $1 million in rent credit this year. Anything Columbus or any airport can do to bring costs down, the likelihood of additional flights goes up. (The opposite is true too, for those airports who can't keep their costs in control.)

I like what they're trying to do here.

View CBS News In