LOSS OF SUBSIDY MAY HURT AIR SERVICE

Trans World Express and the Cape Girardeau Regional Airport could be affected by the life or death of an Essential Air Service subsidy to the tune of more than $500,000.

Trans States Airlines of St. Louis, which owns TWE, gets $254,525 from the Department of Transportation each year to provide a commuter airline in Cape Girardeau and Marion-Herrin, Ill., with St. Louis as the community's essential air service hub.

Without the subsidy, TWE would be operating in the red. TWE's operating costs are $1,240,508. The operating revenue is $985,983. Trans States' financial condition has been healthy in recent years. The company's balance sheet as of September 1993 showed a positive working capital of $5.9 million and a current assets to current liabilities ratio of 1.4 to 1.

Because TWE is the only commuter airline in Cape Girardeau, the total enplanements it records has a direct bearing on whether the city hits the magic number of 10,000 to qualify the Cape Regional Airport for $300,000 of entitlement money from the Federal Aviation Administration.

Cape Girardeau fell short of that number by nearly 2,000 last year. TWE accounted for 6,330 enplanements.

Charter flights made by Air Evac Inc., the newest fixed-base operator, and flights by Procter & Gamble, also count toward total enplanements at the airport.

The entitlement money provided by the FAA would be used for capital improvement projects at the airport.

The FAA is also looking at daily operations at the airport before making a decision on whether to keep the air tower. The daily operations for January exceeded January 1994 by more than 30 percent. TWE ended January with a total of 360 enplanements. This is an increase of more than 6 percent from last January's figure of 339.

With increasing enplanements by TWE and two FBOs, one already in place and Prestige Air due to arrive in the near future, Cape Regional Airport Manager Greg Chenoweth feels he can hit the magic number this year and beyond.

If TWE would decide it could not operate without the subsidy money, however, the city would either have to shop for another commuter airline or make a pitch to Trans States to keep the airline after providing its own subsidy money.

Assistant City Manager Doug Leslie is watching the situation with heightened concern. "We're definitely aware of the situation and are hoping TWE doesn't lose the EAS subsidy," Leslie said. "But right now it's hard to say right now what is going to happen until we see what takes place in Washington."

Trans States spokesman Bill Mishk said the company will re-evaluate TWE's status in Cape Girardeau when a decision is made by Congress this summer.

"It would be premature for me to speculate on what kind of decision would be made because there are so many variables that would have to be looked at," Mishk said. He didn't want to discuss the variables until a decision is made in Washington.

Dennis DeVany, chief of the Department of Transportation's EAS and domestic analysis division in Washington, said the subsidies are in serious jeopardy of being cut.

"That program has been cut a half dozen times only to be brought back," DeVany said. "From what I've been hearing, there is a more serious intent to drop it now than there ever was. The administration wants it out, but only Congress can change the law."

The Clinton Administration is seeking a "zero-out" of the subsidy by 1996. The first part of the phase-out would begin in 1995 if Congress decides to eliminate the program.

Tom Schulte, who is an assistant to Sen. Christopher "Kit" Bond, R-Mo., said Bond is "very concerned" with the status of EAS subsidies. Bond is on the Senate appropriations subcommittee that is currently talking about the program.

The Department of Transportation provides the subsidies to enable cities like Cape Girardeau to have a commuter airline that would otherwise operate at a deficit.

On April 1, 1993, Trans States Airlines filed a 90-day notice of its intent to suspend its then subsidy-free air service effective July 1, 1993. The carrier provides three round trips weekdays and two each weekend between Cape Girardeau and St. Louis and Marion-Herrin in Illinois, using a 19-seat Jetstream aircraft.

The Department of Transportation prohibited Trans States suspension, solicited proposals, with or without subsidy requests, from carriers interested in providing essential air service at Cape Girardeau, then set a final annual subsidy rate of $255,903 for Trans States service until it completed its selection process.

Trans States subsequently sent a proposal for subsidy service to the Department of Transportation and was awarded the EAS.

Chenoweth said he would like to have more than one commuter airline at the Cape Girardeau Regional Airport. However, the airport manager said airlines are unable to compete against a company that receives a subsidy.

"I think it would still be able to work if an airline could develop a route to one or two cities just like TWE does with St. Louis," Chenoweth said.

History shows that competition brings enplanement numbers up. In 1987, Cape Girardeau was generating 44 enplanements per service day. However, when Britt Airways and Express Airlines left, the city's enplanements dropped to 28 in 1988.

Traffic continued its downward trend through 1992, when average enplanements reached a low of 14.3 per day.

One of the reasons for the plummet in enplanements was construction of the air terminal. Since the completion of the terminal in June 1993 the boardings have been on the increase.

A 12-month period that ended in December 1993 showed Cape Girardeau had 10,724 passengers, an average of 17.1 enplanements per day. The subsidy guarantees TWE 29 enplanements per day.