(1) Turbulent finances for airline
04/18/01
By LARRY HANOVER
Trenton Times Staff Writer

EWING -- Shuttle America, Trenton Mercer Airport's only commercial carrier,
filed for Chapter 11 bankruptcy protection yesterday, a move that inflamed
the ongoing debate over whether the county should proceed with an $18
million proposal for a larger terminal.
The 2-year-old airline portrayed the bankruptcy filing as a way of getting
out from under a burden of debt and helping negotiations to bring in up to
$20 million in new investment.
If the Connecticut-based airline closes down, it would mark the 11th airline
to fail at Trenton Mercer since 1980.
Company founder and CEO David Hackett said Shuttle America's operations and
flight schedule will be unaffected.
But Michael Boyd, president of a Colorado-based aviation consulting firm,
said he believes the airline's days are numbered.
"It really strikes me as the last gasp of the Titanic before the deck chairs
go under," Boyd said.
Eastwind Airlines was the last airline to leave the airport, in September
1999, just one month after it announced it was being put up for sale. It
never filed for bankruptcy.
Even if Shuttle America stays alive, Mercer County taxpayers stand to take a
hit as the airline negotiates with creditors to pay only a percentage of
what it owes them.
The airline is $160,789 behind in rent payments to the county, said Thomas
Rubino, spokesman for County Executive Robert D. Prunetti. The airline has
paid $6,000 so far this month toward rent.
Rubino said officials have been in frequent contact with Shuttle America and
believe the airline can survive its recent downswing.
Prunetti has proposed a new 45,000-square-foot terminal, twice the size of
the 25-year-old existing facility. He believes the terminal will attract
discount carriers such as Midway Airlines and AirTran, which have expressed
preliminary interest, although Southwest Airlines said it lost interest when
the proposal was cut from a potential four gates to two.
Heidi Kahme of People Limiting Airport Noise and Expansion (PLANE), said
Shuttle America's woes prove the terminal would only put county taxpayers
deeper into debt. She does not believe new airlines will continue to reverse
the airport's track record of failed carriers.
"A new terminal is not going to bring in a successful carrier," she said.
"That's the bottom line."
But Rubino said the administration sees no reason to change course,
contending Eastwind failed because of its own internal problems."
They (PLANE) don't have any concept that the market is here," Rubino said.
"If an airline like Eastwind didn't make it, it's not because there's not a
market here."
The terminal's future hinges on an environmental assessment. Based on that
report, which was supposed to have been ready for public review a year ago
but continues to delayed, the Federal Aviation Administration will either
allow the county to continue to pursue plans or order a more detailed
environmental study.
The airline this year has cut back its scheduled flights into and out of
Trenton from 28 to 20. It blamed the reduction from six planes to four on
maintenance problems and a failed effort to buy other planes.
Hackett said the airline is making money on an operating basis but cannot
pay its debt.
"We've been trying not to (file for bankruptcy protection)," Hackett said.
"It's not good for creditors or shareholders. But we had to face facts and
deal with the problem."
Hackett said the airline is negotiating with more than one investment group
to bring in up to $20 million.
As a condition of restructuring, Hackett said, the airline is seeking to
switch from 50-seat turboprops to similar-sized jets, although he did not
say if all turboprops would be shelved. It is also negotiating to enter a "code
sharing" agreement, meaning it would form a partnership with a major
airline.
Boyd said such major changes amid a bankruptcy filing spell Shuttle
America's imminent demise.
He said there is an enormous backlog for ordering such jets. Also, he said,
there is no airline that would need a small-sized partner like Shuttle
America.
In fact, he said, if "code-sharing" did occur, it would mean the end of the
Shuttle America name. In such deals, the smaller airline takes on the name
of its larger partner, he said.
Hackett said he sees no problem getting the needed investment and can get
jets as soon as he needs them. In fact, he said, Shuttle America will hang
onto its name.
Despite Shuttle America's problems, Boyd backs county plans for a larger
terminal. He said population shifts to Central New Jersey bode well for the
plan.
"I think Trenton Mercer would be very remiss if it stopped trying to plan
for the future," he said.
But Freeholder Brian Hughes said Shuttle America's problems raise concerns,
although he considers it plausible that the airline's problems are
temporary.
A 1998 economic feasibility study said the airport plan works as long as the
county commits to a potential $500,000 in subsidies. The report also said it
would be "disastrous" if the airport lost all commercial service, creating
deficits of $1.1 million to $1.6 million per year.
Shuttle America flies from Trenton Mercer to Greensboro, N.C., Buffalo,
N.Y., and suburban Boston. It also serves Hartford, Conn., and New York's
LaGuardia Airport.
Last year, Shuttle America signed a three-year lease with the county
expected to net $282,000 annually because of the expanded flight schedule.
Shuttle America has grown rapidly. Its revenue jumped from less than $15
million in 1999 to $36 million in 2000.
In the first three months of this year, Shuttle America has averaged more
than 6,300 passenger departures per month from the Ewing airport, up
two-thirds from the same period of 2000.
But that is down from its average of 7,500 departures per month from April
to December 2000.
[ed: For more information about PLANE, visit their website
http://www.aboutplane.com or call them at (609) 818-1409.]

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(2) Airline cash woes fuel optimism among opponents

Bucks County residents fighting $18 million in proposed improvements at the
Trenton Mercer Airport say Shuttle America's bankruptcy filing proves
commercial service can not fly at the facility.
By JOAN HELLYER
Bucks County Courier Times
Wednesday, April 18, 2001
TRENTON - Opponents of the proposed upgrades at the Trenton Mercer Airport
have long said that commercial service cannot succeed at the Ewing facility.
They point to yesterday's bankruptcy filing by the regional carrier
servicing
the airport as proof of their argument. "[Mercer County officials have] been
trying commercial service for the last 20 years, but they have not been
successful," said Bill Lynch, a member of the citizens group Bucks Residents
for Responsible Airport Management. He cited the nearly dozen airlines that
have started service at the airport, only to pull out for one reason or
another.
"There really is no need to invest money into the airport," said Lynch. "I
question Mercer County trying to pass this off as a need for [expanded
service]. Everything we see is just the complete opposite."
BRRAM members have been waging a battle against Mercer County Executive
Robert Prunetti's proposed $18 million in improvements at the airport to
attract a national low-cost carrier to the facility.
They are concerned the increased flights will mean even more noise over
their neighborhoods because all of the airport's flight paths go right over Lower
Makefield and Yardley.
Tom Rubino, Prunetti's director of communications and policy, said the BRRAM
argument about no market for commercial service has been "irrelevant" since
the beginning.
"We know the market is there. It's just a matter of having the right airline
provide the right service," said Rubino. He added that Shuttle America
officials have said the Trenton Mercer facility had nothing to do with their
company's financial woes.
According to the airline's news release about the bankruptcy filing, service
to the Trenton airport is one of the company's strong points.
"The market has proven that there is a strong demand for our product and we
hope to be able to build on that foundation in the months and years ahead,"
said Shuttle America founder and CEO David Hackett in the release.
Shuttle America said it will continue to service the Trenton Mercer Airport
through its Chapter 11 proceedings.
"Hopefully, they will pull through," said Rubino." We don't see it as the end
of the line."
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