Moore County Airport, Delta in dog fight over service
CARTHAGE - When the Moore County Airport Authority convinced Delta Air Lines to provide service between the tiny aviation outpost near Southern Pines and Atlanta in 2006, the flight might as well have been called Air Pinehurst.
Community and civic leaders had tried for years to attract service from a commercial carrier that could act as an air caddy, hauling in well-heeled duffers eager to take an afternoon stroll down local courses, including legendary Pinehurst No. 2.
But Air Pinehurst now has been grounded, and the airport and Delta have landed in a legal sand trap as they squabble over how much money - if any - the airport authority owes the carrier as part of a revenue guarantee that helped attract the airline in the first place.
Delta has submitted a $700,000 bill to the airport, which is located just five miles from the Pinehurst Resort. The Moore County Airport Authority, or MCAA, has refused to pay the tab.
Instead, MCAA claims in a lawsuit that Delta's service didn't live up to its end of the deal and that the airport shouldn't have to pay the revenue guarantee. The case is being heard in federal court, although MCAA filed its original complaint against Delta in Moore County Superior Court in mid-February.
Attacks ditched service
The lawsuit is a cautionary tale that illustrates the problems small airport ponds can encounter when they try to land big airline fish. The origins of the dispute trace to June 2006, when Delta began providing seasonal service between Atlanta and the Moore County Airport. It was the first commercial service at the airport since US Airways abandoned its operations there several months after the Sept. 11, 2001, terrorist attacks dealt a financial body blow to the airline industry.
US Airways had provided service between Moore County and Charlotte for a decade, hauling tens of thousands of passengers back and forth during some years. There had been one telling problem indicative of the clientele: US Airways wasn't using regional jets on the route, and the small puddle jumpers it assigned sometimes had trouble accommodating all the golf clubs that passengers brought along with their luggage.
Local officials, including Pinehurst Business Development Director Peter Stilwell, began trying to attract another carrier not long after US Airways scuttled its service to Moore County. A search board was formed, and a consultant was hired.
"There was a full-court press, absolutely, within the entire community," says Pinehurst Resort spokeswoman Janeen Driscoll. "We were pretty involved with it."
There were good reasons for wanting to move fast. Commercial service would provide convenience for locals, tourists and conference organizers who didn't want to drive an hour and a half to Raleigh-Durham International Airport or make an even longer haul to Charlotte.
While the locals thought their long track record with US Airways would be a helpful selling point, the major carriers weren't impressed. It took years for MCAA to land the coveted service. Any euphoria over the triumph would be short-lived, as local officials soon became disillusioned with their new airline partner.
Minimum revenue guaranteed
Court documents filed by MCAA show that as part of the air service agreement, Delta was required to provide one round-trip flight six times per week using a 40-seat regional jet or a similar-size aircraft. In return, the airport guaranteed Delta would receive a minimum revenue level. MCAA sweetened the pot by waiving rental and landing fees as well as selling fuel to Delta at cost. The airport also agreed to provide ticketing and baggage services for the flight.
"We extended everything that we could think of," says Ray Ogden, the executive director of economic development group Moore County Partners in Progress. "We did everything that they asked."
Delta says it had good reason to ask for so much. "These type of revenue guarantee agreements are common, and we would not have started service to SOP (the Moore County Airport) without the revenue guarantee," says Delta spokesman Anthony Black. "Delta had more profitable uses for the expensive aircraft, crews and jet fuel we would have to commit to this market."
Delta operated the seasonal flights from June 22, 2006, through Nov. 13, 2006, and then from March 14 through Nov. 12 in 2007, according to the airport's lawsuit.
The 2006 flight started off its life arriving at Pinehurst at 10:45 a.m., according to Driscoll. Its arrival time in Moore County was later changed so that it touched down in the afternoon.
According to the U.S. Bureau of Transportation Statistics, 2,678 passengers arrived at the Moore County Airport in 2006 and 4,158 arrived in 2007.
But Moore County insiders say that having just one flight a day made it tough for the flight to be successful. Such little flexibility meant connecting flights had to be timed just right.
Delays not only could cost golfers time on the course, they also could strand passengers in Atlanta if they missed connections on the return leg of the trip.
The airport's complaint alleges that there were frequent delays. One example the lawsuit cites is August 2007, when, it claims, 18 of 29 flights were delayed by an average of one hour and 21 minutes.
According to court documents filed by Delta, the flight's actual revenue never exceeded the revenue guarantee made by the airport.
MCAA, with the help of funds from a grant administered by the state, paid Delta $500,000 in 2006 as part of the revenue guarantee, according to Black, the airline spokesman.
But MCAA balked at paying another $700,000 in guaranteed revenue to Delta at the end of its 2007 service. The airport's complaint claims that the carrier "failed to provide quality service and operation." The complaint goes on to allege that there were numerous instances of flight delays, lost baggage and complaints about the reservations system in 2007.
The airport's lawsuit describes Delta's performance as "abysmal" and claims the carrier failed to provide the service as set forth in the agreement, thus breaching that contract.
Delta has filed an answer detailing its defense and a counterclaim alleging a breach of contract against the airport for not paying the $700,000.
"Not only did the airport refuse to pay, but it filed the lawsuit against us," says Black, the Delta spokesman. "We are very disappointed that it has come to this, but we intend to vigorously pursue it."