Article published July 21, 2009
JetAmerica outlay chalked up as 'learning experience'
By NEENA SATIJA
BLADE STAFF WRITER
If nothing else, the JetAmerica saga was a learning experience for the Toledo-Lucas County Port Authority.
"I think that we had a successful campaign," Michael Stolarczyk, president and chief executive officer of the port authority, said at the authority's airport committee meeting Monday. "It was a learning experience and we need to continue to move forward."
The campaign Mr. Stolarczyk mentioned was the $119,000 the port authority spent marketing for JetAmerica, a low-cost air carrier that offered $9 flights at Toledo Express Airport. On Friday, it canceled all air service before the first flight took off.
The board had set aside $200,000 for advertising the JetAmerica brand.
Port authority spokesman Carla Firestone said that after the few straggler billboards and TV ads are removed, the amount spent could be $150,000.
That money, which came from property tax levies, was expected to be reimbursed to the port authority through a Small Cities Air Service Grant - but only if the planes actually got in the air.Because that never happened, the money can't be returned.
"We need to be very judicious in the future relative to spending tax dollars," said Jerry Chabler, a member of the airport committee.
Those at the meeting acknowledged a dire need for air service out of Toledo but emphasized caution in how to reach that goal. In particular, some wondered if JetAmerica founder John Weikle was the best person for the job.
"They didn't really have a good track record," committee member A. Bailey Stanbery said. "Should we have considered them at all?"
Before his involvement with JetAmerica, Mr. Weikle founded SkyBus Airlines, a low-cost startup based in Columbus that flew for 11 months before it abruptly shut down in April, 2008.
However, Mr. Weikle noted that he left that company the day it started operating.
Mr. Stolarczyk, a businessman before he became the port authority's president in April, said that he began talking with Mr. Weikle about air service for Toledo in March.
At that time Air Azul was slated to fly from Toledo to Newark three times a week. When the Air Azul plan fell through, Mr. Weikle offered to step in with JetAmerica.
"I thought it was a great idea," said Mr. Stolarczyk.
"John has had some start-ups, and he's had some failures. … I found him to be a sincere individual that was trying to start a company."
Mr. Stolarczyk said he asked Mr. Weikle if it were possible to base some of JetAmerica's operations in the Toledo airport, allowing planes to fly to Newark six times a week instead of three.
The two also talked about the possibility of the port authority providing JetAmerica with $1 million either through investment or a low-interest loan, but legal issues made that impossible.
In retrospect, Mr. Stolarczyk acknowledged that daily service to Newark "was not a short-term obtainable goal" and that if JetAmerica started out by flying into Newark three times a week instead of six, it would have been able to operate for about four weeks at its current cash flow.
Instead, it had only enough cash to operate for about two weeks before shutting down.
The cash was being eaten up by a bond that the New York/New Jersey Port Authority was requiring JetAmerica to post before it flew, and by efforts to get permission for takeoff and landing slot times at Newark Airport.
By the end of July the company found that slots were going to cost $40,000 a piece, totaling $500,000. So it delayed its start date from July 13 to Aug. 14 and refunded customers $500,000 instead.
In an interview recently before the company announced the cancellation, Brian Burling, vice president of operations at JetAmerica's creator SunAmerica, denied any serious financial concerns.
He said officials just needed "an extra week or two" to finalize agreements about the slots. The company would secure slots shortly and for "a lot less" than $500,000, he said.
Port authority and airport committee members said they were not aware of any issues with slots before JetAmerica announced it was delaying service on July 3, and they didn't know it was going to cancel service until its announcement on Friday.
Board member R. Michael Frank added that the advertising and the announcements about JetAmerica made in late May might have been premature, because it wasn't certain the air carrier was set to fly on its initial start date of July 13.
"We should have made sure that they had the slots, too," said Mr. Frank. "Sometimes its better just not to say anything until you make sure that all the i's and t's are crossed."
Asked if he would consider a proposal from Mr. Weikle again, Mr. Chabler was firm.
"Absolutely not," he said.
"I just don't see how they're going to sell ticket one in view of the way he handled this start-up."
Mr. Stolarczyk was more receptive to the idea.
"Depending on the business plan, yes. …" he said, "but it has to have merit."
Contact Neena Satija at:
nsatija@theblade.com
or 419-724-6272.
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