Branson's new airport is tiny, and privately owned

May 4, 2009, 11:25 PM

BRANSON, Mo. -- Starting next week, pilots for AirTran and Sun Country airlines will bring the first jetliners filled with paying passengers here to Mid-America's kitschy mecca for country music lovers and budget-conscious family vacationers.

They'll land at the nation's first commercial airport built and operated as a private, for-profit business for which federal, state and local taxpayers paid nothing.

The new $155 million airport carved into a couple of rugged Ozark mountains is called simply Branson Airport. And it's as modest as its name. Its lone 7,140-foot runway can handle most narrow-body jets used on domestic routes, but wide-bodies aren't likely to land on it. Its 58,000-square-foot terminal is about a third of the size of a big suburban supermarket. The terminal has no jet bridges and just four parking spots for jetliners. Passengers will have to exit planes on old-fashioned air stairs.

But unpretentious little Branson Airport could have an outsize effect if it works: It could turn what now is a mostly regional tourist spot with only 7,500 year-round residents into a national destination for vacationers. And it could spur other U.S. cities to consider operating their airports privately, a concept widespread in Europe and Latin America and catching on in Asia.

"We've got everything you could want in a vacation destination — all at pretty moderate prices — except our own airport. And now we're getting that," says Johnny Morris, founder of Bass Pro Shops, a privately owned $2 billion-a-year chain of sporting goods stores focused on hunting, fishing, camping and boating that is headquartered in nearby Springfield, Mo. "It's going to open up Branson to a whole new set of people all over the country who would love to come here but really haven't been able to get here before."

Beginning in the 1960s, with a troupe called the Baldknobbers, which mixed corn-pone humor with traditional country and bluegrass music, Branson has grown as a center for live music.

Today, it has 52 theaters that feature traditional country acts, crooners such as Andy Williams and aging pop stars such as Tony Orlando. The Osmonds, the Hughes Brothers, the Duttons and the Lawrence Welk tribe are among the musical "families" who operate year-round theaters or are headliners.

New theme parks have joined the long-running The Shepherd of the Hills drama at an outdoor theater. Three big outlet malls make Branson the third-largest outlet-shopping venue in the USA. There are three lakes: Table Rock, Taneycomo and Bull Shoals.

"We've got more options than anywhere I know of, including Las Vegas," says Morris, whose company is betting heavily on Branson's growth with a big new Bass Pro store downtown and the luxurious Big Cedar Lodge resort and executive conference center on Table Rock Lake 10 miles south of town.

Getting to Branson

But getting here has never been easy. About 95% of Branson's visitors historically have come by car or bus. The nearest airport, in Springfield, is a 52-mile drive.

Glenn Patch realized that more than a decade ago. The former magazine publisher who fell in love with Branson in the early 1990s and acquired 11,000 acres of land — 900 of which are where the new airport sits — figured that if Branson were going to become something bigger, it had to be more accessible.

But voters twice rejected paying for an airport. So in 2000, Patch hooked up with Aviation Facilities Co. (AFCO) of McLean, Va., and they devised plans to build a private airport. In 2003, Steve Peet, a former bond trader and AFCO investor, became a passionate promoter of the idea and led a group of investors, including a unit of Citigroup, that in 2005 formed Branson Airport LLC. AFCO stayed on to manage construction of the airport, and Peet has stayed on to become the airport's CEO.

The Branson promoters' idea is largely a new one in the USA. Most airports have been built with taxpayer dollars or by quasigovernmental authorities using public financing or government-backed vehicles such as bonds. But it's an idea that is catching on.

Going private has advantages. It would enable cities desperate for better air service to short-circuit the slow and frustrating political, regulatory and financial processes involved in building or expanding airports. It also would let them unlock the hundreds of millions of dollars invested in their airports by selling them, doing long-term lease deals or letting for-profit groups operate them.

More than a dozen cities, such as Philadelphia, New Orleans and Long Beach, are exploring some form of privatization

Most recently, Chicago struck a deal to sell Midway Airport to an investment group led by a unit of Citigroup for $2.5 billion, only to see the deal collapse last month. Investors cited tough credit market conditions that made it impossible to secure the loans needed to complete the transaction. Chicago Mayor Richard Daley is expected to put Midway back on the market, even if it means lowering the price to $1.5 billion.

Skeptics point out obstacles

"It's a copy-cat business," says Oris Dunham, the retired head of Airports Council International, the global trade group for airport operators. "I don't think airport privatization will go crazy in this country. But if Branson works, it'll probably give a few other cities the courage to try it."

Dunham cautions that public officials who sit on airport boards around the nation like their positions. "When it comes time to make the deal, most won't want to give up that power," he says.

Industry consultant Mike Boyd advises small and midsize airports on service development matters, and he's more skeptical.

Branson Airport is not likely to be the vanguard of airport privatization, he says. It's too hard disentangling existing airports from their government financial and legal tethers, he says, and financial prospects at most airports probably aren't good enough to justify the risk.

In Branson's case, Boyd says, the local population is too small, and the region's attractions aren't sufficient to consistently generate sufficient traffic for profitable air service.

"I hope they can do it. I wish them well. I just don't see how it's going to work," he says.

Backers: It's 'going to work'

Peet, the Branson Airport CEO, says the key to success is attracting airlines, especially low-fare carriers, to bring value-seeking tourists from distant parts of the country.

Branson already draws more than 60% of its visitors from more than 300 miles away, and a surprisingly large number from distant cities. Research by the Branson Lakes Area Convention and Visitors Bureau shows that 554 people a day come from the Minneapolis area, 107 a day from the Atlanta area and 598 a day from Dallas/Fort Worth, a seven-hour drive away. Those are the first cities with non-stop air service to Branson.

"There are 5.4 million people working hard to get here," Peet says. "How many more would come here if we made it easier and affordable for them?"

The big network airlines are waiting and watching. But Peet has used the airport's exclusivity rights to attract two discount carriers: AirTran and Sun Country. Because Branson Airport did not accept any government money, it can pick and choose the airlines it will let in.

Another tool at Peet's disposal: low operating costs that reduce carriers' risk. Airlines serving Branson won't have to hire their own ground staff or pay conventional landing fees. Airport personnel will do all the ground chores, such as processing passengers and loading bags. Landing fees will be based on the number of passengers airlines bring in, not the weight of the aircraft, as is usually the case.

Branson Airport, meanwhile, will be paid $8.24 by the city for each arriving passenger, ensuring a stream of income for 30 years. It will be augmented by revenue from aircraft fuel sales and a cut from every transaction at the airport, whether it's the purchase of a sandwich in the restaurant, the sale of fishing lures in a small Bass Pro Shop that'll operate in the waiting area, or a percentage from each car rented by Enterprise, which has exclusive car rental rights.

"If we're not handling 225,000 to 250,000 passengers a year three years down the road, then we'll be in a tough situation," Peet concedes. "But I don't think that's going to be the case.

"We've got a great market to sell. We've got significant capital reserves. And we'll have all these other streams of revenue."

Peet also has set expectations low. Reno gets about 2.5 million air travelers a year, or nearly 68,500 travelers a day, he notes. Discount king Southwest Airlines has 38 flights a day there. But to reach Peet's goal of 250,000 passengers a year, Branson Airport needs only 685 passengers — five to six planeloads a day.

"Reno's got beautiful scenery. Branson's got beautiful scenery. They've got a lake. We've got three lakes. They've got lots of hotel rooms. Branson's got lots of hotel rooms. They're pretty isolated. Branson's pretty isolated. The only thing they've got that we don't are the casinos, and a lot of people don't want to be around gambling.

"What we're doing is going to work."

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