Knoxville airport McGhee Tyson wants Southwest flights
McGhee Tyson Airport is waiting for a call.
It could come next month, or it could come in five years, but airport leaders are confident it will come sooner or later.
On the other end will be Southwest Airlines.
It won’t be the first call between the airport and the airline, but it will be the most important. Southwest leaders will say that the airline is finally able to enter the Knoxville market.
For travelers with a long memory, Southwest is a beloved budget airline that offers better customer service and cheaper fares than other airlines. Many drive out of their way to take advantage of getting two free checked bags, a first come, first serve seating policy and flexible ticketing services.
More recent memories of Southwest include massive holiday cancellations, an aging scheduling system and aircraft manufacturing delays courtesy of Boeing.
But though these events have threatened Southwest’s reputation, they have done little to dampen the zeal of Knoxville residents who want the airline.
Luckily for Southwest enthusiasts, McGhee Tyson has a “great partnership” with the airline, said Jim Evans, the airport’s vice president of marketing and air service development.
When a chartered Southwest flight touched down in Knoxville in 2017, airport staff put out an emergency radio call to summon anyone who wasn’t busy to come immediately to the gate. Staff posed with a banner in front of the plane that read “Hey Southwest! Knoxville is Waiting.”
The airport sent the photo to Southwest’s headquarters in Dallas. “They thought it was funny, but it didn’t work,” Evans said.
But getting Southwest is not a will-they, won’t-they situation. It’s simply a matter of time.
More McGhee Tyson:The Knoxville airport is growing, and we’re doubling down on covering it.
“We visit with them on a regular basis,” Evans told Knox News. “They have been here looking at the city, and I think they have a great deal of confidence that they would do well flying to McGhee Tyson Airport. As they have told us many, many times, our time will come. We don’t know when that is. I’m not sure if they do either.”
Southwest stunned the industry when it added 18 new destinations in a short period at the height of the pandemic. Since then, the airline has not added any new destinations, choosing instead to focus on improving the performance of its network.
“We have regular conversations with airports about the potential of bringing Southwest to a particular market,” airline spokesperson Dan Landson told Knox News. “We do not currently have plans to expand into Knoxville.”
As its mix of business and leisure passengers grows, McGhee Tyson Airport wants to attract new airlines and it has a plan to entice them. Though it is unlikely to be a deciding factor in whether Southwest comes to Knoxville, the airport’s updated air service incentive program could hasten the announcement.
What incentives can McGhee Tyson give airlines?
More than 250 commercial airports in the U.S. use air service incentive programs, according to the Federal Aviation Administration, which regulates them. The programs let airports offer incentives to airlines that defray the cost of starting a new flight. Behind almost every announcement of a new airline is an airport’s effort to entice them with incentives.
McGhee Tyson’s sticker price for airline incentives is $240,000, but it can be raised with a vote of the airport board. Though the airport has spent only a fraction of that amount in recent years, its incentive budget has skyrocketed due to a slate of new flights and a new airline coming this summer.
All money for McGhee Tyson’s incentives come from nonaeronautical revenue, like parking fees and airport concessions.
The FAA has a slate of incentive rules airports must follow, including:
- An airport cannot subsidize a flight.
- Its incentives cannot last forever, and the airport has to get something in return.
- An airport cannot charge one airline higher fees to pay for another airline’s incentives.
- Incentive programs cannot be tailored to a specific airline (sorry, Southwest).
The airport has a new incentive program that meets new FAA guidelines and was approved by the Metropolitan Knoxville Airport Authority Board of Commissioners in February.
The program went into effect April 1 and will continue through 2029. It lays out various levels of marketing incentives, based on whether an airline is new to Knoxville and how desirable its new destination is.
If Southwest came to McGhee Tyson with a nonstop flight to Los Angeles, it could receive up to $100,000 in marketing money. On the low end, if an existing airline added a flight to a not-so-exciting destination, it could receive up to $40,000 in marketing money.
The marketing money is a reimbursement for advertising an airline buys for up to its first three years at McGhee Tyson. All advertisements must feature the airport’s name and logo.
Airlines also get rewarded for how successful a new flight is: McGhee Tyson will give them $1 per passenger flown on the route during the incentive period. The program does not apply to airlines that increase the frequency of existing service or “upgauge,” an industry term for putting flights on bigger planes.
In addition to marketing, McGhee Tyson can waive fees that an airline pays to land and use its gates during the incentive period. Evans said these fees typically add up to between $900 and $1,000 per flight.
The airport is unlikely to reach maximum incentives spending, said Evans, who oversees air service development and marketing. Knoxville’s incentive budget is relatively small and the airport hasn’t needed to use many incentives to get airlines to add new service.
“We are blessed that we don’t generally have to throw out massive amounts of incentives to attract air service. You know, our local market is so strong and our airlines do very well here,” Evans said. “They really are not demanding massive amounts of incentives, which is great for us. Not every other airport has that luxury.”
McGhee Tyson’s reputation as an airport that doesn’t need incentives could be changing as the airport adds seven new flights this summer.
Chattanooga Metropolitan Airport raised its incentive budget from $467,000 to $684,000 last summer in a bid to attract airlines. In general, airports modify their incentive plans to get what they want. Nashville International Airport’s incentive program goes big on international flights – up to $500,000 a year for two years – but gives only up to $25,000 for new domestic flights.
Aviation expert: Southwest not likely swayed by incentives
There’s another lever McGhee Tyson could try to pull to get Southwest here sooner: incentives supported with financial backing from community partners.
Some airports have gone big and won. Real estate companies and local governments in Panama City, Florida, put together a $26 million incentive package for Southwest in 2010 to fly from Northwest Florida Beaches International Airport. Though that partnership worked well, don’t expect something similar in Knoxville.
One incentive the airport has not explored is a minimum revenue guarantee. These are risky ventures that are common in the aviation industry in which nonairport partners, like chambers of commerce and tourism boards, agree to make up any difference between how much an airline wants to make from new service and how much it actually makes.
“There are bunches of them out there that have been done in the past and sometimes they work great. Sometimes, as soon as the incentive guarantee is over with, the airline pulls the service, and there is risk involved in that,” Evans said. “We as the airport just don’t do that.”
Even if McGhee Tyson did put together an ambitious package of incentives, Southwest has much larger problems to deal with at the moment, said Bill Swelbar, chief industry analyst at Swelbar-Zhong Consultancy and a leading aviation expert.
Incentives can help move a city higher up on an airline’s list of markets it wants to enter, but they aren’t likely to make the decision for them, Swelbar said. Besides, Knoxville may not need them.
“Knoxville has a lot of airlines and a lot of service and they have been one of the best-performing airports in terms of attracting air service without incentives,” Swelbar said. “Knoxville is a very strong market and it can stand on its own.”
As the airport grows, airlines are likely to gain confidence that Knoxville is a good bet, and that could include Southwest. But the same qualities that made Southwest a favorite – industry leading customer service and low prices – are not necessarily true of the airline today as competitors catch up.
Southwest canceled around 16,700 flights in December 2022 thanks to winter storms and a rudimentary scheduling system. As the operator of the largest Boeing fleet in the world, it has also been hit hard by aircraft delivery delays after a series of fatal crashes and emergency landings of Boeing aircraft operated by other airlines.
“Ten years ago, Southwest was a very different carrier than it is today. If you had Southwest in your city, they were the low fare operator,” Swelbar said. “They had tremendous power. They were the great price disciplinarian. They are no longer that price disciplinarian.”
Passengers return to Southwest perhaps for the customer service, the free carry-on bag or the nostalgia. Some even drive to Nashville, a regional hub for the airline, instead of flying on a budget airline from Knoxville.
Knoxville airport throws $1 million in incentives amid rapid growth
McGhee Tyson is executing a record seven incentive programs at once this summer for new flights. The incentives have pushed the airport far beyond its $240,000 sticker price for incentives to around $1 million, Evans said.
McGhee Tyson saw a record 2.8 million passengers in 2023 and led Tennessee airports with the fastest growth rate. The airport has embarked on a long-term construction project to add a new $180 million parking garage and expand the terminal.
The airport will offer marketing funds and fee waivers to four airlines for seven new flights this summer:
- Avelo Airlines to Tweed New Haven Airport beginning May 9
- Frontier Airlines to Philadelphia International Airport beginning May 16
- Allegiant Air to Orlando International Airport beginning May 17
- Delta Airlines to Minneapolis-St. Paul International Airport beginning June 7
- Allegiant Air to MidAmerica St. Louis Airport beginning June 13
- Allegiant Air to South Bend International Airport beginning June 14
- Allegiant Air to Jacksonville International Airport beginning June 14
Airlines will get $30,000 for marketing, $1 per passenger flown on the new service and a fee waiver for up to a year for year-round flights and three years for seasonal flights. As a new airline, Avelo Airlines will get $40,000 for marketing.
Low-cost carrier Avelo became the first new airline in Knoxville since 2011 when it announced in February that it would begin flying from Knoxville to its hub in New Haven, Connecticut.
Six airlines fly out of Knoxville: Allegiant, American, Avelo, Delta, Frontier and United.
Chamber program tries to attract new flights to Knoxville
For over 10 years, the Knoxville Chamber has helped McGhee Tyson to try to keep fewer locals from traveling to airports in other cities.
The chamber operates the competitive airfare partnership, or CAP, to bring Knoxville community partners to the table to offer airlines additional incentives. CAP is on standby in case an airline asks McGhee Tyson for something it can’t give them.
For the most part, McGhee Tyson and CAP must operate completely separately from one another. Doug Lawyer, the chamber’s vice president for economic development, is the program’s de facto leader.
Attracting new air service is not so different from traditional economic development, where the chamber tries to sell Knoxville to companies looking to build in a new city. The main difference is how volatile the aviation industry can be, Lawyer told Knox News.
“The airline industry can change very quickly,” Lawyer said. “Airlines have got these $150 million assets called airplanes that they can move around at a moment’s notice and those decisions tend to happen really rapidly. We try and position ourselves to be able to respond rapidly as well when those requests come.”
CAP put around $100,000 on the table many years ago to help Allegiant add new nonstop service from Knoxville, which was the program’s largest offer, Lawyer said.
It is not involved in every new airline announcement, though it actively seeks to attract more low-cost air service, including from Southwest.
“In my opinion, no amount of incentives, whether it’s an airline trying to expand or recruiting a business is going to make make a bad location a good one. Airlines are looking at where the population growth is and where they can drive revenue,” Lawyer said. “I think we’re blessed to be in a good position.”
Daniel Dassow is a growth and development reporter focused on technology and energy. Phone 423-637-0878. Email daniel.dassow@knoxnews.com.
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