Last updated: 11:43 AM ET, Wed February 10 2016

Rhode Island's Flagship Airport Has a Unique Strategy for Luring Airlines. Will it Work?

Airlines & Airports | Josh Lew | February 10, 2016

Rhode Island's Flagship Airport Has a Unique Strategy for Luring Airlines. Will it Work?

PHOTO: T.F. Green International interior. (photo via Wikimedia Commons)

T.F. Green International is the main airport in Rhode Island. It serves Providence and is often considered a reliever airport for New England’s main hub, Boston Logan.

Last year, the airport, the largest of six in Rhode Island, saw 3.5 million passengers. That might seem like a respectable number for a small metropolitan area like Providence. However, it used to see a lot more traffic. A decade ago, Green was serving more than five million passengers.

READ MORE: Monumental Cuckoo Clock Arrives at Portland Airport

Falling passenger numbers

Except for a slight bump in 2013, passenger numbers have fallen every year since 2005. This past December brought a small gleam of optimism as numbers jumped compared to December 2014 and the airport ended 2015 with a miniscule year-on-year drop of 0.02 percent in terms of number of fliers.

T.F. Green has a few routes. German carrier Condor flies seasonally from Frankfurt and the Cape Verdean airline TACV travels to Praia, the capital of the African Island nation. (There is a the large Cape Verdean population in Providence and surrounding areas). Other than that, however, service from the Rhode Island hub is limited to a handful of routes for each airline.

Getting in the game

There are changes at the Rhode Island Airport Corp, which runs six airports in the state. CEO Kelly Fredericks will step down and a search for a new leader is taking place now. Meanwhile, the state’s governor has suggested that a small amount of money be earmarked for “air service development.” The R.I. Airport Corp's interim chairman, Peter Frazier, said that the money, $1.5 million, will “allow us to say, ‘Listen, Rhode Island is in the game.’ This allows us to stay competitive.” 

How will this relatively small amount of money get the largest airport in America’s smallest state “in the game?” 

The plan is still being finalized, but the funds will be used as a sort of revenue guarantee for airlines. If they start a new service from T.F. Green and they do not meet their revenue goals for the year, then the airport will pay them the difference, up to $1.5 million. This will act as a kind of incentive for airlines to try out a new route without having to shoulder the full risk usually associated with doing so.

READ MORE: Why Aer Lingus Is Expanding Its US Network

Offering revenue guarantees could become a trend

This idea has worked in the past. Hartford, Connecticut’s Bradley International Airport, which is currently New England’s second busiest airport (behind Logan), used a similar revenue insurance policy to get Irish airline Aer Lingus to start service to Dublin. 

There is one catch: according to FAA rules, airports cannot pay airlines to launch new services. The money has to go through state government organizations. In Rhode Island’s case, the state’s Commerce Corporation would be in charge of the $1.5 million and would be responsible for paying out if necessary. 

As smaller airports compete for service from large airlines, the practice of offering this kind of revenue guarantee could become more and more common.

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