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New airline considering move to W.Va.

January 14, 1999|By BRYN MICKLE

MARTINSBURG, W.Va. - The Berkeley County Commissioners are considering a proposal to use the Eastern West Virginia Regional Airport as the hub for an airline that would serve 20 major cities within 500 miles of Martinsburg.

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The new airline, Skyy Airlines, would make daily direct flights to cities such as Atlanta, Kansas City, New York, Washington, D.C., and Detroit.

Samuel DeLee, president of the Fairlea, W.Va.-based Corporate Assets Resources Development, asked the County Commission on Thursday to consider authorizing a $4.5 million bond. DeLee said the bond is a key factor in his company's plans to begin daily commercial flights out of Martinsburg as early as April.

DeLee said his company would be responsible for repayment of the entire $4.5 million bond and said Berkeley County is not being asked to take on any financial risks.

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The $141.5 million package includes a planned $132 million buyout of the Orlando, Fla.-based AirTran, said DeLee. The airline would be renamed Skyy Airlines and a new 10,000-square-foot terminal and a 351-acre headquarters would be built in Berkeley County, said DeLee.

DeLee said the airline initially would create about 120 jobs in the Martinsburg area and 520 jobs over the next five years. He said the addition of direct air service would attract commercial and industrial developments to the Eastern Panhandle region.

Officials at AirTran said they had no knowledge of any planned buyout of the airline. AirTran merged with ValuJet in 1997 and officials at AirTran said they were proceeding with normal flight operations.

AirTran Holdings - traded as AAIR - was trading at $3 1/8 a share on Thursday afternoon, according to Jim Sellgren, a broker at Wheat First Union in Hagerstown.

In the past 52 weeks, the stock has been as high as $9 3/8 a share and as low as $2 1/8 a share, Sellgren said.

The stock has pretty much been in a downslide from $5 to $3 since August, he said.

Martinsburg was chosen because of its central location in the eastern half of the country and the airport's capacity to handle passenger jets, said DeLee.

"This is an overlooked and under-utilized market niche," he said.

DeLee said AirTran has 50 DC-9 planes that can carry up to about 100 passengers each, he said. The new airline would attract tourist, business, recreation and business flyers with low-fare and no-frill flights, said DeLee.

One-way fares would range from $79 for tickets bought two weeks in advance up to $159 for walk-up sales, he said.

DeLee pointed to the recent success of another small airline he said indicates the Martinsburg plan will work.

Midway Airlines moved its hub from Chicago to Raleigh-Durham International Airport in North Carolina after intense competition in the Midwest.

Midway now serves 13 destinations around its North Carolina hub, and grew by almost 50 percent in 1997, he said.

DeLee is projecting daily flights to and from Martinsburg and the 20 major cities the airline would serve. The airline would show a $5.7 billion net revenue in its third year of operation, he said.

Skyy Airlines would be the first airline endeavor for the four-member CARD company, said DeLee. The company was started three years ago with the intention of building an airline from the ground up but the members decided instead to acquire an existing airline, he said.

DeLee said he has previous experience in hotel and restaurant acquisitions.

The project would have to clear a number of hurdles, including the bond approval by the Berkeley County Commissioners, the buyout of AirTran and a formal presentation to the Eastern West Virginia Regional Airport Authority.

Airport Authority Chairman Rick Wachtel said he has met with DeLee on an informal basis but has not seen formal plans.

The runways at Berkeley County's airport could handle the increased air traffic, but the airport would need to expand to provide adequate terminal and hangar space, aprons and parking facilities, Wachtel said.

"It's a concept and a doable one but there's a whole lot of details that need to be worked out," he said. "It would be wonderful for the state of West Virginia."

Eastern West Virginia Regional Airport Manager Bill Walkup said the airport could handle six to seven airplanes with six to 10 flights a day but lacks amenities that passengers might expect.

DeLee said his next step will be to bring a bond resolution to the Berkeley County Commissioners within 30 days. The biggest hurdle, he said, would be if the county decides not to authorize the bond.

The County Commissioners did not take a position on the matter Thursday but expressed enthusiasm with the project.

"It's a very exciting and interesting proposal," said Commissioner Robert L. Burkhart.

Berkeley County Administrator Deborah Sheetenhelm said the county would not have any financial liability in the project and said the county's bond rating would not be affected if DeLee's group defaulted on the bond.

Carolyn Motz, airport manager for the Hagerstown Regional Airport, said it was hard to speculate on the potential impact of the plan but said it would have positive and negative aspects for Hagerstown's airport.

U.S. Airways flies an average of nine round trips daily from Hagerstown to Pittsburgh, Harrisburg, Pa. and Newark, N.J., said Motz.

"(A new airport) wouldn't slow my efforts to attract more routes," said Motz.

- Staff Writer Kerry Lynn Fraley contributed to this story.

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