GARY | Allegiant will discontinue air service in August, officials at the Gary/Chicago International Airport Authority announced late Friday.
However, the company remains open to discussing future opportunities a the airport, officials stated in a news release.
Gary Mayor Karen Freeman-Wilson said the airport's large-scale runway expansion project and a potential public-private partnership have accelerated discussions with other airlines.
"From the runway expansion to the P3 exploration, big competitive changes are happening at the airport," Freeman-Wilson was quoted as saying. "As a consequence, the airline industry is taking notice and other airlines are expressing an interest in Gary."
In a May 17 letter to the airport, Allegiant said it anticipates Aug. 10 being its last scheduled flight between Gary/Chicago International Airport and Orlando Sanford International Airport.
Allegiant opened service at the airport Feb. 15, 2012.
Beginning June 5, weekly flight service will switch to Wednesdays and Saturdays with one-way flights starting at $70.
The announcement comes at a time the airport authority is making plans to move ahead with the largest borrowing in its history, with a bonding resolution being readied for its June 10 meeting.
A joint city/airport committee seeking to land a public-private partnership for the airport was told Friday the airport needs to raise $34 million to pay some of the last bills on its $166 million expansion project, as well as some needed repairs to an airport runway and taxiways.
The committee resolved to recommend the airport issue tax-exempt municipal bonds to raise the money, something that will place some limits on private uses of the airport in the future.
"In a perfect world, we would have no limitations on public-private partnership agreements, but we know there will be some limitations," bonding attorney Rich Hill told the committee.
Once the airport authority has issued the tax-exempt bonds, which carry a lower interest rate than taxable bonds, the airport has to treat all users of the airport the same. For example, it could not grant special incentives or discounts to one airline and not another.
In addition to the $34 million raised with the bonding, the airport will most likely need to set aside as a lending reserve some of the more than $20 million currently held in the Airport Development Zone fund, financial consultant Phoebe Selden told the committee.
The Airport Development Zone is a huge tax increment financing district that takes in a large swath of Gary's west end. A portion of property taxes collected there is diverted into the Airport Development Zone fund twice a year. Tax rates there are no higher than they are in the rest of the city.
The joint city/airport committee also set a date of Sept. 6 for making a final recommendation to the airport authority for a private partner to invest a minimum of $100 million in the airport.
The committee hopes the airport authority could act three days later on their recommendation.
Next month, the public-private partnership committee will start to learn how much interest there is among investors in partnering with the airport. At its June 6 meeting, the committee plans to get together an invitation to investors by which they can express interest in the public-private partnership.
A legal notice will be issued Monday to apprise contractors and others of the airport's intent to solicit for a public-private partnership.