Horry Co. owes WestJet $570k due to profit margin deal

MYRTLE BEACH, SC (WMBF) - In February 2013, Horry County Council passed an agreement with WestJet stating it would pay the airline up to one million dollars if the airline couldn't maintain a 15 percent profit margin during its first six months at Myrtle Beach International Airport.

Numbers released last week show the airline was unable to meet the 15 percent profit margin during its first six months at MYR.

The Horry County Council decided Friday to pay Westjet Airlines the roughly $570,000 it owes them through accommodations tax funds. These are funds generated from visitors staying at hotels, campgrounds and lodges.

In February, the county made a deal with the airline, agreeing to pay up to one million dollars if the airline couldn't maintain a 15 percent profit margin during its first six months at MYR.

The Myrtle Beach Area Chamber of Commerce says it will help the county pay the debt. The chamber already had $250,000 set aside for the county in funding the state provides from the taxes. The chamber says it has an agreement to give the county five percent of the accommodations tax funding to the county for marketing tourism.

The remainder of the money will also come from the Chamber. The Chamber says it will front the money it expects to receive from future accommodations tax funding from the state.

"The chamber is in the business of advertising and marketing and that's what this was," said County Council Chairman Mark Lazarus. "This was advertising and marketing and investment to bring new people to the area and we accomplished that."

When they made the deal, County Councilman Gary Loftus told WMBF News the county didn't expect it would owe the airlines once the six-month period came to an end.

"Of the million dollars, we probably won't spend a penny," Loftus said in February.

Loftus wasn't alone. Of the 10 council members at the February meeting, nine voted in favor of passing the agreement.

"When you enter into such an agreement there is risk that comes with that, and we were made well aware of those risks when we entered into it. I think WestJet and us were hoping for a stronger tourism season for them," Horry County Spokeswoman Lisa Bourcier said.

Bourcier said the agreement was passed because otherwise the airline wouldn't offer air service at MYR.

Although the county does have to pay, Bourcier said airport numbers show having WestJet at MYR brought a $6.6M boost to the economy.

"We did some surveys of those passengers deplaning to the Myrtle Beach area. A lot of them were first timers to the area. It is a strong indication that WestJet is starting to book for next year," Bourcier said.

Myrtle Beach Area Chamber of Commerce President Brad Dean released the following email statement last week:

"We have put aside a portion of our accommodations tax receipts, as provided for by the law, in order to set up a contingency fund to have at the ready. Our estimates are that fund will be around $250,000 to $260,000 by the end of this year that the county could use. From there, we'll work with the county and WestJet to ensure their service continues to benefit visitors to the Myrtle Beach area."

As for the roughly $320,000 that will be left for the county to pay, the council decided in a meeting held Friday morning that the county will pay WestJet the remainder with accommodations tax money.

"At that time the discussion will be brought up how that money will be funded to WestJet. We'll have representatives from the airport and from our finance department to discuss with that committee those particular options that we have," Bourcier said.

Several other county leaders released statements regarding the county having to pay WestJet.

"Despite the slow start we are optimistic WestJet will return for its second season starting May 2014," said Pat Apone, Interim Director of Airports for Horry County Department of Airports. "While WestJet has not confirmed it will return, we believe the airline will be back as tickets for May 2014 service are now available for purchase at westjet.com."

"Although this first season was not as strong as we had hoped, WestJet did open Myrtle Beach to new markets across Canada," Horry County Administrator Chris Eldridge said, "The relationship between MYR, WestJet and the Myrtle Beach Area Chamber of Commerce is one that can be used to enhance the diversification of our tourism base and flight services. Horry County is currently exploring alternate means of funding the agreement with the Myrtle Beach Area Chamber of Commerce. Any future financial arrangements will be directly between WestJet and the Chamber."

"The airport regularly monitors westjet.com to ensure airfares being offered are reasonably priced. Our latest evaluation, based on travel between October 10 and October 17, 2013, found that a person wanting to visit Myrtle Beach can fly round trip between YYZ and MYR for as low as $424.29, including all taxes, fees and charges, or less than $0.32 cents per flight mile" Marketing Director for Horry County Department of Airports, Kirk Lovell said.

Horry County Council Chairman Mark Lazarus said they are working on different negotiations with the airline for next season.

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