When the Washington, D.C.-based carrier’s parent, FLYi Inc. (formerly Atlantic Coast Airlines, or ACA) selected Knoxville as part of the airline’s 37-city roll-out this summer, it was a second chance for the community to enjoy cheaper air travel.

Back in 1998, another low-fare carrier, AirTran, landed at McGhee Tyson, only to depart about a year later. AirTran’s low rates drove down prices of big names like Delta Airlines and United Airlines to certain connection cities. Air travelers took advantage of the reciprocal effect across the airport, but they were flying the other airlines that had matched AirTran’s fares and offered frequent flyer miles.

When AirTran was here, Conklin, vice president of marketing for the Airport Authority, says the number of passengers per flight, or loads, went up 65% in the markets that had low-fare service that year, while the airport saw 22% growth overall.

Low ticket sales, a 30% cancellation rate, its earlier merger with the ill-fortuned ValuJet, and a lack of advertising support also contributed to AirTran’s decision to leave Knoxville.

“If you don’t get enough people, an airline is not going to be able to fly it—plain and simple,” Conklin says.

East Tennessee had been burned, and had burned itself. One activist group wasn’t going to let that happen again.

Two years ago, local business leader Darrell Akins formed a nonprofit coalition call East Tennesseans for Airfare Competition (ETAC) to better prepare the region, especially the business community, for a new low-fare carrier.

“As soon as we heard Independence Air was coming, we went into high gear, setting up breakfasts and luncheons, inviting everyone we could find to educate them about the importance of supporting a low-fare airline and how it will benefit all of us financially in the long run,” says Danni Varlan, spokesperson with ETAC.

As evidence of Independence Air’s faith in McGhee Tyson, the company recently announced service from Knoxville to Orlando with fares ranging from $69 to $141 each way.

Independence Air isn’t exactly a Knoxville newcomer. The airline, in its former incarnation, had been flying regional jets on short routes and smaller passenger flights for 14 years, providing commuter service for Delta and United.

When ACA decided to break away from the incumbent airlines (a transition that will be completed by November) and launch itself as an independent low-fare carrier, it kept a similar business model by flying the jets and routes with which the company was already familiar.

Rick DeLisi, spokesperson for Independence Air, says the airline competes on routes, not with the other airlines per se. Knoxville was selected as one of the airline’s first connections because of the market’s need to fly to Washington, D.C., and purchase one-way tickets. Plus, Knoxville’s economic feasibility and support from McGhee Tyson and ETAC also played a significant role.

The Knoxville community welcomed Independence Air with open arms, but the success of the low-fare carrier rides on much more than the support of one market.

“The unique part about the Independence Air story is that [the company] has taken control of its destiny,” says Anthony Cristello, airline analyst with BB&T. “They’re less concerned with building revenue and profits than they are with making sure they get their brand out there and get passenger traffic up. What’s important to them is maintaining and getting their brand awareness.”

Independence Air has remained tight- lipped about its financial goals, but will say the airline expects to turn a profit by mid-2005.

Conklin is thrilled with the initial acceptance of the low-fare carrier here. “Independence Air has ‘brung us,’ so now we need to dance with them.”

IN THE NEWS

ALCOA—The United Steelworks of America Union (USWA) and Alcoa jointly announced that the USWA will put together a team of members of the international union to review grievances primarily involving subcontracting outlined by four Alcoa U.S. operating facilities—ones in Alcoa; Evansville, Ind.; Rockdale, Texas; and Davenport, Iowa. Union members at the Alcoa plants in each city asked for five days of talks with Alcoa management in July. The plants continue to operate as usual, meeting customer requirements. After the USWA team assessment, senior level representatives from Alcoa and the USWA will meet to jointly discuss possible resolutions.

BRISTOL—Bristol Motor Speedway’s newly constructed, $8.5 million office complex and interactive fan center was officially named the Bruton Smith Building, in honor of the man whose company Speedway Motorsports purchased the facility in 1996 and “single-handedly turned this race track into arguably the most popular motorsports venue in the nation,” says Jeff Byrd, BMS president and general manager. More than 17,000 square feet of the 36,000-square-foot building were constructed for fan and community usage. The building features a state-of-the-art ticket office and expanded souvenir store, plus an interactive fan center featuring computer-simulated racing games, a theater and a wide array of Bristol-themed racing displays. The facility also includes employee offices and a large banquet hall and outdoor terrace with catering facilities available for Speedway and Dragway functions and is open for use by the community.

Stellar International, a Canadian pharmaceutical developer and marketer of high quality, cost-effective products for select health care markets, and its U.S. licensee,SJ Pharmaceuticals are working to initiate clinical trials of Stellar’s replacement therapy drug NeoVisc, which is used to treat osteo-arthritis, along with Stellar’s other proprietary, patented products—Uracyst-S and the Uracyst-S Test Kit. SJ Pharmaceuticals has agreed to underwrite all costs associated with these clinicals.

KINGSPORT— The Community Health Improvement Partnership (CHIP), an alliance of health care organizations in the Tri-Cities area, has announced a new agreement with Englewood, Colo.-based CareScience, an operating unit of Quovadx providing care management and clinical data sharing solutions, to plan a proposed Tri-Cities Care Data Exchange solution. Once implemented, this solution will provide secure access to clinical results and critical data from regional patient medical records to improve patient care. CHIP serves a medical service area of approximately 650,000 residents in the Tri-Cities, through 14 hospitals and 1,200 physicians.

Eastman Chemical Co. senior executives say the company has made significant progress toward improving profitability and is focusing on a growth strategy that builds on Eastman’s strengths in polyester, acetyl and organic chemistry technologies. “Our operating foundation is stronger as a result of our restructuring actions and financial discipline,” says Eastman’s chairman and CEO Brian Ferguson. “Our focus now will be building on this foundation and extending Eastman’s expertise and know-how to market segments that offer the greatest growth potential where we can differentiate ourselves from competitors.”

Wellmont Health System and Spectrum Laboratory Network have reached an agreement to establish a limited joint venture where Spectrum will manage Wellmont’s four hospital laboratories and additional outreach facilities presently operated by MEDex Regional Laboratories. Spectrum, a full-service clinical laboratory headquartered in Greensboro, N.C., submitted a successful bid through a court-appointed trustee for the assets of MEDex, which has been under Chapter 11 bankruptcy protection since 2003. MEDex is owned and operated by Wellmont, and the Wellmont joint venture is incorporated in Spectrum’s winning bid. The transaction was expected to close in October. As a result of the transaction, unsecured creditors are expected to receive payment of up to 70% of their claims. Additionally, 85 to 90 of MEDex’s 315 employees will become Wellmont employees. The remaining MEDex employees will work for the Spectrum Laboratory Network. Early estimates indicate 35 to 50 positions, primarily in support areas, will be eliminated over a period of time, although that number could change. Wellmont President and CEO Eddie George calls the health system’s partnership with Spectrum a positive conclusion to a difficult situation. MEDex filed for bankruptcy protection after officials discovered its former CEO, now serving a prison sentence, was committing fraud.

KNOXVILLE—Mayor Bill Haslam broke ground on two buildings that will include additional parking, office/retail space and condominiums near Market Square in downtown Knoxville. The projects include a 693-space, city-owned garage and an adjacent 23,000-square-foot building that will house residential and commercial space. Both projects are expected to be finished in about a year. “Downtown is seeing a resurgence of activity and these projects continue that momentum,” Haslam says.Kinsey Probasco & Associates is developing the residential and commercial project, which will include 12 two-story condominiums and 8,900 square feet of space for retail or office use. The cost of the parking garage is roughly $11 million, down from $14 million budgeted in fiscal year 2004, because of value engineering, project management and a competitive bid process. Haslam reinvested much of that savings in downtown Knoxville, dedicating funds for a movie cinema in the fiscal 2005 budget.

National Coal Corp. announced it has signed an agreement to purchase the mining rights and permits on 7,000 acres of land in Elk Valley, including Zeb Mountain, from Robert Clear Coal Corp., a coal mining company located Campbell County, for $5.5 million. When fully operational, the mines are expected to generate more than 40,000 tons of coal per month.

POWELL—DeRoyal and Orthomerica Products, headquartered in Newport Beach, Calif., have announced the July 31 dismissal of their patent infringement lawsuit pending in the U.S. District Court for the Northern District of Georgia in Atlanta. DeRoyal has formally retracted its previous claim that Orthomerica had copied the DeRoyal Ortholign™ medical orthosis and acknowledges that Orthomerica had exercised good faith in independently designing its California Soft Spinal System Orthosis. Orthomerica acknowledges the work of DeRoyal in commercially developing the Ortholign product and the existence of DeRoyal's portfolio of patents. DeRoyal has offered, and Orthomerica has accepted, a patent license from DeRoyal with a corresponding dismissal of the lawsuit. DeRoyal is the leading supplier of orthopedic softgoods to hospitals in the United States. Orthomerica is a developer, manufacturer and marketer of prefabricated, semi-custom and custom orthoses.

WALLAND—Blackberry Farm, a small hotel located in the Great Smoky Mountains, and Matt Alexander, the hotel’s previous general manager, have purchased the Maple Leaf Lodge in Townsend for $3.7 million to create a four-star premium resort. The partnership will create a resort on the 30-acre estate that already features a 15,000 square-foot lodge with 12 rooms, 17 cabins and a 2,000-square-foot meeting facility. The estimated cost of the first phase of construction is $200,000 to $300,000, and the second phase could run $2 million to $3 million.

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