RTA negotiating new winter air service contracts

“We need to sell more seats”

There will be planes flying into Gunnison next season, but there won’t be as many. The pressing questions for the Gunnison Valley Rural Transportation Authority (RTA) and Crested Butte Mountain Resort are: How many, how big, how frequent, and where will they originate from? The RTA board of directors met May 14 to iron out these details and more. Ultimately, it all comes down to money.

During the meeting, the RTA concluded it will not propose a tax increase this year to help generate revenues for funding the air and ground programs. That decision is largely due to the current economic climate, and the consensus from the board that the public needs to be educated further about the need.
Currently, the RTA is funded through a .35 percent sales tax in the city of Gunnison and a .6 percent sales tax in the rest of the county. The tax generates about $1 million a year but its revenues are declining. The discussion has centered on trying to raise the tax in Gunnison to the .6 percent figure or have the entire sales tax increased to 1 percent across the board.
“I think the conclusion was this isn’t the year for the tax increase,” said RTA board chairman Jonathan Houck. “This is the time to begin the educational process.”

Air Program

On the air service side, both CBMR and the RTA would like to see higher load factors (filled seats) for the flights coming into Gunnison. The load factor for this past winter stands at about 54 percent, which means the local Rural Transportation Authority along with CBMR will pay the full $1,225,000 in flight guarantees used to get airlines to fly here.
During the RTA’s last meeting, RTA airline consultant Kent Myers said, “The bottom line is that we need to sell more seats. We need 65 percent load factors minimum to make the program viable.”
If the load factor is high enough, then the airlines won’t charge the guarantees to fly in here. But that wasn’t the case for 2009/2010, and is unlikely for 2010/2011 as well.
“We’re going to spend our money next year,” said RTA Executive Director Scott Truex. The RTA is contributing $325,000 toward the guarantees, while CBMR will pay the rest. The RTA’s money will be used first.
The May 14 RTA meeting in Gunnison focused largely on the air program since there are contract deadlines with potential carriers looming, and CBMR needs the program details solidified so it can finalize its marketing program for the upcoming season. Airline consultant Kent Myers provided his recommendation to both entities after gathering the parties’ feedback, and working within the existing budget.
Truex summarized some of the details. “If the plan we identified at the meeting comes to fruition, we will have about 40,000 seats next winter. Last winter, we had just over 45,000. These numbers are not exact because we don’t have the final numbers yet.”
Where the planes will come from is still being ironed out, but Truex said there will likely be some changes. “We are looking at a program with twice daily service on regional jets from Denver [United] and from Dallas [American]. We are also hoping for a daily 737 from Houston [Continental], which we hope could be reduced to four times a week during January and early February.”
Atlanta and Salt Lake City are not part of the current proposed program because of incompatible schedules and cost-prohibitive caps. Myers emphasized the importance of informing the public about this decision, otherwise people will ask, “Why did you drop Atlanta—are you idiots?”
“Salt Lake City and Atlanta are both Delta hubs,” Truex said. “In the past we have had once a week service to Atlanta and three to four times a week service from SLC. These programs require each other to be successful since the passengers from Atlanta would travel through SLC one of the directions. Delta is no longer able to offer us three or four trips a week. The offer was for Saturday only, or seven days a week. The seven-day price is too high and unlikely to be successful, and the once-a-week service is probably not viable. So, though no decisions are set in stone, it seems unlikely that we will be able to continue Atlanta service. SLC did not perform well enough to warrant expanding the service to seven days and will not be continued.”
“From a ski area standpoint, Atlanta will still be on our map, and people will still be coming into our second airport [Montrose],” said CMBR chief operating officer Ken Stone.
Daren Cole, CBMR’s vice president of sales and marketing, cited the importance of Montrose as a hub. “To grow as a community we have to look at how we can take advantage of flights coming into Montrose.” He also mentioned working with Alpine Express on issues such as transportation to and from the airport and pricing.
Myers also commented on the program’s movement towards smaller aircraft, which could lead to higher fares, but the frequency factor would add convenience. “They’re all small aircraft, that’s the downside,” he said. “People need to pay for convenience. But will people be willing to spend $300, $400, even $500 to get here?”
“The cost per seat will be more expensive on smaller planes,” Truex said.
Ken Stone said making it affordable for locals to fly out is important as well. “We need to develop a locals’ fare program so that there will be more outbound fares that will be acceptable to the community.”
Other ski areas serviced by smaller airports, from Telluride to Steamboat, are dealing with the same situation. According to Stone, Steamboat paid $2.4 million in airline guarantees this year. “Most all ski areas we’ve talked to are facing the same situation.”
Crested Butte Mayor Leah Williams echoed Stone’s sentiment: “We’re not alone in this—everybody’s in the same boat.”
“This is the best program we can put together with the resources we have,” Myers said. “I’m assuming CBMR agrees with that.” CBMR was in agreement.
“Given the constraints we’re working under, are we comfortable in the direction we’re moving?” asked Houck.
The consensus was “Yes” and Houck was authorized by the board to sign the contacts when they are ready. Myers will continue to negotiate the final details and expects to have more of the program details completed shortly.