The Crested Butte News Serving the Gunnison Valley since 1999
“The mind is willing but the body is weak”
The final piece in the air service puzzle—non-stop service from Houston to Gunnison—fell into place last week. The Continental Airlines contract was sewn up after lengthy negotiations between the airline, Crested Butte Mountain Resort, and the Gunnison Valley Rural Transportation Authority.
Now that Continental Airlines is flying into the Gunnison Airport, they need the infrastructure in place. As part of the deal with any new airline coming to the area, there are start-up costs for things like a desk site, equipment for baggage handling and a scale, computers, cables, and airline signage. And those costs are not covered by the airlines.
Continental’s estimated startup cost is $60,000. So Crested Butte Mountain Resort (CBMR), along with the Crested Butte/Mt. Crested Butte Chamber of Commerce, is approaching various governmental entities to seek contributions toward those start-up costs. CBMR plans to chip in $12,500.
The chamber of commerce and CBMR initially approached the town councils of Crested Butte and Mt. Crested Butte on Tuesday, July 6, asking for $10,000 from each. Both councils told them they were going to take a wait-and-see attitude. One thing the councils would be watching was how the county responded to a similar request.
Crested Butte/Mt. Crested Butte Chamber of Commerce director Richard Bond and CBMR director of Crested Butte Vacations Jeff Moffett didn’t mention a dollar amount when they visited the county commissioners on Tuesday, July 13.
But Bond and Moffett were looking to the county’s Airport Fund to fill part of the hole that was left in the funding, even though they weren’t sure how much the bill for Continental’s start up would be.
Moffett and Bond told the commissioners that the contract stipulated that the cost could not exceed $100,000, but Moffett added, “for the purposes of this meeting, we’re still using the $60,000 number.”
Airport manager John DeVore didn’t “want to rain on anybody’s parade,” but doubted the money CBMR and the chamber were looking for would come from his fund.
DeVore explained that in 28 years, the airport has received about $50 million in funding from the Federal Aviation Administration, and today receives around $1 million a year. That money has strings, some of which do not allow airport revenues to be used for certain things, like directly subsidizing short-term airport services.
No matter how Moffett and Bond tried to look at it, signing a multi-year contract for air service with Continental might be the only way to get access to the Airport Fund. And the commissioners weren’t willing to take any chances with the flow of FAA money.
“I don’t think it is responsible management of our Airport Fund—morphing into gray areas is kind of like fraud. It’s not worth the risk of treading anywhere near the FAA. We’ve worked very hard to establish a long-range relationship with them, but it is fragile,” commissioner Hap Channell said.
Instead, county manager Matthew Birnie pointed out that the county sets aside money specifically for marketing the area that it could use to help defray CBMR’s marketing costs. That would free more money for CBMR to spend on the start-up costs.
But the commissioners wanted to make it clear that it was one-time money being offered.
Channell told Moffett and Bond, “I think there needs to be a reality check on the part of CBMR of what the cost of doing business is.”
Swenson was right there saying, “Everybody is on hard times and I do want Matthew [Birnie] to pursue LMD [Local Marketing District] financing and work something out. And understand this is a one-time deal. The RTA and CBMR will have to work on this for next year because there is no more money to go out and find.”
The commissioners agreed to work with CBMR and the chambers to find the money in the Local Marketing District reserve to cover the county’s share of Continental’s start up costs. The LMD funds the local Tourism Association.
“By July 31 we expect Continental would do its investigation and provide us with a better estimate of what the start up will cost,” Moffett said.
The towns need more time…and money
Moffett told the Crested Butte Town Council last week that the ski company is seeking a new way to get flights into Gunnison. Utilizing more, smaller planes bringing in passengers is the goal. Between CBMR and the Gunnison Valley Rural Transportation Authority (RTA), guarantees to get airlines to fly into the area next winter total $1.2 million.
“Houston is the number-two market for second homeowners in the area,” he said. “The last time we had Continental flying in here was 2004-2005. That was a very successful year and we ran a 71 percent load factor.”
This past winter, the air service ran at a 54 percent load factor.
Moffett said the service from Houston would provide 11,000 new seats. There would be daily service at peak periods of the ski season and service four days a week the rest of the time.
“We estimate that 8,400 passengers would directly bring in $12 million in direct spending,” Moffett said. “So we are asking the towns and the county for their help with this cost.”
“Just to let you know,” responded Crested Butte mayor Leah Williams, “tonight we turned down a request from our staff for $1,500 to replace some bad sod. We are looking at another down year as far as sales tax. It’s not looking good.”
“Texas is our biggest market,” responded Moffett. “We anticipate filling all the seats, which will increase your tax revenues and revenues throughout the county.”
“I’ve never seen a request like this before,” said councilperson Dan Escalante. “I wouldn’t want to see it happen year after year. It makes me a little nervous. But I see a benefit to it if we can make it work. I’d like to see what we can do.”
Councilperson Roland Mason sits on the RTA board. “The Continental piece does tie together the rest of the air service,” he said. “It is important to get Continental into Gunnison.”
“Getting tourists in here is more important than Elk Avenue sod,” said councilperson Phoebe Wilson. “Getting tourists in here is our survival.”
Councilperson Jim Schmidt was worried about the slippery slope. “I hear American Virgin Airlines out of San Francisco might be coming in here, too,” he said. “Will you be coming to us for some sort of guarantee or start-up costs?”
“We don’t anticipate having to make any other similar requests,” Moffett assured him.
Schmidt also wanted to know why the city of Gunnison wasn’t being approached. Moffett explained CBMR has gotten the message from Gunnison that ground transportation is more a priority for Gunnison at the moment.
Schmidt suggested perhaps funding a portion of the request but he, like councilperson Reed Betz, wanted to see what the county and Mt. Crested Butte provided first.
Mayor Williams didn’t like the potential precedent. “The RTA was a voter-approved initiative to help support the air and ground programs. There is a taxpayer source for that help. I’m uncomfortable asking them twice. I am reluctant to ask our taxpayers to reach into their pockets again. Plus, I don’t see us having the entire amount anywhere in our budget. We do have $8,300 left in service grants but that is meant for small non-profits.”
Chamber of Commerce executive director Richard Bond told the council, “This is the best air program in many years. The approach CBMR and RTA are taking to manage the program is different. They are using techniques to manage the loads and the fares to avoid guarantees.”
The council asked Bond and Moffett to return to the August 3 meeting, where commissioners will again look at the request.
Mt. Crested Butte has the desire but maybe
not the funds…
Up on the mountain, Moffett and CBMR vice president for sales and marketing Daren Cole were informed by the Mt. Crested Butte council that funds are very lean.
Councilperson David Clayton said, “We’ve had to cut the budget to the bone.”
Mt. Crested Butte finance director Karl Trujillo confirmed Clayton’s statement. “We’re down to about $0 for cash flow in the admissions tax fund. Around September we start to build up a balance.”
The money isn’t available from the town’s Admissions Tax Marketing Fund because, according to councilman Gary Keiser, “All admissions tax dollars are committed into September.”
Councilman David O’Reilly asked when the funds would be needed, and was told mid- to late December.
“We’d be in a positive cash situation at that time. We’re going to have to manage cash pretty tightly,” said Clayton. “It’s going to be a tradeoff—who gets paid when? We’re looking at trying to build up a reserve, to get back in the situation where we can spend money today versus giving them a chip for later.”
Keiser said, “If we spend it now, we won’t have it for this winter.”
Daren Cole informed the council, “Every dollar we spend toward minimum revenue guarantees is money we don’t have for marketing funds. We’re launching a very aggressive outbound program in the next couple of weeks, making sure there are good outbound fares for locals.” He said through that program five to 10 points in load factor could be added.
Councilman Chris Morgan is also on the RTA board and spoke to the RTA’s financial challenges. “We took risks year after year [on airline guarantees] and we’re no longer able to have a fund balance. CBMR has stepped up and said ‘We’re going to put some money out there,’ so I want to thank them for doing that.”
Morgan said he’s been researching the price of the Continental flights, and requested more information on fares from CBMR.
“I have sent CBMR a couple of emails in the last couple weeks and haven’t heard back. What are the prices of these flights going to look like?”
Moffett and Cole addressed Morgan regarding his inquiry, and said they hadn’t seen his emails. He informed them that he had emailed “their boss” and hadn’t received a call back.
RTA executive director Scott Truex was sitting in the crowd, and to answer Morgan’s fare question he did a fare search on his iPhone. The prices he found for Continental and United flights were comparable. The Continental flight was just posted, and in the early going some searches were turning up fares that are more expensive than United. However, the expectation is that prices should balance out over time now that the flight is posted.
After all the discussion, the council asked the chamber and CBMR to come back after meeting with the county commissioners.
Mayor William Buck concluded, “What you’re hearing is, the mind is willing but the body is weak. It’s not a no, but let’s see how we can do it. We look forward to hearing about the Board of County Commissioners meeting.”
Each government board will consider a final allocation toward the start-up costs when CBMR and the chamber present hard figures later this summer.
