RTA and CBMR secure winter air service from Houston

Third party donation helps foot the bill

Following an executive session, the Gunnison Valley Rural Transportation Authority (RTA) made a motion on Friday, July 8, to move forward with the newly merged United/Continental Airlines service direct from Houston, Texas to the Gunnison-Crested Butte Airport. In a new approach to funding the airline program, a third party has joined the RTA and Crested Butte Mountain Resort (CBMR) to help foot the bill.

“There was a motion made to enter into a contract with United Airlines to provide service from Houston at an amount not to exceed $420,000, contingent that we receive a donation pledged from the Mt. Crested Butte Town Center Community Association (TCCA) in the amount of $100,000,” said RTA executive director Scott Truex.
According to RTA board chair Jonathon Houck, the ski resort and the RTA have been discussing ways to broaden contributors to the air program. Other communities, such as Telluride/Montrose, rely on a broader base of financial support from a variety of community organizations to fund their air programs. Continual increases in revenue guarantees to the airlines have stretched both the RTA and CBMR thin.
“The guarantee never covers the actual losses of the airlines, so they tend to come back with higher guarantees,” said Houck. In the long run, he said, the RTA and CBMR are counting on load factors (how much passenger capacity is being used) and the tourism economy to rebound. Until then, they’ve been muddling through.
“For [the RTA], we have a set figure we can spend, which we derived by ratcheting the bus down to the absolute minimum,” Houck said. “So we have the bus program and all our other expenses, so we know what we can spend. CBMR has more wiggle room as a private organization.”
The RTA has committed $420,000 to the 2011-2012 airline program. According to CBMR vice president of sales Daren Cole, the ski resort is still finalizing their final contribution to the program and will release that number once the contract has been signed.
The resort has assumed a larger role in funding the program since decreases in revenue have hurt the RTAs budget. As reported in March, CBMR contributed $800,000 to this year’s program in comparison to the RTA’s $325,000. According to Houck, CBMR covered last year’s startups costs of Continental service from Houston.
In addition to rising revenue guarantees, funding has been made even more complicated by the fact that airlines will no longer accept payment of revenue guarantees at the end of the season; they have requested ongoing payments. According to Truex, the RTA, which is funded by sales tax revenues, sees a two-month lag time in the receipt of its funds.
“Revenue for December doesn’t come in until February,” Truex said. “This donation should solve our [cash-flow] problem.”
There has been some confusion, however, on what exactly the TCCA is.
“That’s where I didn’t get a clear answer from [CBMR] at the meeting,” said Houck. “But I did make it clear that everything has to run through our lawyer to make sure we can accept the donation.”
According to Joe Fitzpatrick, town manager of Mt. Crested Butte, the TCCA is an umbrella organization created when the Planned Unit Development that created the Lodge at Mountaineer Square was formed. Zoning for the area allows for multiple buildings, even though only the Lodge at Mountaineer Square exists.
“But say a building was built on the old Mandarin Site just north of the Grand Lodge. When this fictitious building was built, it would have its own HOA but it would also be a member of the Town Center Association,” Fitzpatrick said.
For now the key players include CBMR, the Transit Center, the Conference Center, the Lodge at Mountaineer Square and the Grand Lodge. They pay annual dues that fund things like the Wednesday night free concerts but also take care of common areas. As the base area expands, Fitzpatrick said, the idea is to hold everyone to the same standard of care for their property. Another source of income is real estate transfer—when a unit sells in one of the properties, a percentage of the sale goes to the TCCA. This year, the TCCA had a surplus.
“Because of our surplus from our last operating year, we were able to have some money to put toward the air program,” Fitzpatrick said. “There’s no way that CBMR can continue the weight of the burden that they’ve been carrying. It just doesn’t work unless we can really increase our skier days. They just don’t have those kinds of surpluses. Everybody benefits when somebody gets on a plane and flies here. That’s everybody, all the money trickling down to paychecks and businesses… so we have to continue to search to find ways to fund the airlines program.”
The United contract will provide daily service from Houston beginning December 15 through January 2, and continue every Saturday after that through March. And with the 2011-2012 airline program in place, the RTA can turn its attention toward the bus program in September, when it will determine the winter schedule. According to Truex, bus ridership “in June was down. We don’t know why because the service was identical [to last year], but it was down. We’ll wait and see how July looks,” Truex said.