RTA ground and air trying to find balancing act

“The RTA is trying to serve several masters”

With declining revenues come difficult decisions, and 2011 isn’t looking any easier than 2010 for the Gunnison Valley Rural Transportation Authority. The RTA is the only organization in the state that manages both air and ground transportation, and the challenging economic climate will likely take a bite out of the budgets for both segments for 2011.

“The RTA saw a reduction of about 18 percent in sales tax revenue last year,” reported RTA executive director Scott Truex. “It seems that the trend is continuing. From the RTA perspective, we’ve drawn down our fund balance as far as we can. And our revenues are declining, so it will not be possible for us to maintain our past level of spending on ground and air. So we’ve got some tough decisions to make for 2011. And we have to start making those decisions right now. It’s very easy to please everyone when revenues are increasing, but it is very difficult when revenues are not.”
For example, in 2010, the RTA’s maximum contribution is $600,000 for airline guarantees, and Crested Butte Mountain Resort’s maximum contribution amounts to $625,000.
Those dollars are spent to “guarantee” that certain flights will fly into the Gunnison/Crested Butte Regional Airport. There’s a good chance that the maximum will be used, judging by current projections for 2010, which forecasts a load factor of 55 percent for the 45,600 seats available.
The RTA, specifically its airline consultant Kent Myers, is currently talking with several airlines to set up air service for 2011. “We’ve contacted United, American, Delta, and Continental,” Myers said. “All four of those carriers have placed options on the table for us. It’s going to be dictated by what we can afford, and what kind of partnership we are going to put together. Continental would be out of Houston—that option is available. Chicago is available. Is it exactly what everyone would want, and can we afford this?” It all comes down to money.
“Without knowing the details, the [RTA] board is going to have to sit back and say, ‘Where do we want to put our resources?’” Myers continued. “How much is going to ground, how much is going to air. What is the best thing for the community? You’ve also got the city of Gunnison, the college, there’s a lot of moving parts with this thing. The RTA is trying to serve several masters here with the goal to have the program succeed, so that in the long term people can see a benefit for access to air, and the convenience of ground transportation. You’re going to get several answers out there about what’s best.”
CBMR has a large stake in this as well, as their maximum contribution for 2010 airline guarantees is $625,000, and they allocate resources to market the air program. Marketing and consistent air service are vital to bringing in CBMR’s guests from around the country.
According to CBMR’s Director of Central Reservations Jeff Moffett, “The ideal situation is finding the perfect balance of flights, and the right load factors achieved through capacity and schedule. Our feeling right now is we’d like to have a much better schedule. Getting into the 70-something load factor [percentage of seats filled] and 50,000 seats would be good for us.”
CBMR’s 2009-2010 55 percent load factor projection for the 45,600 seats available compares to 52 percent in 2008-2009 for 55,400 seats available.
According to CBMR, the Gunnison Airport’s impact on Gunnison County is fiscally substantial. They report that community revenues are $36,540,000 and about $3.5 million in tax revenue is generated, based on 28,000 passengers and an average five-day length of stay. Moffett also mentioned the other impacts the airport has on the community, including employment opportunities.
“We’re looking at the different requests in [CBMR’s] proposal to cost them out. It’s going to be hard to say where we’ll end up until we get the costs for each component from the airlines,” said Truex. “It’s a puzzle—we’ve got to put it together so it makes sense. I thing the CBMR plan makes sense. The question is, can we afford it?” CBMR would like to see more frequent flights with a more convenient schedule.
CBMR is supportive of the RTA and their partnership, according to Vice President of Sales and Marketing Daren Cole. “The RTA has been successful in its mission of providing oversight and fund management directed at both air and ground transportation in the Gunnison Valley,” Cole explained. “The resort fully supports this organization and works in cooperation with the RTA. CBMR acts as an additional funding partner for air service. The resort’s efforts marketing our winter air service and additional funds from the ski resort help the RTA maintain a substantial level of air and bus service.”
Cole continued, “This year the ski resort is taking on more than 50 percent of the risk for the air program, which allows the RTA to keep an equal emphasis on the bus program and air subsidies.
“Having the RTA structure in place benefits the entire valley and can be shown to have a measurable return on tax dollar investment,” Cole said. “It is estimated that the air subsidy shows an annual return of $36 million in incremental revenues countywide and $3.5 million return directly to the overall tax base in Gunnison County.”
As the RTA budgets for 2011, it all comes down to dollars and cents. Because they are facing decreased revenues, the RTA board of directors has discussed the possibility of having a ballot question in November 2010 concerning increasing the existing tax to 1 percent county-wide. Currently the tax is lower in the city of Gunnison (.35 percent) than the rest of the county (.6 percent). The other option would be to make the tax .6 percent across the board.
According to Truex, “The board will discuss the ballot issue at the March 26 meeting at the Gunnison City Hall. There are a few options they are looking at. We will be holding two focus groups with business owners at each end of the valley before the meeting to gauge their receptiveness to the ideas. I think the decision to go to the voters will depend upon what board members hear in the next few weeks.”