Wednesday, August 16, 2017

Contour Airlines to submit bid to continue Tupelo Regional Airport (KTUP) air service

TUPELO – Contour Airlines had a record number of boardings last month for its Tupelo-to-Nashville flights, and after 16 months of service, it has proven to be a reliable service.

With that in mind, its corporate parent, Corporate Flight Management of Smryna, Tennessee, will be bidding for another two-year contract through the U.S. Department of Transportation.

“We have a desire to remain the carrier providing service to Tupelo,” said Matt Chaifetz, CFM’s chief executive officer. “Tupelo, aside from being a valuable part of our network, has a special place. It’s where the Contour brand got its start.”

The DOT announced Friday it was requesting proposals from airlines interested in providing Essential Air Service flights at Tupelo, as well as Muscle Shoals, Alabama, for a new contract starting March 1, 2018, with or without a subsidy. The deadline to submit is Sept. 19.

The Department of Transportation’s EAS program provides subsidized air service to communities like Tupelo. CFM was one of four airlines that submitted bids two years ago to provide service in the All-America City.

CFM’s bid was the most expensive but deemed the best first for Tupelo, and the company was selected to be paid more than $4.2 million a year for two years, while providing 30 flights a week to Nashville.

Contour’s subsidy through the Essential Air Service program allows a 5 percent profit. In its bid two years ago, CFM estimated $686,000 in passenger revenue through ticket sales (with prices averaging $49 per ticket).

Expenses totaled more than $4.7 million, covering fuel, maintenance, pilot costs, aircraft fixed costs and other indirect costs. The $4.2 million subsidy gives CFM a profit of about $237,000. Contour gets paid only for flights completed, no matter the passenger count.

Chaifetz and the Tupelo Airport Authority also discussed using Alternate EAS instead of the standard EAS program.

While the traditional EAS program gives the subsidy to the airline on a monthly basis following the completion of flights, Alternate EAS gives the money directly to the city or airport authority. According to the Department of Transportation, “this allows the community to recruit air service that would not otherwise meet EAS guidelines, such as more frequent service with smaller aircraft, less-than-daily service, flights to differing destinations at different times of the year or week, on-demand air taxi service, scheduled or on-demand ground surface transportation, regionalized air service, or even purchasing an aircraft. This alternative program has most often occurred as a public charter arrangement.”

Chaifetz said the the uptick passengers warrants a look at AEAS, which would allow the airline to utilize more seats. Under EAS, the Jetstream planes can have a maximum of nine passengers, even though the aircraft was built to hold 19.

“We think Tupelo is a market that warrants additional capacity,” Chaifetz said. “But to serve with more than nine seats, we have to have Alternate EAS.”

Chaifetz said the Jetstreams could be reconfigured to have all 19 seats available again or it can consider using a regional jet with 30 seats.

However, a bigger plane means higher expenses. The number of flights would be reduced to help mediate those costs, which are federally mandated to be $200 per passenger.

The community has a choice between higher frequency with the smaller plane or fewer flights with larger planes.

CFM and the airport have had informal discussions, but Chaifetz said he would talk to the airport board to see what direction it leaned toward. In addition he said, “we have a lot of good data on Nashville now. I certainly think it will remain part of the equation. But if it’s time to consider the introduction of another destination, this is it.”

After several years of spotty service but two previous airlines, air service has improved drastically since Contour’s arrival, and Chaifetz said he’s been pleased with the response.

“We learned that if a carrier provides reliable service, people will use it,” he said. “We’ve been very impressed with traffic from the get go and it continues to build, which is an important indication that customers have reacted well. I think we have a really nice mix of business and leisure flyers. During the week we have plenty of business travelers who have come to rely on us to connect elsewhere or to commute.

“We’re excited and we definitely want to continue service. Tupelo has been a great market for us.”

Original article can be found here ➤

1 comment:

  1. We make KTUP a regular stop for our GA ops.

    Good prices on fuel and excellent service. The tower was especially informative on our first visit.

    We keep coming back.