Saturday, September 2, 2017

Air Wyoming? State explores behaving like an airline to ensure regular service to cities

The impending departure of Allegiant Air from Casper, announced last week, signaled more than the end of popular discount flights to Las Vegas. It showed the extent to which Wyoming is dependent on the whims of commercial carriers to serve relatively rural areas.

Rep. Pat Sweeney, R-Casper, said that airport officials had done everything possible to retain Allegiant service, including attending the company’s annual meeting every year in Las Vegas.

“What more can we do?” Sweeney asked at a legislative committee meeting Friday.

The Wyoming Department of Transportation has a possible, if ambitious, fix. The agency wants to contract with airlines to provide regular service to airports in the state, similar to how large airlines like United contract with smaller carriers like GoJet to provide regional air service.

That would be a different approach than the revenue guarantees currently used to subsidize commercial air service in most Wyoming airports where the local, state and federal government chip in to the tune of $46 million per year to guarantee carriers a minimum amount of business each year by covering any shortfall.

WYDOT’s idea is to start entering what are known as capacity purchase agreements. Those deals give the entity commissioning the contract more control than by offering revenue guarantees alone. WYDOT and local airports in Wyoming would dictate the frequency of flights, number of seats, price and destinations while paying the contracted carrier a set amount.

“This idea of capacity purchase agreements, for decades, has worked very well for airlines,” said WYDOT director Bill Panos. He pitched it as a public-private partnership that could reduce the amount now spent by the state on ensuring air service to small Wyoming cities.

Air service challenges

The new approach is intended to head off a series of factors working against reliable commercial air service in the Cowboy State.

One is price. The average air fare to or from Wyoming airports is nearly 30 percent more expensive than the national average, while southern neighbor Colorado has fares that are 20 percent below the national average, leading to a gulf that makes it hard to persuade state residents to fly out of local airports rather than driving to Denver or Salt Lake City, Panos said.

Only about half of Wyomingites taking a flight use airports in the state each year, according to WYDOT data.

Moreover, as commercial airlines begin phasing out the smaller jets that have long served many Wyoming airports in favor of at least 70-seat aircraft, it will become more difficult to continue attracting carriers to the state, even with revenue guarantees.

“That’s why I think the program we’re talking about is so significant,” said Sen. Hank Coe, R-Cody, at the Joint Interim Minerals, Business and Economic Development Committee meeting Friday in Casper. “How do we end up with air service? Because right now the 50-passenger airplane is the size that fits the market we have.”

And finally, even in Wyoming cities with regular air service, a common problem persists: It’s far easier to fly out than fly in. A businesswoman in Rock Springs can fly through Denver to an afternoon meeting in Dallas and arrive back home the same night. But her counterpart in Dallas couldn’t fly into and out of Rock Springs in a single day.

A capacity purchase agreement, Panos said, would solve many of these issues.

The core goal would be bringing three daily round-trip flights to Denver to all nine Wyoming airports with commercial air service, ideally with prices aligned with national averages and few to no cancellations or delays. While the program’s proposed model could eventually be built out to include connection to other hubs such as Minneapolis or Dallas, Denver remains the largest regional hub for Wyoming, with connections to carriers like United, Southwest and Frontier.

Currently, four carriers service eight Wyoming airports — Casper, Cheyenne, Gillette, Rock Springs, Riverton, Laramie, Cody and Sheridan — all with their own schedules. WYDOT’s goal is to transition to a single carrier with regular Denver service.

Jerimiah Reiman of Gov. Matt Mead’s ENDOW Council, which is working on economic diversity in the state, said lack of reliable air service in Wyoming led many business people and companies to move out of the state or cluster around Jackson, Wyoming’s busiest airport. Jackson was largely left out of the WYDOT proposal because it already has frequent, primarily leisure-based, flights.

“Commercial air service is a significantly limiting factor,” Reiman told the committee. “There’s a lack of air service particularly to global destinations.”

Nick Wangler of the Forecast consulting firm, which worked with WYDOT on developing the proposed program, said that Wyoming is unlikely to see this kind of regular service to regional hubs without more state intervention.

“The way (airlines) do it is, ‘If it’s not broken, we don’t want to fix it,” he said. “What’s ‘not broken’ to them is we’re paying really high airfares and we have really full flights.”

But instead of having, say, a single flight with high fares, the state could use a capacity purchase agreement to create three flights with lower fares, Wangler said.

As now proposed, individual Wyoming communities would enter into the capacity purchase agreements with a carrier that would operate and staff the flights, while the local airport — or a community-based board — would brand the flights, distribute tickets and plan schedules and routes. Wangler said under the current plan, passengers would still purchase tickets on the airline’s website and board an aircraft with a national brand’s name painted on the side, though that’s subject to change.

“The best solution is invisible,” Panos said.

Skepticism, support

WYDOT is now completing a study of the model and the legislative committee agreed to form a working group, though lawmakers wavered between support and skepticism over whether the model will — or should — ever be implemented.

If the model is seen to completion, it would include creating hubs in Casper and possible Cheyenne that would allow flights to and from cities within Wyoming.

Rep. Chuck Gray, R-Casper, said that the timing likely wasn’t right for the Legislature to fund a new air service program.

“We need to continue to look at the current situation and continue to pursue competition,” Gray said. But with the exception of Casper, commercial airlines have shown little interest in serving Wyoming without government subsidies — much less in competing with one another.

Regional carriers, which formerly served the small markets that larger airlines were not interested in, have been battered by new federal regulations passed after a 2009 regional plane crash that require pilots to have significantly more experience before flying any commercial routes.

Gray said he believed the solution to Wyoming’s air service troubles lay in attracting Southwest Airlines to the state because it was already a discount carrier.

“You plop down Southwest and I think that’s the biggest thing you could do to control price,” he said.

State officials emphasized that the airline was uninterested in local markets and used only large planes that even Casper was unlikely to be capable of mustering demand for.

Despite volunteering to serve on the working group, Gray cast the lone vote against moving forward with developing the capacity purchase agreement model.

In contrast, Sen. Michael Von Flatern, R-Gillette, was one of the more enthusiastic supporters of exploring the model. He said that as carriers move to larger jets, many states will be competing to attract carriers to capacity purchase agreements and that Wyoming risked falling behind and losing out on a vital transportation option.

Von Flatern said he’d been involved in discussions about air service in Wyoming for decades and that this was the first time he aware of an option like the capacity purchase agreement to work — something other rural states were likely realizing as well.

“It’s of the utmost urgency we get on this,” he said. “This presentation could be given in Arkansas this morning, or South Dakota.”

Original article can be found here ➤

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