When it comes to recruiting a new flight to the Bert Mooney Airport, there’s one thing that most local officials can agree on: Increasing air service to Butte would be good for the local economy.
Not only would it provide another flight option for tourists traveling to western Montana, but it would also make Butte a more attractive location for businesses looking for a place to call home.
But what officials don’t seem to agree on is which local entity should lead the way in earmarking the funds necessary for a revenue guarantee that would make a flight between BTM and Denver a reality.
Butte’s Tourism Business Improvement District — a board that oversees a yearly budget of around $250,000 generated from a $1 assessment charged to hotel guests for every overnight stay in Butte — has already made a $200,000 commitment toward the guarantee. But in November, some county commissioners called for the TBID to increase the assessment to $2 to further subsidize the potential new connection.
Last week, Chief Executive Dave Palmer renewed the call for an increased assessment with a letter he sent to the board, stating that “a new connection would provide a boost in local and state usage of the airport, as well as more tourists using the airport to fly into and out of Butte.”
Palmer followed up with an in-person visit to the TBID’s usual board meeting Monday night, where he restated his position.
Also in attendance Monday was Jay Doyle, president of St. James Healthcare, who said a direct flight to Denver would be good for business and more efficient for St. James employees. “It makes a lot of sense for us,” said Doyle.
TBID board members said they understand the importance of increasing Butte’s air service — that’s why they made the $200,000 commitment — and they repeated what they have said during previous board meetings: They would like to see a community-wide fundraising effort, one that involves county officials, major employers, economic development organizations and others with skin in the game.
Airport personnel, meanwhile, are prohibited by federal regulations from raising private funds for flight guarantees.
For over a year now, Bert Mooney officials have been in discussions with SkyWest and United airlines regarding the addition of a new flight to BTM’s lineup — one that would run seasonally three months in the winter and three in the summer.
But adding a new flight could be risky for the airline involved, and its leadership would most likely ask for what’s known as a revenue guarantee: a commitment of funds from a variety of local entities that would be earmarked for the airline in case the new destination doesn’t turn a profit.
Revenue guarantees are common in the industry, and the commitments that comprise them often come from a variety of sources, including funds set aside from local TBID boards, grants, donations from large employers, individual donations and more.
Earlier in the airport’s discussions regarding the potential new Denver destination, JR Hansen, chairman of Bert Mooney's Air Service Development Committee and also a member of the Airport Authority Board, told The Montana Standard the revenue guarantee would be around $850,000.
Hansen said Monday that based on a recent passenger leakage study that showed Bert Mooney attracts just 31 percent of its potential market, the estimate given by the airlines came down to $386,000 for 6 months of seasonal service in 2019.
Unfortunately, Hansen said, the window has already closed for securing a new destination for 2019, and the airlines will have to come up with a new estimate for 2020 service to Denver. Based on uncertainty about fuel costs and other variables, there’s not a new number on the table yet, but it’s likely to continue to be hundreds of thousands of dollars, Hansen said.
Steve Luebeck, TBID chairman, said Monday that board members have been waiting for a new flight-guarantee figure to determine whether an assessment increase would even be able to cover the entire cost.
TBID board member Mike Johnson expressed similar sentiments.
“I’d like to increase (the assessment) when we know we have somebody talking to us (and) we’ve got an opportunity to actually allocate some real money to a real project. In the meantime, we had a plan to make sure there was money available,” he said, referring to the TBID’s $200,000 commitment.
“I was aware of your plan,” Palmer replied.
“But we realized it wasn’t enough,” he continued, adding that going out into the community and asking for commitments is easier “if you’ve already got a good start” — meaning that it would be easier to ask for commitments if a large amount of funds have already been set aside.
Hansen said airport officials plan to attend an air-service development conference in March, at which time they’ll meet with SkyWest and United to continue their pitch for Butte. Both airlines are interested in providing service between Butte and Denver, which he said is a positive indicator. However, he said Tuesday, time is of the essence and it will be important to get the ball rolling on securing commitments so as to not lose out and miss the window for 2020.
After the March meetings, Hansen told board members Monday, he estimates that a revenue-guarantee figure for 2020 seasonal service to Denver would become available around May.
He added that there is another scenario at play:
United could apply for a federal Essential Air Service Grant for year-round service to Denver. Currently Delta Airlines’ year-round service between Butte and Salt Lake City is subsidized by an EAS grant. However, EAS funds would only be available for year-round service to just one major hub destination. This means that if United was awarded the grant, a revenue guarantee would then be needed for the Delta service to Salt Lake City instead.
TBID board members said Monday they’d like to see at least one entity in Butte take the lead in a fundraising campaign for the guarantee, while a few stakeholders in the room, including the Butte Chamber of Commerce, the Butte Local Development Corp., and CEO Palmer, expressed interest in leading the charge.
By the end of the meeting, TBID board members didn’t exactly embrace the idea of increasing the assessment with open arms, but they didn’t take it off the table either.
Luebeck said if the next revenue-guarantee figure is similar to the $386,000 provided for 2019, he’ll support increasing the assessment from $1 to $2.
“If you get a firm commitment on that, I will call a special meeting and I will put this as the sole agenda item and I will argue in favor of that $1 tax increase,” he said. “But again, we do need larger community support.”
“Somebody’s going to have to become the tip of the spear,” he said.