Butte’s Tourism Business Improvement District is considering increasing its nightly tourism fee from $1 to $2 to support an effort to bring a Denver flight to the Bert Mooney Airport.
For each overnight stay in Butte, the TBID collects a $1 “assessment” from hotel and motel patrons and sets aside those funds for investment in tourism and projects that board members believe will increase visitation to Butte — things like festivals, sporting events and marketing campaigns.
The assessment generates over $200,000 per year for the TBID, but with the proposed increase, the body could see its budget double.
Board members met Monday, at which time they discussed submitting a resolution to Butte’s Council of Commissioners to increase the tourism fee and steering the additional funds toward a revenue guarantee for SkyWest Airlines, which would operate the new flight under the banner of United Airlines.
JR Hansen, chairman of Bert Mooney's Air Service Development Committee and also a member of the Airport Authority Board, told board members Monday that the airport has been having ongoing discussions with SkyWest regarding the potential new flight, but landing an agreement would require coming up with an $850,000 revenue guarantee for the airline.
Hansen said SkyWest’s current Delta route to Salt Lake City isn’t profitable for the airline, and as a result its service to Bert Mooney is subsidized by a federal $881,665 Essential Air Service grant. The airline wouldn’t want to lose money on the Denver flight, Hansen explained, and that’s why the company would want a revenue guarantee in place.
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The goal of the campaign, Hansen said at the time, is to increase the airport’s boarding numbers and keep SkyWest and Delta in Butte. Loosing that service, he said, could be “catastrophic” to Butte economically, and boosting the numbers could help airport officials in their efforts to court SkyWest.
Board members ultimately delayed taking action on the assessment issue Monday, but they are likely to take up the topic again at their next meeting, which could come as early as the end of June, Maria Pochervina, executive secretary for TBID, said Tuesday.
If passed, the assessment increase would not mean that the TBID would be supplying all of the funds for the revenue guarantee, which would likely come from a variety of sources and a fund raising effort.
Hansen told The Montana Standard Tuesday that a number of Montana communities have used revenue guarantees to bring new airlines and new destinations to their airports, including Missoula, which through a marketing campaign and assistance from a federal grant was recently able to add daily American Airlines direct flights to Dallas and seasonal direct daily flights to Chicago to its lineup.
Kalispell is another community that has recently dredged up funds for revenue guarantees, setting up a nonprofit called Glacier AERO, whose purpose is to invest “in strategies designed to expand commercial air service to the Flathead Valley,” according to its website.
Hansen said Tuesday the revenue guarantee wouldn’t go to SkyWest unless the Denver flight failed to attract a boarding rate of 85 percent. Most Montana communities haven’t had to dip into their revenue guarantees, he said, save for Billings Logan International Airport, which recently had to dip into $250,000 of its guarantee to make up for a slow fall spurred by wildfires, according to the Billings Gazette.
Hansen added that the airport is in the process of commissioning a leakage study that will look at the amount of travelers that chose other airports but might have chosen Bert Mooney under more favorable conditions. Those results, he said, could decrease the amount of funds required for a revenue guarantee.