When American Airlines landed at Missoula International Airport on its inaugural flight in June, its arrival was hailed as a success, one that grew the city’s destinations, increased competition and helped drive down prices.
But the years-long effort to establish the revenue guarantee needed to bring American Airlines to Missoula now has backers looking to restructure the program, known as Take Flight Missoula, and explore new ways to grow air service.
That could include turning some popular seasonal flights to permanent, year-round options.
“We’re all feeling it needs to be restructured somehow, because the conversation is changing,” said Barb Neilan, executive director of Destination Missoula and one of Take Flight’s partners. “We’re looking at some scenarios that might work.”
Nonstop service on American Airlines to Dallas/Fort Worth was announced in December 2017. It was made possible through a revenue guarantee that included a $600,000 federal grant and a $400,000 community match.
The guarantee, required by major carriers as cities compete for service, helps airlines cover the cost of vacant seats. The Missoula to Dallas flight has ranged from 77 percent to 86 percent capacity, requiring a $94,000 payment to the airline.
Cris Jensen, director of Missoula International Airport, said the payment was larger than anticipated. He attributed the cost to a number of factors, including rising fuel prices and increased competition from United Airlines.
“The contract was written with a $2 per gallon fuel price built in, and we’re at about $2.43 right now, so we’re getting a big fuel penalty,” he said.
“The other thing, United has come in with a very competitive response and put a lot of capacity into our market,” he added. “The result of that is we’re spreading the passengers over more seats. That’s suppressing the American numbers just a little bit.”
Since American arrived in Missoula, United has increased aircraft size and flight frequency to San Francisco. It also launched service to Los Angeles for the first time.
United also brought in larger aircraft on its flights to Chicago, and it added weekend service. Nearly all United flights to Denver are now on larger aircraft as well, Jensen said.
“From the time American entered the market to the end of this year, United will be up 35 percent in available seats compared to where they were last year,” he said. “That’s a huge increase in a short period of time.”
Jensen said American’s arrival in Missoula and United’s response has driven down ticket prices. While figures compiled by the Department of Transportation won’t be released until early next year, a drop in local ticket prices has been widely observed by frequent travelers.
That benefits all travelers, leisure and business alike, and represents the need to continue growing local service, Jensen said.
“We’re seeing pricing come down considerably on a lot of the routes now because of that competition,” he said. “We think the consumers are benefiting from it. We expect there’s been a big benefit to our community, to our business and to our travelers.”
Take Flight Missoula and its three primary partners, including Destination Missoula, the Tourism Business Improvement District and Missoula Economic Partnership, along with the airport, will continue to meet as they consider their next move.
Neilan said they need to raise the last $40,000 to complete the revenue match for American. After that, they’ll explore other ways to continue the Take Flight program.
“We’ll be looking at different formats on how we can look at Take Flight differently,” she said. “One of the things that was thrown out at one of these meetings was the possibility of making it more of a membership organization.”
Neilan said it’s too difficult to build a revenue guarantee each time it’s needed. Backers are now looking to a member-drive program where the guarantee is fed annually by partner organizations who rely on air service.
Those conversations have expanded beyond Missoula. Neilan said the effort is now looking to other cities where business ties are high, such as San Francisco, to bring them into the equation.
“Those conversation are happening, but we need to coalesce it into a united voice and really have a strategy behind it,” she said. “We’re trying to figure out if we have incentives behind that, how we structure that, and if it’s a membership, is that more palatable to businesses.”
Matt Doucette, a member of the Missoula Airport Authority’s board of directors, said the Take Flight initiative has shown its importance to the region’s economy.
“We need a coffer of money somehow to be able to incentivize flights like American,” he said. “Now we have some history and things we’ve learned, and we’ve had transition with MEP. There’s some real energy coming out of that. We need to take a step back, finish this, and come up with a good plan with more people contributing to the goal.”