Missoula airport considers incentives to airlines to offset state’s aviation fuel tax

American Airlines arrives in Missoula on its maiden flight in 2017. The airline flies several long-haul routes from Missoula that could be jeopardized by the state’s boost to the aviation fuel tax and the elimination of a fuel rebate. (Martin Kidston/Missoula Current file photo)

Fearing a decision by the Montana Legislature will hurt commercial air service, Missoula International Airport could offer its carriers new incentives to help offset any additional costs imposed under the new law.

The Legislature this session boosted taxes on the aviation fuel used by commercial carriers and it eliminated a fuel rebate once offered to the airlines. Together, it increases a carrier’s financial risk, particularly during slower seasons and on long-haul routes.

“Because of the distance, these routes tend to be more at risk because of the additional fuel burned and the fact that the aircraft is less productive,” said airport director Cris Jensen. “Staff felt it was a good idea to be proactive and is proposing an incentive package that will directly benefit these routes.”

The Missoula Airport Authority this month will consider a number of options intended to offset the elimination of the fuel rebate and the increase in fuel taxes.

That includes applying a $50,000 marketing budget toward the package and making changes to the airport’s ground handling fees.

Jensen said the package would be available for routes over 1,000 nautical miles, including Atlanta, Chicago and Dallas. It could also include a waiver of landing fees and terminal fees during a certain period.

The total package could amount to around $189,000.

“Because of our concern, we’re putting together an off-season, off-peak incentive package to help the airlines,” Jensen said. “That January, February, March time frame is a slow time of year for us, especially for long-haul flights. So we came up with a strategy to help offset that increase in the fuel tax.”

Commercial airports across Montana lobbied against the increased fuel taxes, saying it could cripple the air services relied upon by business and leisure travelers. It comes at a time when other states are eliminating fuel taxes as a means to court and keep service.

Affordable air service is a major economic driver, opponents of the new state measure argued before its passage.

“Our fear is that it’s the long-haul, price-sensitive markets that will suffer, short term and long term,” said Brian Ellestad, deputy director of the Missoula airport. “It takes away another tool in our tool box when we try to recruit new air service. We saved $2.8 million with getting American Airlines in here and now all that work might be taken away from us.”