Air service subsidies in other resorts

mammothairportnight2.jpgPart of the new Business Improvement District assessment in Mammoth Lakes will pay for some subsidy of air service. It’s a subject with lots of push and pull on both sides. Mammoth Lakes Tourism Director John Urdi pointed us in the direction of a news story from Vail about the Eagle County Airport. Subsidies are not uncommon for ski resorts.

The Vail Daily News reported on how things work at Eagle County Regional Airport. The story highlights the importance of air service for second homeowners and for business in general. According to the Vail Daily story, “Most airports have to offer airlines what’s called a minimum revenue guarantee before the airlines will consider adding service to the market.” The story says this holds true particularly for mountain airports which usually have limitations in what type of plane can land and take off, high altitude air density, terrain obstacles and weight restrictions.

For Mammoth, the Ski Area has funded most of the air service subsides over time with help from the Town and County during fall and summer months. For those who think this is a bad investment, the Vail story says otherwise. The report describes a local Vail alliance dedicated to raising money to subsidize air service to the Eagle County Airport. It’s called a negotiated minimum revenue guarantee for the airline. If airlines make as much as the subsidy, the community keeps the subsidy.

While Mammoth’s air subsidies have raised some controversy and resentment, other resorts seem to have more cohesive community support – like Vail and also Jackson Hole, Wyoming. According to the Vail Daily News, the Jackson Hole Air Improvement Resources Board has been able to build a successful flight service program over the years. Now, fewer than 20% of the flights this winter are subsidized.

But small communities rarely attract air service without subsidies. Plus, the air service world is mostly merging. Twelve years ago, the nation flew ten major airlines. Now, there are four that dominate the market. This gives smaller markets less appeal.

Officials agree that no airline will fly to a resort community without economic incentives. So, it’s a community decision. Of course, the resort flights also mean locals nearby have an air service alternative to get in and out of the Eastern Sierra.

 

 

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27 Responses to Air service subsidies in other resorts

  1. Ken Warner December 4, 2013 at 10:09 am #

    “the importance of air service for second homeowners and for business in general”

    This says it all. Use the promise of air service to sell fractional ownership condominium hotels. And you and I pay for it even though the air service provided really isn’t directly useful to the average person living in Mammoth Lakes or the surrounding community.

    Oh well, whatayagonnad???

     
  2. Desert Tortoise December 4, 2013 at 10:10 am #

    All forms of transportation are subsidized by taxpayer money. Road taxes collected at the gas pump pay for only 50% of the total cost to maintain our streets and highways. The remainder comes from general tax revenues. Same for ports and airports. One of the hard core requirements for economic development is that the public fund necessary transportation infrastructure. Mobility is essential for development. The only outstanding questions, therefore, are how much transportation infrastructure is ideal for a community, whether the community has the foresight to understand this and the willingness to fund it.

     
    • Ken Warner December 4, 2013 at 11:31 am #

      All true. But the crux is from this, “…the public fund necessary transportation infrastructure…” How much air service is really necessary for the public? Given that nearly one and a half million people ski MMSA every year and the usual figure for “enplanement” (whatever that means) is between fifteen and twenty thousand people a year — how much air service does Mammoth Lakes need and are we really getting our money’s worth or are we really subsidizing the big property developers?

      Getting a clear answer to this has been elusive since air service started in 2009. Given the claims of necessity for air service, why has occupancy rates and sales tax revenue not risen? In fact ocupancy and TOT and sales tax revenue have diminished in that time.

       
      • Charles O. Jones December 4, 2013 at 1:04 pm #

        All four years since 09 have been on the tails of the biggest economic downturn any of us have experienced. Add to that two relatively dry winters in a row…

        Do you really think that the snapshot of TOT and sales tax for those years is adequate to make an evaluation of success or failure of the program?

        What would the TOT and sales tax have been had no air service been in place? Potentially far worse? – who knows? Either way, I don’t see how the recent economic experiences can provide a clear-cut picture.

         
        • Benett Kessler December 4, 2013 at 3:16 pm #

          One other note. The TOT for last fiscal year ended up coming in $660,000 higher than projected.
          BK

           
          • Steve December 4, 2013 at 4:26 pm #

            Credit social media NOT MLTs King George and his Klan.

             
          • Ken Warner December 4, 2013 at 4:45 pm #

            “…TOT higher than projected …”

            Basically so what? Was the TOT higher than 2009? Was it higher than 2005? If the airport is so essential — why hasn’t it proved to be an important part of our economy.

            Nobody know’s how much the airport contributes to our economy. They take studies from other airports in other states and then say that’s what we are gaining — nonsense.

            Yes the economy was bad for the last few years. But not now. Look at the stock market. And if the economy was so bad, why invest in the airport then. Why not wait?

            The question has been asked — how bad would our economy have been without the airport. Well maybe there should be some hard data instead of just hand waving and extrapolation from other airports in other states.

            People say how important the airport is without offering any proof and then just pour money into it. What if that money was spent on upgrading the infrastructure and recreational facilities of the town? Maybe that would have been a better investment.

             
          • Benett Kessler December 4, 2013 at 5:54 pm #

            There are some figures on numbers of passengers compared to the past and estimates of money spent in town as a result. I’ll see what I can get.
            Benett

             
          • Ken Warner December 4, 2013 at 6:53 pm #

            I’ve see estimates of how much each passenger spends in town. They are not reliable figures. Those estimates are based on what other passengers to other airports spend in other states. For MMH, nobody is even sure how many passengers even go to Mammoth Lakes.

            All those estimates are just smoke and mirrors contrived to make the airport look valuable to the local economy. I had a summary prepared by Urdi the last time our steakholders were begging for public money for subsidies. There was no hard data in that.

            Make me a believer. Show me real numbers.

             
          • Pedro December 4, 2013 at 8:55 pm #

            Thanks for the drinks Mammoth! I talked my way into first class on one empty flight out of town.

             
  3. J. Ritter December 4, 2013 at 11:50 am #

    Here is the big difference — both Vail (Eagle) and Jackson airports are reliable. And when the weather in those places prevents landing, the nearest alternate airports (Denver and Idaho Falls, respectively) are approximately a 2 hour drive from the resort.

    In contrast, the Mammoth airport is located too close to the mountains and commonly subject to extreme winds to be reliable. Our alternate airport is to return to where you came, or worse — land in Fresno. Most visitors are not willing to gamble their vacation on this risk.

    Of course, the obvious solution would be to craft and execute a long-term plan to develop the Bishop airport, but since that was not (and still is not) a short-term possibility, given the many stakeholders that would have to be involved, it has been a non-starter for our past and current councils, including Rusty.

    It is another example of our town leadership and ski area CEO grasping at a short-term silver bullet, only to shoot ourselves in the foot and cause long-term damage.

     
  4. Observer December 4, 2013 at 1:45 pm #

    Unstated is that the airport for commercial air service to Vail, the Eagle County Airport, is located 40 minutes away. Farther down slope, resulting in fewer issues with terrain, density altitude, weight restrictions, and bad weather. Bishop Airport, not Mammoth-Yosemite Airport, would be the equivalent to the Eagle County Airport described in the story.

     
  5. Desert Tortoise December 4, 2013 at 3:41 pm #

    Bishop would be the logical place for a good regional airport. It has better navigation aids, a longer primary runway, two additional runways for days when winds make the primary runway tough to land on and, importantly, is about 3000 feet lower in elevation, making it easier for aircraft to operate out of at heavier loads.

    The sad fact is that Bishop is in Inyo County and the town of Mammoth Lakes along with the surrounding ski areas are in Mono County. The two counties would have to work together and establish some sort of joint regional airport district to make it worth while to develope passenger service into Bishop serving the resorts in Mono County. It is entirely doable but there would have to be some benefit to Inyo County to make this happen. I think that is the crux of the issue.

     
    • Shine December 4, 2013 at 7:41 pm #

      http://www.sierrawave.net/10869/bishop-airport-issues/

       
      • Desert Tortoise December 5, 2013 at 8:12 am #

        Interesting. I never flew passengers, just cargo so I never considered the lack of facilities for passengers or regs about fire crews. We only had to worry about whether or not there were compatible insturment approaches and predicted weather.

        In any event, all of the shortcomings would be addressed in turning Bishop into the regional airport. The real roadblock is cross county cooperation, and what benefits would flow to Inyo County.

         
        • Ken Warner December 5, 2013 at 9:33 am #

          DT, I’ve been saying and writing the same things that you’ve said for years. I’m glad an actual aviator is saying them. You can speak with much more veracity about aviation issues than I ever could.

          And I also think that Inyo and Mono county should merge and pool resources for both the airport and the fights with LADWP. It would make sense to have one central government for both counties.

           
          • Desert Tortoise December 5, 2013 at 4:20 pm #

            There are probably a dozen or more small lightly populated counties in this state that would benefit from merging into fewer larger ones with more aggregate resources at their disposal. It would require an act of the State Legislature to do so i believe.

             
        • Shine December 5, 2013 at 8:47 pm #

          To be fair, one must note that LADWP only gave Inyo permanent easement at BIH in 2011. This was major roadblock in past.

           
        • Don December 5, 2013 at 10:35 pm #

          Just a quiet observation. “Combining smaller Counties for their mutual benefit”, perhaps Mono and Inyo Counties? I believe smaller Counties and communities, working together, collaboratively and representing the interests of their constituents, perhaps through RCRC. In smaller Counties, the elected representatives are, I believe, closer to the people.

           
          • MajorTom December 6, 2013 at 11:47 am #

            Amen to that Don. I like Inyo County just the way it is. I don’t think our northern neighbors would get the desert mindset of Inyo County or that Inyo County would benefit from more of the SoCal culture of Mammoth (although the rest of Mono County doesn’t seem so bad). There are plenty of ways for governments to cooperate to their mutual benefit when they desire.

            The Bishop Airport could totally work as a regional airport. Mammoth Mtn could pay airlines to fly into Bishop as easily as it pays them to fly into Mammoth if Bishop was more viable. Most airport improvements are funded through federal grants which weren’t available before the airport easement. Inyo has already obtained grants and done one major electrical project which helps pave the way for more commercial use. If Mammoth Town and Mono and Inyo Counties all found it feasible to use Bishop as the regional airport, the details would take care of themselves. But that’s the rub – there’s only room for one regional airport in the area, and I’m guessing that Mammoth would rather that its airport be the one.

             
  6. Steve December 4, 2013 at 4:47 pm #

    If air service needs a subsidy to survive then it shouldn’t exist. Just because other resorts do it does not mean it’s right for Mammoth. The fact that an industry (airline) must be subsidized in order to operate shows there is no market for this type of economic activity. Throwing more money at a fail enterprise will only lead to more inefficiencies and the need for increased subsidies down the road. Mark this post, Mammoth will always subsidies its air service.

     
    • Observer December 4, 2013 at 7:01 pm #

      LAX and SFO flights have guarantees, but with snow on the mountain the airlines do not receive subsidies for these flights. Local governments have no seat at the table when guarantees and subsidy contracts with the airlines are negotiated and executed. Year round service to Bishop to these markets may need guarantees to initiate,– and will need FAA financed airport upgrades– but probably will not require subsidies (unless too many winter flights are scheduled and there in no snow on the mountain).

       
    • Desert Tortoise December 5, 2013 at 8:16 am #

      Lets examine that statement. US 395 requires a subsidy of taxpayer money to exist. Federal and state excise taxes on fuels only fund about 50% of the total costs of building and maintaining roads. The remainder comes from general fund tax money in the form of state and Federal grants, some local tax revenues and bond issues. By your standard no highway would be built anyplace in the US, nor would there be any sea ports, airports, dams, water systems or electric utilities.

      You have electricity and highways in the Eastern Sierras because taxpayers elsewhere are footing the bill for them. Nowhere in the world to user fees pay the full cost of either. Both are, in every case, subsidized out of the general tax revenue of a nation. Both are fundamental ingredients to economic growth and a high standard of living. It is what we do as a nation to make it better. Private industry will not do it on it’s own, so it falls to government to fund these. Economists as far back as Adam Smith recognized these things.

       
      • Steve December 5, 2013 at 12:10 pm #

        You make a good point, but what you have mentioned (sea ports, airports, dams, water systems or electric utilities) is not the same as air service. The last time I checked, air service for 100 people a day from LA and SF was not essential. How do I know this, Mammoth has prospered when there was no air service in the past. Don’t confuse government sponsored enterprises/subsides with utilites, taxes for roads and seaports are collected based upon consumption (electric bill, taxes per gallons and fees paid based on use). The subsidies for flights comes from both users and non-users.

        Based on your logic Tortise, then why not fund everything with tax dollars, I want to fly to Miami, so we should have a direct flight there. If governmental planning is the best model then the USSR and N Korea should be the most prosperious nation on earth.

         
        • Desert Tortoise December 5, 2013 at 4:16 pm #

          There isn’t a country in the world where the full cost of providing electric, gas and water utilities to residential users is paid for in full by the users. In every case everywhere in the world a combination of higher rates for commercial users (even the electrical rates I pay Edison for periods when my rentals are not rented and the bill is paid by my company through what is called a “Continual use agreement” are higher per KwH than the rate paid by my renters) and taxpayer subsidies. None of the communities in the high desert or eastern Sierra would have electricity if not for some very large taxpayer subsidies.

          I do not see much difference in subsidizing an investor owned utility like Edison or subsidizing an investor owned airline. Much of Nevada for example would not have any form of air service were it not for state and Federal subsidies. This is essential transportation infrastructure essential for economic growth. See where our communities would be if all those taxpayers in the big cities who really pay the nation’s bills decided to cut off our subsidized electricity and refuses to fund our roads.

          All or nothing arguments do not work with me. I am not a strict ideolog. Everything requires judgement. I like the Chinese concept of Yin-Yang. Nothing is perfectly black and white. There are no silver bullets. Everything in life requires the application of some reasoning and judgement, a little compromise for the better of us all.

           
    • Charles O. Jones December 5, 2013 at 12:47 pm #

      Are you equally opposed to the Digital 395 project which is bringing high speed internet access to the eastside through tremendous government support? Not to mention the many other advancements we take for granted that wouldn’t survive if left only to local economic support. Such is life in a rural region.

       
  7. slowpoke December 5, 2013 at 7:59 am #

    I have waiting for someone to bring this up for a long time. Airport jobs in Bishop, more jobs in Mammoth. Too bad it will never happen

     

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