Small airports gamble with revenue guarantees

Associated Press Published: November 14, 2012
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Columbia Mayor Bob McDavid said the city was told by its airport consultant that a "$1 million guarantee gets you on a list, $2 million might get you a phone call and a $3 million guarantee could get you a deal."

McDavid said the city has lost innumerable corporate investments due to its inadequate air service. Until 2010, when Delta added limited jet service through Memphis, Tenn., it had been a decade since Columbia passengers could travel on bigger planes on now-defunct Ozark Airlines, which offered flights to Chicago and Dallas.

The city is ponying up $1.2 million toward the revenue shortfall fund, with the local Chamber of Commerce providing $600,000 and county government another $500,000. The University of Missouri is also shelling out $500,000, with neighboring Cole County and Jefferson City, the state capital, each pledging $100,000.

In return, American is bringing two daily nonstop flights to and from Dallas/Fort Worth, and one daily nonstop route to Chicago O'Hare International Airport on 50-seat regional passenger jets, starting in mid-February. The city will also waive two years of landing fees and facility rents, valued at $250,000, and chip in $400,000 of free advertising through a deal with a local broadcaster.

American spokesman Matt Miller declined comment, citing a company policy of not discussing its revenue guarantees.

Columbia's air-service links to the southeastern United States aren't completely severed. In November, Frontier Airlines will begin offering twice-weekly flights to Orlando, Fla., on 138-seat jets.

Mike Boyd, a Colorado-based aviation consultant who previously worked with Columbia but wasn't a part of the Delta and American negotiations, said the city still came out ahead despite Delta's departure.

"It's the only airport I know where airlines are falling over themselves to get there," said Boyd, adding that United Airlines was also interested in a Chicago connection. "I think other cities would kill to get into this situation.

"If American comes to you and says, 'I want to fly to your community,' the city can't say, 'We don't want you," he continued. "You have to take what you get, and accept the consequences."

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Alan Scher Zagier can be reached at http://twitter.com/azagier .