For the past several years, the Missoula Economic Partnership has focused on improving air service to and from the city, calling it an economic tool capable of opening new business markets while enhancing leisure travel.
To do that, however, Missoula must compete with other cities and entice airlines with revenue guarantees, which are increasingly required as airlines consider new flights to new locations.
On Wednesday, MEP joined local business leaders and Missoula International Airport officials in unveiling a new study focused on revenue models used at nearly a dozen U.S. cities, from Harrisburg, Pennsylvania, to Redmond, Oregon.
Contracted by MEP and presented to the Missoula City Council’s Committee of the Whole, the study found an array of programs that varied in structure and leadership, though nearly all received support at the local level.
“I found the annual average contribution to the air service revenue guarantee fund was $202,700,” said Anthony Rodriguez, who conducted the study. “A revenue guarantee is a tool or asset that can attract new air service into this community. It really is an economic development tool.”
Local business leaders have long lobbied for expanded air service, saying it would allow customers and clients to travel between markets. The city’s larger businesses deal primarily with customers who live outside the state, and traveling to and from Missoula can be cost-prohibitive.
“I definitely see this as an economic development tool,” agreed Ward 3 council member Emily Bentley. “It attracts big companies that have the potential of bringing high-paying jobs to our community. I’d be interested in an analysis of how those companies look at these matches.”
James Grunke, director of MEP, said Missoula already loses out on business opportunities from Chicago and San Francisco due to the city’s seasonal air service to those locations.
He said a revenue guarantee, in whatever form it takes, would not go toward an unsustainable route. Any new service must be backed by community demand and solid numbers.
“We have no interest in the long-term subsidization of a route that wasn’t sustainable,” Grunke said. “The only way to drive down costs is to increase seats. Absent of our community stepping up to say it wants air service and is willing to pay for it, we’re not going to have it.”
While the city has budgeted $300,000 through 2018 to subsidize free bus rides on Mountain Line, local businesses have fronted the cost of enhancing air travel to and from Missoula.
Recently, local business contributed $100,000 to match the same amount donated by the Missoula Tourism Business Improvement District to help incentivize service to Dallas-Fort Worth.
If a federal grant comes through later this month, the city would join forces with Bozeman to entice American Airlines to launch non-stop service to that south-central city.
But Grunke and airport director Cris Jensen said the opportunity with American Airlines was a one-time opportunity that came up unexpectedly. By creating an air-service revenue guarantee, the city would be better prepared for other opportunities when they arise.
“Missoula can either participate by buying capacity, or we’re going to watch other communities do it,” Grunke said. “But airlines aren’t going to come here without it.”
Jensen agreed, saying air service has changed in the past five years.
“Air service today is really a community effort,” he said. “When you look at successful airports, you’re looking at successful communities.”
MEP will ask Rodriguez to look at specific revenue programs in place at other cities, from ticket banks to incentive offers – like ski or fishing packages – and what model might work best for Missoula.
Grunke said he’ll talk with local business leaders while the city contemplates participating in the program. The airport will continue to explore new market opportunities as well.
“We’re continually analyzing what cities make sense,” said Jensen. “That East-Coast market – Boston, New York – we have a lot of demand for. We’re well served to the west, though we think Los Angeles, San Francisco and Chicago year-round make sense as well.”