‘Revenue guarantee’ needed for Toronto to Eagle County flight
July 14, 2014
• Air Canada last year announced weekly service between Toronto and the Eagle County Regional Airport.
• While flights were well-booked in February and March, passenger numbers lagged the rest of the season.
• The airline asked for a “revenue guarantee” to continue service.
• Flights from Toronto in the coming season will be in February and March only.
EAGLE COUNTY — There was great rejoicing last year when news broke that an Air Canada flight from Toronto would provide ski season service to Eagle County Regional Airport. That rejoicing was almost cut short recently.
While the weekly flights from Toronto were well-filled in February and March of this year, the airline provided service through much of the ski season. Eagle County Director of Aviation Greg Phillips said the flights, especially in January, didn't perform as well as anyone had hoped.
That led Air Canada to scale back its planned service to just February and March of next year. The airline also asked for a $115,000 revenue guarantee so it didn't lose money on those flights. While most domestic airlines regularly use those guarantees for the first few years of new routes, Air Canada doesn't often ask for guarantees.
And this request came with a tight deadline. Given the fact that airlines schedule flights well in advance, Phillips said the county needed to act quickly or Air Canada would cancel the flights. That led to a request to the Eagle County commissioners for the guarantee funds, a request that was quickly granted.
“A year and a half ago (before I took office), I thought airlines thought coming to Vail is a privilege. That’s not the case, and I think a lot of other people think the same thing.”
Eagle County Commissioner
"Time was of the essence," commissioner Jill Ryan said. "We want to be supportive, since air service is vital to our economy."
While the county has the money available, flight backers are now going to the valley's towns and business groups, asking for money so the county isn't alone in paying all or part of the guarantee after the coming ski season. The total payment, if any, will be based on passenger and revenue numbers calculated after the flights have ended.
The municipal tour starts Tuesday in Vail, where Phillips and Vail Resorts air program manager Gabe Shalley will ask the town of Vail for roughly half of the flight guarantee.
Phillips said the near-loss of the Air Canada flight points, again, to the valley's biggest problem with air service: every flight requires a new round of finding money for guarantees.
The EGE Air Alliance, a community group made up of business and government representatives, has now twice raised about $400,000 to lure a summer flight from Houston on United Airlines. A third summer will require yet another round of fund-raising from both public and private sources.
"Any time this comes up, we're going to scramble or give up the flights," Phillips said. "We really need to establish a long-term source of funding.
While the Toronto flight was the work of Eagle County and Vail Resorts, a group such as the Alliance could have a more significant role to play in bringing flights to the valley if there was a steady stream of funding. And yes, that probably means some sort of tax, which would have to be approved by voters.
Michael Brown, board president of the Alliance, said the group has been doing a lot of research into just what kind of revenue source would work best, both in terms of money raised and the potential for voter approval. Brown said the Alliance is still looking at its options, and will announce a plan this year, with the idea of presenting it for voter approval in 2015.
That's going to take a lot of public education, Brown said, something Ryan agreed with.
"A year and a half ago (before she took office), I thought airlines thought coming to Vail is a privilege," Ryan said. "That's not the case, and I think a lot of other people think the same thing."
Brown said public education is going to be a key element of the Alliance's work over the next 16 months or so. While the support of elected representatives and business groups is important, people who vote will need to be persuaded, too.
Vail Valley Partnership President Chris Romer said a stable air program — one in which a steady source of money is used to target flights from different markets — is crucial to the valley's economic future. In a small way, the Toronto flight is part of that long term effort to build the Vail/Beaver Creek brand.
Losing Toronto after just one season would have had long-term consequences, perhaps more from the perspective of consumer awareness than passenger numbers, he said. Having a flight, then not having one, can do a lot to discourage a potential customer.
"These things need time to grow," Romer said.
So does the idea of sustained funding for a flight program.
"We've got a lot of work to do," Brown said. "We need to have a lot of conversations and do a lot of education."