Air Alliance considers imposing sales tax
Here’s a look at what other ski resort communities spend every year to fund air service:
• Telluride/Montrose: $3.5 million.
• Steamboat Springs: $3.5 million.
• Crested Butte/Gunnison: $900,000.
• Eagle County: $400,000.
• Aspen/Pitkin County: No organized effort.
EAGLE COUNTY — Air service to ski towns is proof of the old adage, “You have to spend money to make money.”
People who fly into ski resorts generally stay longer and spend more money than those who drive. That makes air service critical to the economic health of those resorts. For years, Eagle County has depended on the year-to-year generosity of local businesses and governments. But an economic slump, airline consolidation and a gradual switch to smaller airplanes has cost the Eagle County Regional Airport almost 100,000 incoming airline seats since 2007, from a high of just more than 350,000.
That decline has led the EGE Air Alliance, a citizen group dedicated to boosting air service into the local airport, to look for a steady source of funding.
That funding will pay airlines for revenue guarantees on new routes. That local money offsets airlines’ losses on routes until those routes make money. The Alliance in 2013 raised more than $400,000 to lure a summer United Airlines flight from Houston. The Alliance raised the same amount for summer service this year, but not all the money was used.
But to negotiate more flights, both summer and winter, Alliance members say a steady source of funding is essential.
Sales Tax Likely
Other resort communities use tax money — mostly sales or lodging taxes — to fund their air programs. The Alliance is likely to ask county voters in 2015 for a similar tax, although details of the proposal haven’t yet been announced. Expect a formal proposal some time in the first three months of next year.
At a recent meeting of Alliance members, board president Michael Brown detailed some of the ideas the Alliance board is discussing.
While there are several ideas under discussion, Brown at a recent meeting of Alliance members spent the most time talking about a possible .15 percent sales tax. That tax — which would be 15 cents on $100 of spending — would raise between $1.2 and $1.5 million per year. Brown said that money would allow the Alliance to fund guarantees for about three flights a year.
The idea is that those guarantees would shift over to new routes every few years, since airlines want flights to pay for themselves as often as possible. Only the summer Houston flight — and this season’s Air Canada flight from Toronto — have revenue guarantees. Conversely, flights at some other resort airports are essentially permanently subsidized.
Is A Tax Enough?
At the meeting, Alliance member Jim Flaum, managing broker of Slifer Smith & Frampton Real Estate, asked if $1.5 million per year would be sufficient.
Fellow Alliance member Tim Baker, the executive director of the Beaver Creek Resort Company, said the incentive money to airlines also has to be accompanied by marketing efforts. Then there’s the fact that Denver International Airport will continue to be the airport of choice for many destination guests.
When the Alliance makes the final decision about what to ask voters for in 2015, expect a vigorous campaign. Current surveys show that a tax question right now would fail, but not by much. Turning public opinion will require everything from advertising to discussions with virtually every local group what will listen. Kelli McDonald, the town of Vail’s economic development director, added that supporters may also send personal notes to encourage a “yes” vote.
“This is about more than peers,” Baker said. “It’s your friends and family, too.”
Vail Daily Business Editor Scott Miller can be reached at 970-748-2930, email@example.com and @scottnmiller.
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