Friday, July 20, 2012
Frontier off Steamboat’s flight schedule
Steamboat Ski and Resort Corp. Airline Program Director Janet Fischer confirmed Friday that Frontier's daily flight from Denver, which brought some competition to United Express on that route last winter, will not be offered this winter.
“The opportunity to have that midday Embraer (jet) on Frontier was just not there this year,” Fischer said.
Steamboat Springs Despite a projection of $950,000 in new revenue from the 0.25 percent sales tax dedicated to the resort airline program, Steamboat Ski and Resort Corp. officials and Local Marketing District board members are looking at an 11 percent reduction in available airline seats for the coming 2012-13 ski season.
Ski Corp. Airline Program Director Janet Fischer told the Local Marketing District board Friday that the number of arriving seats for the coming season now stands at 109,000 with the possibility of an additional 2,700 coming from Denver on United Express.
Local Marketing District Chairman Steve Dawes said during the board’s meeting Friday that he thinks it will be important that the board be prepared to explain the situation in early October, when it hosts an open house to educate and take questions from the community.
“How did we get $400,000 more revenue and get 11 percent fewer seats?” Dawes asked rhetorically. “I think a lot of people will be taken aback when they are likely expecting (the tax) would create more seats.”
Dawes’ reference was to the $417,214 collected by the 0.25 percent sales tax as of Tuesday. However, a preliminary projection anticipates that number could grow to $950,000 by the end of the year.
Board member Chuck Porter said part of the message to the public needs to be a reminder that the winter airline program, deemed essential to Steamboat’s resort economy, would be in far more difficult circumstances had the tax not been approved by voters.
Fischer said following the meeting that there is strategic thinking behind the 11 percent reduction in inbound seats. Seeking to improve efficiency, the new airline program includes eliminating some, but not all, Tuesday and Wednesday flights from Atlanta and Chicago as well as a smaller, but still full-sized, aircraft on some Tuesdays and Wednesdays from Houston.
Tuesday flights in particular are the lowest performing for Steamboat, and much of the 11 percent is accounted for by those reductions, Fischer said. The decision also freed up funds to add Saturday and Sunday service on United from Los Angeles International Airport, a key portal for the growing number of Australians coming to Steamboat as well as affluent communities in Southern California.
Airline costs keep rising
Voters passed the new sales tax by a large margin in November 2011, and collections began in January. Monies collected this year first will become available to be applied to the 2012-13 ski season flight program next year when the bills come due.
Ski Corp. officials, consulting with the Local Marketing District board, have been adjusting the airline schedule to make the most efficient use of available funds in the face of escalating demands for revenue guarantees from the three airlines that now serve the Steamboat market: American, Delta and United. Airline mergers and fleet reductions have reduced competition while placing a premium on operating full, or nearly full, flights.
Revenue guarantee demands can be traced in part to disappointing snowfall last ski season, which led to less demand for flights into Steamboat, which in turn led to discounting and poorer financial performances. The disappointing performance on the Steamboat flights translated into a perception of increased risk on the part of the airlines, causing them to seek to reduce their exposure through higher revenue guarantees.
Steadily escalating fuel prices for the airlines during the four-month period the flights operated have led to revenue guarantee caps of just more than $4 million for this coming season’s flight program compared with last year’s caps of $3.57 million.
The Local Marketing District board calculates it has in the neighborhood of $2 million available for the 2012-13 ski season, which includes an anticipated $1 million from a pre-existing 2 percent lodging tax. Revenue projections also include dipping into the final $350,000 in the Local Marketing District’s reserve fund balance.
Ski Corp., which has committed to contributing the first $1.1 million toward revenue guarantees, already has indicated it would as much as double that amount to make this year’s numbers work.
The Local Marketing District board, which was not scheduled to meet in August, has added an Aug. 24 meeting to work toward finalizing its budget before it is expected to present the final financial package to Steamboat Springs City Council on Sept. 18.
To reach Tom Ross, call 970-871-4205 or email tross@SteamboatToday.com