Won't Anyone Take $800,000 For A Second Airline At FLG?

Currently, an affiliate of U.S. Airways is the only commercial airline that provides service, with daily flights to Phoenix Sky Harbor International Airport.


Feb. 09--The city of Flagstaff had no written responses to its request for proposals to start a new airline at Pulliam Airport -- despite the offer of a start-up grant of $800,000.

But it did receive inquiries, according to Flagstaff Economic Vitality Director Stacey Button.

"That's not unusual in the airline market," she said about the lack of written responses. "We did have a lot of calls with questions about the grant and the market and that's a good thing."

Both Button and Airport Director Barney Helmick declined to give out the names of the airlines that called or information on how many calls they received.

"We have a market size that fits certain carriers. They're all interested and that's all I'm going to say," Helmick said.

Last year, the city was awarded one of 17 U.S. Department of Transportation Small Community Airline Service Development grants to entice a second airline to provide service at Pulliam.

Currently, an affiliate of U.S. Airways is the only commercial airline that provides service, with daily flights to Phoenix Sky Harbor International Airport.

The grant is worth approximately $800,000 and is designed to offset the start-up costs for the first year a new airline moves into the terminal, Button said. The city is not required to provide matching funds for the grant. So, no city tax dollars are going into the grant.

Helmick estimated the start-up cost for a new location for an airline to be around $1 million to $2 million, depending on which airline it was and the location. A lot of the cost is moving staff, equipment and planes to a new airport, he said.

ONLY GOOD FOR A YEAR

The grant money is only good for that first year, he said, because regulations require the airport to give equivalent leases to all of the airlines that service it.

"We can give an airline this deal for one year, but after their contract is up it has to be equivalent to what the other airline has," he said.

The grant can only be used to provide service to a destination other than Sky Harbor, Button said.

The request for proposals went out in September and were due at the end of October, said Helmick.

Opening a new location to service is expensive and many airlines want to know the specifics before they jump into something like this, she said.

The request for proposals was just one step in the grant process. Now that that step is out of the way, the city is free to speak directly with airlines who may be interested in providing service to Flagstaff, Button said.

Helmick said city procurement and airport staff have already met with a number of airlines.

"We've done our legwork. An analysis of our market shows it's much bigger than we thought," Helmick said. "I'm positive our future holds good things."

Added Button: "The airlines were aware of our visitor market and we've been able to educate them on our business market. A lot of them told us they were unaware of our business needs and that we needed to rebrand things to accommodate that. We're already working with the (Flagstaff Convention and Visitors Bureau) to do so."

DALLAS OR L.A.?

The ideal airline would offer connections to major hubs either east or west of Flagstaff, such as Dallas or Los Angeles.

"We want to go to a hub," Button said. "In fact, the grant requires us to go to a hub."

Both Helmick and Button said there is a need for a second airline.

Pulliam averages about six to seven flights to Phoenix a day in the summer and about five a day in the winter, Helmick said. Although 656,000 airline tickets a year are sold in the area, only 18 percent of those tickets belong to travelers who fly out of Flagstaff. The rest belong to those who drive two hours to Phoenix to fly out of Sky Harbor.

"We've got the market," Helmick said. "I've had business people asking me when we're going to get service to Los Angeles back."

Pulliam had service to Los Angeles for two years starting in 2008, he said, but lost it after Horizon Airlines pulled out in 2010.

During that two-year time span, traffic out of the airport doubled, Helmick said.

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