United Airlines is asking Butte for about $1 million in revenue guarantees over a two-year period, and possibly $100,000 more for start-up costs, to provide a daily flight to Denver for 84 days in the summer, an airport official said Thursday.
It’s only a “rough figure” at this point, the official said, but it got a cool reception from the board overseeing Butte’s Tourism Business Improvement District, or TBID, which could fund a significant portion of the guarantee through a hotel tax.
“To hear $500,000 (per year) is hard to stomach given that it is half the service we expected,” board Chairman Steve Leubeck said when JR Hansen, a member of the Airport Authority Board, provided details of United’s proposal.
SkyWest had said in December 2018 that it could provide flights to Denver during peak summer and winter months for about $385,000 in revenue guarantees for one year, Luebeck noted. It’s not on the table anymore, but it was offered.
“I think it’s out of line,” Luebeck said of United’s proposal after Thursday’s TBID board meeting. “We have been talking six months of flights. Last time it was $386,000. Now we are talking less than three months of flights and the guarantee has gone up to $500,000.
“That’s not in line with what our expectations were, put it that way,” he told The Montana Standard.
Luebeck said he wanted airport officials to try to negotiate a better deal with United. "I think everyone on the board is in agreement that we would like to work toward a second flight," he said. "It's got to be a reasonable amount, though. There is only so much money in the pot."
The TBID had pledged $200,000 in revenue from a local hotel tax toward a second flight destination from Butte, and the community was successful in raising about $200,000 to match it. Local officials hoped that would be enough to lure a second flight.
The fundraising campaign was spearheaded by the Butte Local Development Corp. and the Butte-Silver Bow Chamber of Commerce, and Rick Griffith and Don Peoples Sr. played a key role in soliciting donations.
Griffith and Peoples say they need to meet with previous donors to explain the current proposal and look at all options.
The federal government announced last month it will continue to subsidize SkyWest Airlines’ twice-a-day flights between Butte and Salt Lake City. United also sought the federal subsidy but would have provided flights from Butte to Denver.
Butte officials have been seeking a second flight as well and United is interested in providing one to Denver.
×
We can't do it without you. Support local journalism with our BEST DEAL EVER!
Already a subscriber? Log in or Activate your account.
Loading&hellp;
{{title}}
{{start_at_rate}}
{{format_dollars}} {{start_price}} {{format_cents}}
{{term}}
{{promotional_format_dollars}}{{promotional_price}}{{promotional_format_cents}} {{term}}
{{html}}
More Close
Thanks for being a subscriber.
Sorry, your subscription does not include this content.
Please call 877-514-6397 to upgrade your subscription.
You have free articles remaining.
Thanks for reading.
Subscribe or log in to continue.
×
Keep reading for FREE!
Enjoy more articles by signing up or logging in. No credit card required.
{{featured_button_text}}
But it's recommending that any air service from Butte to Denver start in the summer of 2021, not this year, and then be offered again in 2022. The airline wants at least nine months of prep time to market the new flights and sell tickets, Hansen said.
United also says flights during winter months, something Butte officials also wanted, are not financially feasible because air travel drops off significantly in Butte after the Christmas holidays. Under the current offer, it would provide a daily flight to and from Denver from June 4 to Aug. 18 starting in 2021.
And United wants a two-year pledge of guarantees at about $500,000 a year, Hansen said, and possibly $100,000 on top of that for start-up costs for ticketing kiosks, personnel training and other one-time expenses.
The way the minimum guarantee works is that if United agrees to start service, and enough seats are sold on the flight, the guarantee would not come into play and then could be used to try to attract yet another flight.
Hansen said guarantees are “just the way it works” and United was “not trying to stick it to Butte.” But Luebeck said he wanted a better deal and more specifics on how it would work.
Griffith and Peoples said earlier Thursday that they didn’t talk about specific routes or proposals when soliciting money for a revenue guarantee, but when pressed, told potential donors that the community needed to raise about $400,000. Now that figure is much higher.
They sent a letter to the Airport Authority Board on Tuesday in response to news about United’s proposal. It said they had “strong reservations” about “significantly less service than we disclosed to the pledgers,” a cost per flight “significantly more than expected” and “other possibilities.”
Griffith told The Montana Standard that community support for a revenue guarantee for additional air service was very positive so far.
“Everyone we went to and asked for money, they donated — some small amounts, some pretty substantial amounts,” Griffith said. “But that being said, I just want to slow it down a little bit so we can compare our options.”
Peoples agreed, noting that there are “a lot of moving parts” to the issue, including the airport board, essential air service subsidies in play and groups like the BLDC and Chamber of Commerce that are supporting fundraising efforts.
County officials have been urging the TBID board to increase the local hotel tax from $1 per night per room to $2, suggesting some of the additional revenue could go toward a second flight.
The board, whose members are hoteliers, will now ask all hotel owners whether the TBID should be extended past a 2021 sunset date and how they feel about raising the hotel tax to $2.
Get local news delivered to your inbox!
Subscribe to our Daily Headlines newsletter
Sign up!
* I understand and agree that registration on or use of this site constitutes agreement to its user agreement and privacy policy.
———
©2020 The Montana Standard (Butte, Mont.)
Visit The Montana Standard (Butte, Mont.) at www.mtstandard.com
Distributed by Tribune Content Agency, LLC.
