Seeking a new strategy

YVRA officials discuss contingency plans in case United ends air service


— Community leaders probably have no more than two weeks to decide whether to cover their bets on summer air service. If they decide to double down, the wager could reach a quarter of a million dollars.

Resort and local government officials met last week to begin working on a backup plan in case United Express commercial air service to the Yampa Valley is interrupted later this year. One option under consideration is establishing daily service this summer on Continental Airlines from Houston, operating a 50-passenger jet. The cost of revenue guarantees and marketing for that flight could approach $250,000. The local business community has tentatively secured commitments for about half that amount.

"The impact of a total loss (of air service) is something we really need to have a plan in place for," Steamboat Springs Chamber Resort Association Executive Vice President Sandy Evans-Hall said.

Concerns about the fate of commercial air service between Yampa Valley Regional Airport and Denver International Airport during the non-ski season months have arisen as United Airlines struggles to emerge from Chapter 11 bankruptcy.

Evans-Hall said it's entirely possible that Air Wisconsin, operating as United Express, will fly three daily flights this spring, summer and fall just as it did in 2002. Last year, that May through November service brought 15,000 passengers to the valley.

However, there are two other possible scenarios that local businesses have to plan for: There's also a significant chance that service into YVRA, as well as the flights into Denver that feed the local flights, will be reduced. There's a third possibility, industry analysts say, that United will cease to exist as an airline.

Northwest Colorado needs to have a strategy in place before the outcome is known, Evans-Hall said.

"We don't want to get to a point where we say, 'Oops, we're out of service let's go see what we can find,'" she said.

Industry analysts say other major airlines would almost certainly back-fill a portion of any lost service due to United's difficulties. But it could take many months, and those other airlines would never replace all of the flights United has operated out of its Denver hub.

Mountains resorts could be left in the lurch as the nation's air system catches up with the shifting dynamic.

Routt County Finance Director Dan Strnad said more than $410,000 in airport revenues and grant monies could be jeopardized by a seven-month loss of commercial service at YVRA. He couldn't yet estimate the degree to which those losses might be offset by a reduction in expenses associated with serving commercial flights.

Evans-Hall said the greatest share of Steamboat's summer tourism business arrives by automobile from Colorado's Front Range. She is particularly concerned about group business on the books at the Sheraton Steamboat Resort and Conference Center and the Steamboat Grand Hotel and Conference Center.

Sheraton General Manager Chuck Porter said he is still evaluating group business that would be at risk because of

a loss of air service, and the dollar value of those conventions.

Porter and chamber President Ulrich Salzgeber agreed that for conventioneers, using ground transportation from DIA or Eagle County Airport near Vail is not a realistic option. Salzgeber, who is also the manager of Alpine Taxi, said his company has ample vehicles to make up for the loss of airline seats, but realistically, ground transport from Denver is only a stopgap solution in today's travel climate.

The question of whether or not to lock in the daily flight from Houston this summer is complicated by the possibility that United Express will operate three daily flights here, just as it did last summer. The implication is that in order for the business community to recoup a portion of its revenue guarantees, the flight would have to compete successfully with the United flights.

"We have to ask, 'does the Continental RJ (regional jet) make sense with and without United?" Paula Sears said. She manages Steamboat Central Reservations for the Steamboat Ski and Resort Corp.

Fisher said the Houston flight would potentially be fed by Continental flights from the southeastern United States and Eastern Seaboard. The effectiveness of those feeder routes would depend upon how well they are timed with the single daily flight to YVRA. Evans-Hall said Arizona is Steamboat's top out-of-state point of origin for tourism in the summer and Texas is a strong secondary market.

Sears and City Manager Paul Hughes agreed that there is the potential for the Houston flight to perform well and reduce the community gamble on revenue guarantees. Others in the room said it would be best to anticipate expending the full amount of the guarantee. Porter said the community must first decide how it would pay for the flight.

"Don't we have to overcome the fundamental issue of paying for the flights if that's going to be the future?" he asked. "We need to have a bank account to go talk to the airlines with. We need a checkbook and we don't have one right now."

Sears agreed with Porter that, in a post-United bankruptcy world, the Yampa Valley will likely be confronted with the need to supply revenue guarantees for all of its commercial airline service, both during ski season and during the balance of the year.

"We're going to be fighting for that service with every small community in the country," Sears said. "It comes down to money. It's going to be the one that comes up with the biggest check and comes with the most incentives from the airport (that lands the service)," she said.


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