Air service funds in nosedive
Seats into YVRA declining as lodging revenues decline
September 27, 2010
Steamboat SpringsSteamboat Springs — Declining lodging tax revenues has Local Marketing District funds in “a downward spiral,” Steve Dawes said, that will mean not only fewer airplane seats into the Yampa Valley this winter, but also a potential for fewer seats in years to come. — Declining lodging tax revenues has Local Marketing District funds in "a downward spiral," Steve Dawes said, that will mean not only fewer airplane seats into the Yampa Valley this winter, but also a potential for fewer seats in years to come.
Steamboat Springs — Declining lodging tax revenues has Local Marketing District funds in "a downward spiral," Steve Dawes said, that will mean not only fewer airplane seats into the Yampa Valley this winter, but also a potential for fewer seats in years to come.
Dawes is chairman of the board of directors for the marketing district, which uses a 2 percent tax on lodging across the city to help fund airline service programs at Yampa Valley Regional Airport in Hayden. He and Sandy Evans Hall, the marketing district's secretary and executive vice president of the Steamboat Springs Chamber Resort Association, recently advised Steamboat Springs City Council of what they called a "self-fulfilling prophecy": Fewer airline seats funded by the district means fewer visitors to the Yampa Valley, which means less revenue for the district, which means less money to buy airline seats the following year, and so on.
Evans Hall said lodging tax revenues are down about 35 percent since 2008, a reflection of the economic recession. That decrease in revenues translates into a 13 percent decrease in airline seats into YVRA this winter, with 120,738 available seats for 2010-11 compared to 138,182 available seats last winter. That's on top of the 13 percent decrease a year ago compared to 2008-09, when there were 158,349 available seats into the valley.
At the same time as lodging tax revenues have decreased, Evans Hall said, the cost of airline service has increased, because of factors including fuel surcharges.
The marketing district is using about $500,000 of its $1 million reserve fund for this winter's airline service program.
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"On a conservative basis, we've got about two more years," Dawes said.
City Manager Jon Roberts said marketing district leaders have been concerned for more than a year about declining revenues.
"Any time you're depleting reserves for ongoing operations, that's a red flag," Roberts said. "Ultimately, a turnaround in the economy would change that scenario."
Evans Hall said the Chamber, through a transportation solutions group, has formed a Regional Transportation Authority task force, which is exploring the idea of a tax measure to provide another revenue source for airline programs.
"We anticipate, probably in the next two years, we'll need some form of additional revenue to maintain (airline) capacity into our valley," Evans Hall said. "This year, we're lower than we feel we should be."
Evans Hall said the earliest an RTA could appear on local ballots would be November 2011. The group is putting together a presentation of RTA needs and potential benefits to present to community groups, she said. That outreach is planned for January through April and will be followed by analysis of community feedback and, potentially, polling late next spring to gauge the community's appetite for such a vote.
Evans Hall acknowledged last week that the appetite could be meager.
"I don't know if in this economic climate, we have a chance of passing anything," she told the City Council.
But the stakes could be high, according to the marketing district's 2011 operating plan, which the City Council approved unanimously last week.
"The Local Marketing District board has determined that unless revenues in lodging tax increase significantly, the reserves will be completely depleted in two years, resulting in dramatic reduction in air service to the Yampa Valley," the plan states.