Local Marketing District board: Facts on the air tax
August 25, 2012
On Friday the Local Marketing District board of directors met for the first time since the Steamboat Pilot & Today editorial of July 29 ("Flight program woes raise tax questions"). In discussing this article, we felt the community needs to know the facts regarding the air service tax and the 2012-13 winter flight program.
Three major, uncontrollable changes impacted the plan for the upcoming season.
The snow. As we are all aware, the biggest factor for our town's winter success is in Mother Nature's control. The 2011-12 winter season brought the lowest snowfall to Steamboat in 30 years, combined with unseasonably warm temperatures. These two factors directly affected the number of skiers and snowboarders who visited Steamboat, which reduced demand, led to low airplane load factors and ultimately decreased flight revenues.
Frontier Airlines. The low-cost carrier has eliminated non-contract flights into Steamboat, along with numerous other mountain airports. The Pilot & Today reported an 11 percent decrease in available seats this winter; Frontier Airlines represents 90 percent of this loss.
Airline bankruptcy. American Airlines, one of our three major airline partners, filed for Chapter 11 bankruptcy protection at the end of November. As a result, the airline made internal staff and fleet changes, ultimately impacting the relationship between Steamboat and the airline.
The goal of the air service tax has always been to stabilize the air program, increasing seats over five years, adding new markets and ultimately bringing winter revenue to the businesses of our community. This remains the goal as we navigate the ever-changing landscape of the airline industry, particularly cost increases in securing direct flights as a result of lower performance on Yampa Valley Regional Airport flights, fuel volatility and airline consolidation.
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Funds paid to the airlines come back to the community through airport passenger fees, landing fees, fuel sales tax, etc., paid to Yampa Valley Regional Airport. Those total approximately $2 million. The amount spent at community businesses including lodging, restaurants, activities, etc. is $1,160 per arriving passenger.
With the air service tax we were able to secure new weekend service from Los Angeles while maintaining all our core flight markets. Without the air service tax this year, the program would have required approximately $1 million in cuts, which would have come in the form of eliminating markets such as Minneapolis, Los Angeles and the additional daily flight from Denver. This would have represented a 24 percent decrease in total seats available from the 2011-12 winter season. Based on the per-passenger spend, this would equate to approximately $11 million in lost expenditures in the community.
We recognize the air service tax and changing winter program can be difficult to follow. Therefore, we invite you to join us at the LMD Open House from 5 to 7 p.m. Oct. 9 at Library Hall at Bud Werner Memorial Library.
Local Marketing District board: Steve Dawes, Rod Hanna, Chuck Porter, Lisa Sanchez Warner, Bill Stuart