Our view: Economic turbulence ahead
Turning around the airport's fiscal crisis
Instead of playing the blame game for budget woes at Yampa Valley Regional Airport, we should begin now engaging the public in plain talk about the challenges of maintaining air service and funding a first class airport.
The news this week that Yampa Valley Regional Airport faces a decade of financial austerity attributable to dwindling numbers of year-around passengers at the airport in Hayden should not have come as a surprise. Steamboat Today reported in October 2014 that revenues at the county-operated airport had dropped precipitously in the preceding five years, to the point that annual cash flow (cash at hand at the end of the year) had dropped from $1.33 million in 2009 to $39,203 in 2014.
Still, it was sobering to hear veteran airport consultant Steve Horton tell the Routt County Board of Commissioners that the airport would be scraping by until 2024 if projected growth in passenger numbers increases conservatively at a rate of 2.6 percent a year. He further told the commissioners to expect negative cash fund balances for the next 10 years, with reserve fund balances at a third of what he would recommend.
New airport manager Kevin Booth told the commissioners he had stemmed the bleeding from the airport’s restaurant and planned to defer heavy equipment replacement to create more room in the annual budget.
But it took much more than a restaurant that lost more than $500,000 in 2013 and 2014 combined to put YVRA in this pickle. The revenues that support the operation of YVRA are all driven by passenger numbers, and enplanements at YVRA have dropped from 140,765 in 2007, when the national economy was booming and consumer confidence was high, to just 95,917 in 2014.
There are external factors, beyond the control of both county and airline program officials, that have contributed to the challenges of operating an airport in a peculiar market. Horton said the ability of mountain towns to attract air service has been undermined by new airline models, which stress mergers and reduced aircraft fleets focusing on the most lucrative markets.
It’s unquestionable that non-ski season reductions in daily roundtrips to Denver of one flight per day the last two years have taken a toll on enplanements and revenues. And the economic hit has been exacerbated by the poor on-time performance by United Express that has led more local travelers to drive to Denver International Airport, one of the most affordable air hubs in the country, to begin their trips.
It’s understandable if community members, who pay a .25 percent airline sales tax in the city of Steamboat Springs, want answers. The tax was approved by a large margin of city voters in 2011 and went into effect for a five-year period beginning in 2012. It’s certain that business leaders will seek a renewal between now and the end of 2016.
Proponents of the tax hoped to reverse the decline in enplanements. But resort officials and city council members made it plain during the election campaign that it was just as critical that airline program reserves also be rebuilt. While balancing those two goals, airline officials have added daily summer flights from Houston and inaugurated new service from Seattle, Los Angeles and Washington, D.C. But they’ve also eliminated some flight operations in periods of weak demand and downsized aircraft in some cases to avoid paying revenue guarantees on days when flights are chronically lightly used. At the same time, they’ve been able to add additional aircraft on predictably bush days.
Clearly, the airport is a critical asset for Northwest Colorado, and flights supported by revenue guarantees are essential to the local resort/real estate community.
We aren’t prepared to offer solutions to the fiscal challenges with which our airline service is confronted, but we’re convinced that now, in advance of asking the voters to renew the .25 percent airline sales tax, is the time for the entire community to engage in plain talk about what lies ahead.
An outstanding campaign dubbed Yes2Air pushed the airline sales tax over the top in 2011, and the success of a tax renewal will likely take a similar effort. It feels like it’s time to get started.
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