Utah-based carrier selected for state air service plan

CASPER — A state-appointed group tasked with finding sustainable air service for Wyoming’s far flung communities took a significant step in the process last week, announcing the state had entered into negotiations with a Utah-based airline to provide regular flights to as many as four Wyoming cities.

Members of the Commercial Air Service Improvement Council announced Friday that the state would be entering into contract negotiations with St. George-based SkyWest Airlines for its proposal to provide regular, regional flights to cities like Gillette, Riverton, Rock Springs and Sheridan, according to a news release.

The service itself would operated under the United Express brand – a subsidiary of United Airlines that maintains partnerships with regional airlines similar to SkyWest across the country.

SkyWest did not return a phone message requesting comment Monday.

The selection of the airline marks a significant milestone in the state’s Commercial Air Service Improvement Plan, which was finalized by the council last summer to make up for unpredictable federal funding streams and industry shifts that had rendered the state’s basic air service funding model ineffective in recent years.

SkyWest’s proposal was selected over Denver Air Connection, a private charter flight company that currently maintains flights from Denver International Airport to Riverton and Sheridan. While Denver Air Connections was the cheaper option of the two, according to selection committee member Sen. Michael Von Flatern, R-Gillette, SkyWest offered a multitude of additional benefits that Denver Air Connection could not. These advantages included the ability to offer shorter layover times, an ability for customers to accrue air mileage on regional flights and the capacity to expand to cities like Cody and Laramie in the future.

“That was a big part of it,” Von Flatern said.

This would not be SkyWest’s first foray into Wyoming: The airline already flies to Casper, for example. In August, SkyWest announced it would be adding flights between the Cheyenne and Dallas-Fort Worth airports through its partnership with American Airlines.

However, the agreement they will be entering into is unprecedented: while states have contracted with charter airlines in the past, none have done so to the degree Wyoming is, said Shawn Burke, who runs the state’s Air Service Development Program.

“This is kind of uncharted waters for us, as far as state support for chartered air service,” said Burke. “Other states have done something like this to some degree, but not like Wyoming has.”

A representative for WYDOT declined to comment on the details of the contract. However, the agency is working on an “aggressive timeline” and hopes to have an agreement with the airline in place by June 30, with operations beginning as early as October.

Friday’s announcement marks a major step away from the state’s 15-year-old Air Service Enhancement Program fund, which was established in 2004 to assist the development of commercial air service across the state.

Created at a time when airfares in Wyoming were the 5th-highest in the nation, ASEP proved to be an effective amplifier for airline use and revenues over the following decade. With $21 million in spending between 2004 and 2015, ASEP helped drive $370 million in visitor spending and nearly $31 million in new tax revenues, according to a 2016 analysis commissioned by WYDOT, resulting in roughly $523 million of economic impact during that time.

While most of the economic benefit was seen in Jackson, the program also improved passenger counts at airports across the state. According to the analysis, airports like Cody and Gillette experienced passenger increases between 31 percent and 62 percent in subsidized years compared with non-subsidized ones.

But over the past several years, various factors outside of Wyoming’s control have made that fund impractical to meet the needs of the state, as the mixture of a lack of qualified pilots, national airline consolidation and small aircraft retirements have made the cost of regional air travel prohibitively expensive.

As a result of these shifts, by 2017 Wyoming’s airfare prices were the second-most expensive in the country and approximately 49 percent higher than the national average, a significant factor behind deflated passenger counts and reduced viability for many flights across the state. Sheridan – serviced by Great Lakes Airlines at the time – lost commercial air service for more than seven months in 2015 due to low ridership and a shortage of pilots while Worland, which became prohibitively expensive under the federal government’s subsidy program, saw Great Lakes pull out of the community in September 2016.

With predictability no longer guaranteed under the state’s model, the council decided to shift to a public/private partnership between the state and an independent airline carrier. Authorized by the signing of Senate Enrolled Act 40during the 2018 budget session, the legislation created a council to study the issue as well as a $15 million fund for the purpose of improving air travel across Wyoming under this “new” system.

While independent from the state’s Air Service Enhancement Program fund, the new fund is not a replacement, largely because of its inability to serve every community across Wyoming equitably, according to a WYDOT spokesman. However, Von Flatern said the agreement – and the funding attached to it – serves an important function: providing the kindling needed to stoke the new normal for air transport in Wyoming.

With a hodgepodge of service providers across the state, a short-term, state-level subsidy to a single, contracted entity is considered the key to ensuring consistent air service across the state.

With an early infusion of cash, the theory goes, quality of service will increase and prices will stabilize, leading to customers returning and once unviable flights becoming profitable once more – working in a similar way to how the Air Service Enhancement Program fund had improved air travel.

“We have a good recipe and good models across the state – it’s applying them to other airports and providing the funding needed to accomplish that,” said Burke. “As passenger volume takes off, retention increases as well.”

With stable customer bases, the air company will have the regular ridership needed to maintain consistent levels of service, eliminating the need for the subsidy while creating more dependable air travel infrastructure.

“We expect this to be heavily loaded at the front-end – $5 million to $6 million for the first couple of years – but we’re hoping the enplanements are great enough that we’re spending next-to-nothing in years four and five,” Von Flatern said. “After a couple of years of reliable service, enplanements will go up to the point we’re not spending any state money.”

The future of the Air Service Enhancement Program, however, is uncertain. While it will likely no longer be the state’s primary mechanism to fund major air service projects, the fund it operated still served an important function for smaller airports by offering smaller, growth-oriented grants to airports like Jackson, Cody and Cheyenne in recent years.

“We’re unsure where that is going,” Burke said.