What Does a Smaller City Have to Do to Attract New Commercial Airline Service?

Mar 7, 2017

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Last week, United Airlines announced it would begin new service to both international and domestic markets. In addition to adding flights between San Francisco (SFO) and Munich (MUC), the carrier also detailed plans to launch service in four new domestic markets — Columbia, MO (COU), Champaign/Urbana, IL (CMI), Rochester, MN (RST) and Santa Rosa, CA (STS).

Columbia Regional Airport (COU) was awarded nonstop routes from two of United’s hubs — daily service from Denver (DEN) and 2x daily service from Chicago (ORD), both beginning August 1. But what does it actually take for a regional airport to get service from an airline like United? Money — and a lot of it.

A proposal from the city of Columbia will guarantee the Chicago-based carrier $600,000 in revenue in one year for flights to and from DEN. A memo to the Columbia City Council (PDF) detailed the proposal, which outlined that COU would get daily, scheduled nonstop service and will guarantee a minimum revenue requirement of $600,000 for one year. In addition, the city of Columbia will waive landing fees and facility rent (for offices and ticket counters) for one year (up to $125,000) and fund marketing support for United’s Denver service (valued at $250,000). In all, the total amount could be worth $975,000.

COU is currently served only by American Airlines, which operates two daily flights from ORD (except on Saturdays, when it only operates one flight per day), and two daily flights from Dallas (DFW). Those routes were launched in 2012, when the city of Columbia guaranteed AA $3 million in two years — far more than the city is guaranteeing United. Of the money raised for the AA guarantee fund, 80% was returned to the city in 2015 — the airline required one payment of $22,562 in March 2013 for two weeks of low passenger utilization. As for the $600,000 the city of Columbia is guaranteeing to United, a councilwoman said that most of it has already been raised, with private companies contributing most of the money.

This is a great example of all that goes into a small, regional airport attracting new commercial airline service. The city, which has a population of around 108,000 people, is home to three higher education institutions, including the University of Missouri (~32,000 students). The city and donors to the fund (including the University of Missouri) are hoping that the additional services connecting the mid-Missouri city with Chicago and Denver will broaden its appeal to out-of-state students. In this case, and in most other just like this, it’s a win-win situation: the city gets more commercial air service (which hopefully translates to more passengers using the airport) and the airline gets a one-year revenue guarantee.

H/T: Columbia Missourian

Featured image courtesy of Notley Hawkins via Getty Images.

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