State air service council talks focus on airline RFP

September 17, 2018

A group tasked with securing commercial air service in the state worked on finalizing a few key documents.

The Wyoming Air Service Improvement Council, established by the Legislature this year, is working to attract more carriers to the state, especially ones that would serve at least four critical communities when the Air Service Enhancement Program dissolves July 1, 2019.

The group adjusted its request for proposals criteria that the Wyoming Aeronautics Commission will release to potential air carriers for bidding, and continued drafting a Memorandum of Understanding.

The chosen carrier would provide up to three daily flights to and from Denver International Airport from airports that join the agreement, which would cost the state $15 million over 10 years. Through the program, the state would offer minimum revenue guarantee funding for a capacity purchase agreement with an airline, prioritizing code-share agreements.

The council agreed on a 60-40 profit-sharing framework, where communities that opt in would share 40 percent of the cost and eventual profit with the state.

Members debated what should be included in the block-hour rate paid to airlines. This rate is usually determined from the moment the aircraft door closes prior to takeoff to the moment it opens after landing.

Rather than rolling in all costs, including landing fees and counter space rent, into the block-hour rate, council members considered flexibility during negotiations because airports often expect the additional revenue.

“What if (the service) is profitable?” Senator Michael Von Flatern, R-Gillette, asked. “They still need to be paying you landing fees and counter rent, so if they get off the state subsidy at some point, which we all hope everybody does, they still need to include that money.”

Wyoming Department of Transportation Director Bill Panos said the ultimate goal is to preserve as much established ASEP framework as possible to keep regional airports operating smoothly.

“I think it is open ended,” Panos said. “We anticipate that everything is rolled into the block-hour cost initially, but it is open as we get into the negotiation period.”

WYDOT Commissioner Bruce McCormack then suggested an amendment to language in the RFP to clarify which information will be made available to the public and, in turn, the Legislature.

“To maintain confidentiality with the airlines and credibility with the Legislature, I wonder if this RFP ought to spell out exactly what information will be made public,” he said. “So we don’t run into roadblocks and the airline is not offended come January.”

Joseph Pickering, Mead & Hunt, said while an amendment to the RFP could be made, it would have to be intricate for legal reasons.

“If we went out to airlines, in my opinion, and said ‘all of your proprietary information will be disclosed publicly because you are responding to a state RFP,’ we would have essentially no bidders,” Pickering said.

READ MORE in the Gillette News Record