In years like these, commercial airline subsidies can make money disappear right before your eyes
Air service to Mammoth Yosemite Airport (MMH) hasn’t suffered this winter as much as one might think, at least until mid -January, reported Mammoth Lakes Tourism (MLT) Executive Director John Urdi.
For instance, passenger numbers on November flights from LAX to Mammoth were up 12.8%, although down by 8% in December. January flights were also down 8%, and February flights are trending 18% below last year.
“Just like lodging, the flights can rebound with the snow,” Urdi said. However, while MLT has been “out there doing as much as we can to get the folks here … we don’t want to overpromise and under-deliver,” he said. “600 acres out of 3600 [on the Mountain] is tough to get people up here for.”
The drop off in passenger numbers means the air service subsidy for the 2013-14 winter season won’t be going down, Urdi said.
He likened the air service subsidy, which MLT and Mammoth Mountain Ski Area (MMSA) pay for in the winter and MLT and the County pay for in the summer, to a debit system. “In order to get these airlines to fly here, they need a Minimum Revenue Guarantee,” he said. He offered the example of a flight from LAX to MMH, which might have a round trip cost to the airline of about $13,000. “If we only sell $9,000 worth of tickets, $4,000 goes to the minimum revenue guarantee payment,” he said. “If the next day we sell $15,000 worth for tickets, it actually credits our Minimum Revenue Guarantee by $2,000. At the end of the season, the positives and the negatives are added up and we pay the difference.”
Fewer passengers means less revenue paid by passengers to the airline, and more revenue paid by MLT and MMSA to the airline for winter air service. This year, MLT will likely pay $1.5 million for the air service subsidy using Town Business Improvement District (TBID) funds, according to Urdi. MMSA will cover anything above $1.5 million.
Urdi said he anticipated the air service subsidy for winter 2013-14 should be around $3 million.
MMSA paid $3.5 million in commercial air subsidy during the drought winter of 2011-2012 (according to a July, 2012 story by Lunch), and the skier numbers for this season are trending almost identically to two years ago
Meanwhile the 2013 summer air service subsidy came to roughly $850,000, he said. MLT will pay about $800,000 of that, with approximately $300,000 from TBID and the remainder from Measure A and reserve funds.
Mono County, which contributed $85,000 toward the 2012 summer air service subsidy, will only contribute $50,000 for the summer of 2013.
Thus far, MLT has received roughly $400,000 in TBID funds for September-November, but is already budgeting $500,000 for the 2014 summer air service subsidy. Because TBID didn’t start until September, Urdi said, “We’re dipping into our reserves, which is a tough thing, especially this season.”