A small Nevada city is working on a creative solution to ensure its airport does not fall off the US air network as regional airlines cut back on unprofitable routes amid a scarcity of pilots.
The city of Elko (population around 20,000) has proposed a regional Air Alliance, a public/private partnership to fund USD1 million for a minimum revenue guarantee (MRG) agreement with one or more airlines. Two local non-profit groups – the Northeastern Nevada Regional Development Authority (NNRDA) and the Elko Area Chamber – have been approached to manage it, but no decision has been made yet, reports the Elko Daily.
In June, the NNRDA’s board of directors approved a motion to investigate the feasibility, operating and custodial requirements for developing the Air Alliance.
Elko negotiated a USD950,000 MRG agreement with SkyWest Airlines (OO, Salt Lake City) after the regional carrier reduced its flights to/from Elko Regional Airport at the start of 2022. The city hasn’t qualified for the federal Essential Air Service (EAS) Programme. The Nevada Legislature failed to pass a bill in 2019 to create a Nevada Air Service Development Fund that would aid air travel in communities like Elko.
Under an MRG agreement, a municipality or county guarantees an airline’s earnings on a route, the amount being the difference between the minimum flight charge revenue specified in the contract between the authority and the airline and the number of actual flight charge revenue received by the airline that is less than that contractual amount.
However, according to the minutes of the NNDA’s board meeting in June, Federal Aviation Administration (FAA) funding of public airports like Elko Regional Airport depends on airports treating every airline the same. “If you give a discount to one airline, then you must give that same discount to any other airline as well.” Hence, the idea is to have the non-profit bodies act as fiscal agents on behalf of the partnerships.
Carriers such as Skywest Airlines have been cutting back their “at-risk” routes – non-contract routes which receive no air service subsidies through the EAS programme or similar state and/or local subsidies. Skywest Airlines has even dropped a dozen or so EAS routes as it struggles to fill its flight decks.
Several small communities have signed MRG agreements with regional air carriers to guarantee minimum revenue for daily flights, including Elko, Nevada; Pocatello and Twin Falls, both in Idaho; and Williston, North Dakota.
This content was originally published here.