Staff:
Agenda:
|
Katrina Amos, Airport Manager
6/6/2022 |
AGENDA REPORT
Cape Girardeau City Council
|
22-123
|
SUBJECT
A resolution authorizing the City Manager to submit a letter of recommendation to the U.S. Department of Transportation recommending Contour Aviation provide scheduled air carrier service for four (4) years, under the Essential Air Service program at the Cape Girardeau Regional Airport.
EXECUTIVE SUMMARY
In June 2021, the City of Cape Girardeau re-selected SkyWest Airlines to continue providing scheduled air service from Cape Girardeau to Chicago O’Hare (ORD) for another three-year term, beginning December 1, 2021. After this selection, the airline industry continued to be impacted by the COVID-19 pandemic, as well as the industry pilot shortage. CGI staff and City management worked closely with SkyWest to minimize these impacts by reducing flight schedules and tagging with other EAS communities.
Despite these efforts, on March 9, 2022, SkyWest announced their intent to terminate air service in 29 communities including Cape Girardeau. This decision resulted in the U.S. DOT issuing Order DOT-OST-1996-1559 - Request for Proposals for air carrier service for all of the communities affected.
Cape Girardeau received proposals from three (3) air carriers: Southern Airways, Boutique Airlines, and Contour Aviation. Southern submitted a proposal for 24 weekly round-trips, including flights for 12 trips to St. Louis or 12 trips to Nashville via 9-passenger aircraft. Boutique Airlines proposed 28 weekly round-trips to Nashville via 9-passenger aircraft. Contour Aviation, because they fly a 30-seat Regional Jet, is only allowed to propose 12 weekly round-trips to Nashville. The Airport Advisory Board is recommending to the City Council, and Airport Management agrees, to select Contour Aviation as the scheduled air carrier for a four (4) year contract pending approval from the U.S. DOT.
BACKGROUND/DISCUSSION
Beginning December 1, 2017, SkyWest Airlines began providing 50-seat Regional Jet service between the Cape Girardeau Regional Airport (CGI) and the Chicago O'Hare International Airport under the United Airlines code. In 2019 the airport met the requirement to become a primary airport when SkyWest Airlines surpassed the primary airport requirement of 10,000 outbound passengers with 11,777. As a result, the City received $1,000,000 in guaranteed Airport Improvement Program (AIP) grant funds.
The airline industry has been heavily impacted by the pandemic, as well as the pilot shortage in recent years. CGI staff and City management worked closely with SkyWest to minimize these impacts by reducing flight schedules and tagging with other EAS communities. Even with the volatility in the industry, the City re-selected SkyWest for another three-year term in June 2021 to continue service to Chicago.
On March 9, 2022, SkyWest announced their intent to terminate air service in 29 communities including CGI. This decision resulted in the U.S. DOT issuing Order DOT-OST-1996-1559, a Request for Proposals for air carrier service for all of the communities affected.
CGI staff has worked closed with Volaire Aviation Consulting and the U.S. DOT to solicit proposals for the Cape Girardeau Community. Each airline proposal is attached to this agenda report along with an EAS Summary of Options provided by Volaire detailing the options presented to CGI.
The proposals are summarized below:
Southern Airways: Service provided in a 9 passenger Cessna Caravan (C-208) or Pilatus PC-12
Proposed Option 1:
- 24 weekly Round Trips (RT) from CGI to St. Louis (STL) or Nashville (BNA)
Proposed Option 2:
- 23 weekly Round Trips (RT) from CGI to STL or Nashville
- 7 weekly Round Trips (RT) from CGI to Chicago O’Hare
Boutique Airlines: Service Provided in a 9 passenger Pilatus PC-12
Proposal:
- 28 weekly RT from CGI to Nashville
Contour Aviation: Service provided in an ERJ-145 configured to 30 seats
Proposal:
- 12 weekly RT from CGI to Nashville
These proposals were provided with the understanding the City of Cape Girardeau would submit a recommendation to the U.S. DOT by June 30, 2022. After reviewing the proposals, the Airport Advisory Board felt interviewing Southern Airways and Boutique Airlines unnecessary. Both Southern and Boutique use nine (9) seat aircraft making it nearly impossible to mathematically reach 10,000 annual boardings, even considering a constant 80% load factor. The Board voted at their June 2, 2022 special Board meeting, and agreed unanimously to recommend Contour. Airport Staff agree with the Airport Advisory Board to recommend the U.S. DOT award a new, four-year EAS contract to Contour Aviation, providing a total of 12 weekly, direct round-trip flights between CGI and BNA.
It should be noted SkyWest presented options to continue offering service within the community after submitting their termination notice. One option proposed, required partnering with another airline did not have the support of U.S. DOT, therefore the Advisory Board could not recommend this option.
In selecting a carrier to provide subsidized EAS for a community, the U.S. DOT will consider five factors: (a) service reliability; (b) contractual and marketing arrangements with a larger carrier at the hub; (c) interline arrangements with a larger carrier at the hub; (d) community views, giving substantial weight to the views of the elected officials representing the users; and (e) whether the carrier has included a plan in its proposal to market its service to the community.
As stated above, the U.S. DOT will give substantial weight to the recommendation of the City Council when making their air carrier selection for the City of Cape Girardeau.
FINANCIAL IMPACT
Selecting Contour Aviation would allow CGI the opportunity to reach, and hopefully surpass, the primary airport requirement of 10,000 outbound passengers. Primary airport status guarantees the City will receive $1 million in Airport Improvement Program (AIP) grant funds. While we are currently working through the fuel sale negotiation; office rental, ramp fees, and landing fees will remain consistent with the revenues we received as part of our agreement with SkyWest.
STAFF RECOMMENDATION
It is recommended the City Council approve a resolution authorizing the City Manager to submit a letter of recommendation to the United States Department of Transportation (U.S. DOT) recommending the U.S. DOT fund a new, four-year contract with Contour Aviation, as proposed, to provide 12 weekly round-trip flights with scheduled air carrier service under the Essential Air Service program at the Cape Girardeau Regional Airport.
|