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Airline, city see potential in Phoenix flights; Consortium partners share $1M cost so far on two-year agreement

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This chart provided by the city of Roswell indicates increases in the number of filled seats on average per week for each quarter for Phoenix flights since the route began in March 2016. The black line is the goal. This chart does not indicate ticket sales. (Submitted Graphic)

The city of Roswell and its partners have paid more than $1 million so far for the commercial flights to Phoenix, with another bill expected soon, but the western route continues to have the support of the city manager and American Airlines.

The $1.2 million minimum revenue agreement that the city and its partners in the region have with American Airlines is due to expire at the end of this month, according to Roswell City Manager Joe Neeb.

Neeb said that the consortium meets monthly to review information about the flights. A decision about Roswell’s continued participation in the agreement requires a vote of the City Council, but Neeb expressed optimism.

“Wit the increased ridership and load factors, there are positive signs that the flight will become self-sustaining in the future,” he said.

Ridership trends indicate that the number of filled seats on average per week has increased from less than 450 during the first quarter of service, March to May 2016, to more than 600 on average per quarter starting in June 2017.

The city of Artesia recently voted to extend its participation in the consortium for at least three additional months, or until the end of June.

Regional leaders worked for three years to get American Airlines to establish service to and from Phoenix at the Roswell International Airport. The airline has been providing service to and from Dallas-Fort Worth since 2007.

With the Dallas flights, a minimum revenue agreement was also put into place, but that route was profitable from the beginning and no payments on the agreement were ever required.

The current agreement regarding the Phoenix flights requires the cities of Roswell, Artesia, Carlsbad, the village of Ruidoso, the counties of Chaves and Eddy, and a U.S. Department of Transportation grant to pay American Airlines should the flights fall short of attracting enough passengers to meet its revenue requirements.

In general, to be profitable, the airline needs to book about 65 percent of its available seats each month, which is about 2,730 or its 4,200 seats.

If ticket sales and passengers are below the threshold, the grant pays 29.13 percent of what is owed each quarter, with the consortium partners paying varying percentages on the remaining portion.

The city of Roswell pays the highest percentage, 35.5 percent, while Ruidoso pays the smallest, 6.5 percent.

So far, the consortium and the grant have paid $1,033,531 to American Airlines, with the final invoice for December 2017 to the end of February 2018 expected by the end of March.

But Neeb predicts that the consortium will owe money for the final quarter as well, given ridership trends during the winter months and indications of bookings so far.

The best results for the flights were seen during second quarter 2017, June through August.

June and July were profitable months, the only time the flights have run in the black so far, and the consortium owed only $21,075 for the quarter.

An American Airlines spokesperson said that the company believes it has its assets in the right location.

“We are very excited that we are serving our Roswell customers,” said the American Airlines spokesperson. “We made a schedule adjustment … from February though April and we updated our aircraft, and we don’t have any plans to cancel.”

In spring 2017, the airline brought in a bigger jet for the route, increasing the total number of seats from 50 to 70, and providing first-class accommodations. American Airlines also adjusted its flight times a bit. Some business customers and consortium partners have said that part of the reason that the flights are not used more is that people cannot fly directly to and from Roswell and Phoenix in the same day.

But Neeb indicated that the city of Roswell also can change some factors to increase passengers.

“The success of the Roswell International Airport must be based upon our travelers having a great experience flying out of Roswell,” he said. “If the experience is lacking or problems occur that affect the flights, travelers may look at flying from the other regional locations. This means that all aspects associated with travel must be completed with a high quality of service. These aspects include ticketing, baggage collection and claim, (Transportation Security Administration) inspection, waiting room services and auto rentals.”

As part of the effort to improve airport services, the city wants to lease the vacant coffee shop area in the airport terminal to Pecos Flavors Winery, which would operate a restaurant and bar. That plan awaits the consideration of the Roswell City Council at its Thursday meeting.

Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 310, or at reporter02@rdrnews.com.