When Missoula International Airport welcomes its first American Airlines flight on Thursday — flight 3984, direct from Dallas — it will mark the airport’s second successful use of a revenue guarantee to acquire a new route. The million-dollar guarantee is composed of a $600,000 federal grant and $400,000 in private funds raised by the Missoula Economic Partnership’s Take Flight Missoula initiative. At press time, Take Flight had commitments for 75 percent of the $400,000, and expected to raise the rest by the end of the month. The money will be disbursed to American Airlines in case the route fails to be profitable. The fund is available for two years.
“We are overwhelmed with the number of businesses who have agreed to contribute anything from $500 to $12,000 because they believe that this is a solution to a problem,” says Take Flight consultant Shannon O’Brien. Take Flight says Missoula businesses regularly cite the availability and cost of flights as one of the city’s areas needing improvement.
The money is not an up-front incentive, and will be disbursed only if needed. “I think our plan is to hopefully be able to keep it in reserve” for future guarantees, says Nicole Rush of MEP. “We anticipate having to do more guarantees the more direct flights we want to bring in.”
American Airlines hopes to have the route’s 76-seat Embraer 175 jets 70 to 80 percent full, says airport director Cris Jensen, and will evaluate the numbers monthly, after which “they’ll look at all their revenue streams, and if for whatever reason the flights don’t reach the threshold of profitability, then that’s where the revenue guarantee would kick in.” American’s profitability threshold is close to 10 percent, he says.
Missoula’s sole previous use of a revenue guarantee was used to lure United Airlines to launch seasonal direct flights to San Francisco, which Jensen counts as a success, because once that $465,000 fund was spent, United maintained the route.
O’Brien expects the expanded service to benefit Missoula by providing access to a region of the country previously inaccessible by direct flight and drive down average airfares through competition. American’s direct flight to Dallas starts at $445, whereas United offers a connecting flight to Dallas starting at $318. There’s a convenience factor in a nonstop flight though, and Jensen says DFW was one of the top 4 final destinations without a direct option for travelers coming to or from MSO, along with Phoenix Sky Harbor, Boston and San Diego.
On Thursday, June 7, the airport will welcome the first flight from DFW with fanfare. “We’ll start out with a water-cannon salute, which is where we have our fire trucks create an arch of water and the airplane taxis through,” Jensen says. “As the passengers come off, we’ll hand out Missoula gift bags.” After a press conference downstairs with representatives from American, there will be cake and coffee upstairs for passengers on the flight back to Dallas. The entire sequence will be repeated later in the day for another inaugural route: United’s first nonstop from Missoula to Los Angeles. That route is being inaugurated without revenue guarantees.