AIR SERVICE RECRUITMENT

THE FACTS ABOUT AIR SERVICE – QUESTIONS, ANSWERS, AND OTHER INFORMATION

 We receive a number of questions and feedback related to all aspects of airline service. The airline/airport industry is an extraordinarily complex environment and is affected by so many continually changing variables. The following information is available to answer the most frequent questions such as what the airport can and cannot control. The information gives insight on what the Airport Authority Commissioners, staff and other community stakeholders are doing to navigate the challenges present in today’s ever changing air service environment to ensure the Helena community has the best possible commercial air service possible with what the airport has to work with.

 

Air Fares – Who Has Control Over the Cost of Airline Tickets?

A common misconception is the local airport has control over the price of airline tickets. The reality is the local airport has no control over the amount charged for airline tickets. The air fares are set by the airlines themselves and in many cases are even established by computer-based algorithms considering a number of variables. Tickets on flights are priced in groups, and each group of seats is priced higher as the plane fills up. The following article helps explain how ticket prices are created by the airlines:

https://www.msn.com/en-us/travel/news/how-airline-ticket-pricing-works/ar-AA11KUdk?ocid=msedgdhp&pc=U531&cvid=ccdec24912a340fc9750d4e64eb3a111

The following video also helps explain how airlines price tickets, which doesn’t involve any control by the local “airport”:

https://www.youtube.com/watch?v=72hlr-E7KA0

 

Is There Anything the Airport Can do to Encourage the Airlines to Lower the Cost of Tickets?

The Airport has no direct control over the cost of airline tickets as the airlines set the fare levels themselves. However, indirectly, an airport can help keep ticket prices less inflated as a result of airport use fees charged to the airlines. We can assure you in the Helena Airport’s case, the fees charged to the airlines are some of the lowest in Montana and the lowest in the nation when compared to other airports. How does the Airport Authority accomplish that? We maintain very low costs for the airlines to use the airport by continually finding other nontraditional ways to generate revenue such as non-aviation-based land leases and business opportunities.

 

There is a Myth that Ticket Prices in Helena are Affected by the Recent Terminal Expansion. Is This True?

The terminal expansion that was done from 2018-2020 had no direct impact on the fees charged to the airlines and the project costs do not affect ticket prices. The Airport funded the terminal expansion with a variety of funding sources. The FAA Airport Improvement Program (AIP) funded a portion of the project. The AIP funds are generated nationwide through a federally collected fee levied to airline tickets, aviation fuel sales, and air cargo transactions. These funds are not Helena – specific but are collected nationwide and distributed back to each airport for eligible projects. The Passenger Facility Charge program, another FAA program, funded a portion of the project. While this project is funded through a $4.50 per passenger fee, this had no impact on the rates the airlines charge. The remainder of the cost was covered by the Airport Authority from funds generated by the various revenue sources the airport has developed – 48% of which are non –aviation related. The cost per square foot of the terminal project was $214/square foot. The project was completed $450,000 under budget as well.

 

Does the Cost of Operating the Airport or Providing Air Service Affect Local Taxes?

The entire airport operation is operated as an enterprise fund and no local, city, County, or State taxes fund the daily operations of the airport facility. This was set in place in 1993 when the City of Helena and Lewis and Clark County created the Helena Regional Airport Authority under Montana Code to be a financially self-sufficient entity to operate and improve the airport facility. Prior to 1993 and the creation of the Authority, the airport received 2 mils and was included on the tax bills of local residents. Operating a commercial service airport facility is a very expensive operation and the Airport does so by operating much like a business where user fees and other non-typical airport revenue sources fund the ongoing operation.

 

What is Causing Less Flights Nationwide

The airline industry is facing some extreme challenges. Those challenges include a pilot and labor shortage and has affected each airline’s ability to operate the same number of aircraft compared to a few years ago. The effects of this situation are outlined by a group effort, and they have created a website to help explain the situation. Click on the link below to see more information:

https://www.rallyforairservice.org/

 

Here is an article that outlines the cuts so far in 2022 from 3 of the major airlines: https://www.msn.com/en-us/travel/news/american-delta-and-united-have-collectively-dropped-59-airports-since-the-pandemic-see-the-full-list/ar-AA11FMMx?ocid=msedgdhp&pc=U531&cvid=f9771dc59cd74d9cbb5ec3e3a4e5f4d9

 

Even the low-cost airlines are experiencing the same challenges: https://bismarcktribune.com/news/local/frontier-airlines-ending-bismarck-service-to-denver/article_d1034d84-470f-11ed-9ebc-132a7c03c952.html

 

United Airlines cut 29 routes earlier this year, but most recently also cut 12 additional routes from large communities:

https://thepointsguy.com/news/united-cuts-routes-drop-cities/

 

Pilot Issue Video/Article: https://www.newsy.com/stories/why-hasn-t-u-s-solved-the-pilot-shortage/

 

Article About American Airlines Sign on Bonus Program to Recruit Additional Pilots: https://www.msn.com/en-us/travel/news/3-american-airlines-regional-providers-are-offering-100-000-bonuses-to-new-pilots/ar-AA14aZ4Q?ocid=msedgdhp&pc=U531&cvid=68a776a394fa41fa80228086c734942b

 

Additionally, high fuel costs are also affecting smaller communities from getting additional service, especially those relying on 50 seat jets. A 50-seat jet is no longer cost effective under the current environment and many airlines are phasing them out of service and will continue to do so. American, Delta, and United all have parked over 100 of their 50 seat jets to date. Using 76 seat and larger aircraft better distributes overhead costs, while still utilizing the same number of crew.

Article About reduced 50 -Seat Jet Use Affecting Smaller Communities: https://simpleflying.com/usa-1300-50-seat-regional-jet-flights-today/

 

By clicking the link below you can watch an informational video presented by Mike Boyd of Boyd Group International, which discusses the shifting trends and economics of the 50-seat regional jet fleet to larger aircraft.

https://rumble.com/v1haovd-rural-air-service-to-continue-to-shrink-with-small-airliner-retirements.html

 

Why Did the Airport Expand the Terminal if Airlines are Facing Challenges Growing Service in the United States?

It was necessary to expand the terminal building to accommodate the future airline fleet transition and to ensure that we continue to support the changing aircraft fleet mix and also have capacity for Helena as the community is growing and the state is gaining more residents and visitors each year which we believe will lead to more flights eventually. Prior to the expansion, we had 170 seats in the gate areas. In 2018 we had 228passengers going out in the early morning bank alone, so we had already exceeded the seating capacity of the gate area. The expansion now allows for seating to be expanded up to 500 passengers if needed. Additionally, the terminal was limited to handling only 3 aircraft simultaneously off jet bridges and the rest had to be ground boarded. The expansion led to 3 jet bridges, each of which can be configured to handle up to two aircraft at a time, thus doubling our capacity. The new jet bridges also have the flexibility to accommodate everything from a 50 seat CRJ to a 767 or A320. The trend from the major airlines is to transition from 50 seat jets to 76 seat and larger aircraft as time goes on. Even in Helena there are trends to ultimately consider mainline (737 and larger) aircraft due to the transition from smaller more frequent flights to larger aircraft. Alaska Airlines is another example as they transition from the ground boarded Q400 turbo prop to the EMB 175 jet boarded through a jet bridge in late 2022. The airport expansion also included a ground boarding station to accommodate any smaller commuter aircraft that may still exist in the fleet into the future. Additionally, the previous terminal lacked other amenities such as a restaurant in the gate areas or additional elevators and restroom facilities. Additional wi-fi and electronic charging stations were also added.

What Specifically Can the Helena Regional Airport Authority Do to Increase Air Service and Address High Fares?

As previously mentioned, the Airport Authority has no direct control over the price of tickets, however, additional seats in a market typically reduces fares overall due to supply and demand. Airports are under certain limitations and restrictions based on Federal laws regarding what the airport can and cannot do with respect to seeking more flights. Airports cannot legally use airport funds towards airline revenue guarantees or incentives. This leaves the airport with only a few options, all of which the Helena Airport is currently doing. These include:

  • Hiring an industry expert to assist with air service recruitment – The Airport Authority issued a Request for Proposals to hire the services of a professional air service consultant. Boyd Group International was selected to assist the Helena Regional Airport Authority in its efforts to maintain and attract new service.  Boyd Group International has been a respected air service consultant for over 35 years and has a proven track record of success with numerous airports and communities. The Airport Authority has also previously worked with Sixel Consulting which was in business for decades and led by the late Mark Sixel who tragically passed away in 2020.  Mark and his team assisted Helena in attracting United Airlines to begin service in Helena back in 2008.
  • FAA-Approved Air Service Incentive Program – This program provides airlines a two-year period in which no airport use fees are charged for new airline service that is provided by existing or new airlines.
  • Airline – Wide Fee Waiver – January 2022 – The Airport Commission unanimously approved waiving use fees to all airlines currently serving Helena for the month of January 2022. January is typically the lowest air travel month in the nation, and this was aimed to keep air service levels intact as the airlines rebuild their networks moving into 2022.
  • Small Community Air Service Development Grant Award – The U.S. Department of Transportation has an annual grant program that airports and communities can apply for to secure funds to be used for new air service risk mitigation / startup cost / revenue guarantees. Airports cannot apply every year and must wait 3 years following the use of a previous grant. In 2021 Helena applied for and received a grant in the amount of $1,004,743. The Airport is working with American Airlines on an effort to connect Helena with Dallas Fort Worth International Airport (DFW) as American Airlines provided a letter of support towards that goal for Helena’s Air Service Grant application. DFW has over 230 daily connections which provides better access to the American network. American Airlines has not yet made a commitment to begin this service, but we are hopeful it will occur within the next year. In order to secure this air service grant, the airport conducted an effort to raise funds from the local community to supplement the grant. A large number of community organizations, businesses, individuals and others have donated both cash and in-kind sponsorships towards this effort. It is important to note that under Federal law, the Airport cannot legally use airport generated revenues towards airline revenue guarantees, so that is the reason for those funds being donated by the local community. Montana Business Assistance Connection (MBAC) has graciously agreed to facilitate the local funds to ensure compliance with the legal parameters for the air service funds generated locally.  The total incentive package available for this effort is approximately $1.6 Million including the US DOT grant, local contributions, and the airports fee waiver amount. As you can see, new air service generally requires a large risk mitigation/incentive package which is a large challenge to overcome. The airport can’t really accomplish this alone so it really takes a community effort as has been done in this case.
  • 2022 Montana Airline Rendezvous – On September 7-8, 2022, Helena hosted the Montana Airline rendezvous. Every airline in the industry from big to small was invited to come to Helena to see our community, tour the airport facility and learn about its unique and cost-effective business model, and meet with airports in Montana to discuss service retention and expansion opportunities. https://infotourism.news/montana-airline-rendezvous-aims-to-secure-new-helena-flights/
  • Affordable Parking – While the airport can’t directly control ticket prices, we can control the other ancillary factors such as parking rates. The airport provides free short-term parking and a very low cost $4/day long term parking. This is unique, even within Montana as most airports are significantly higher priced with respect to parking fees.
  • Community Air Service Development Coalition – The airport is being supported by a number of community stakeholders in our continued quest to improve air service. Air service development today is an ongoing effort and will require that the airport and community work hand-in-hand into the future. There are also restrictions under Federal laws that prevent airport funds being used for air service incentives and other costs, so this makes it important to have community organizations involved to help facilitate those community generated funds. Examples of these entities include the Helena Chamber of Commerce, Montana Business Assistance Connection and the Tourism Business Improvement District and many local businesses, organizations and other government entities.

 

Hometown Helena Airport Update Presentation

To view a recent Hometown Helena presentation please go to this link: https://hometownhelena.blogspot.com/2022/07/thursday-july-28-grandstreet-live.html (the airport presentation begins about 30 minutes into the video).

 

How The Airport Authority Operates

Here is an additional video about the Helena Regional Airport Authority that provides an overview of how the airport operates, how it is funded, how air service recruitment works, and the airport’s business model to keep the 1,400-acre campus updated and efficient, in addition to commercial airline service:   https://www.youtube.com/watch?v=CiBryyMmAww