Four vying for Cape airport contract
Thursday, February 22, 2007
Carriers seeking to win the two-year contract to provide flight service out of Cape Girardeau Regional Airport have submitted bids in recent weeks to the U.S. Department of Transportation's Essential Air Service program.
Proposed destinations are Memphis, Tenn., St. Louis, Kansas City, Mo., and Cincinnati. The two most likely options are St. Louis and Cincinnati, said airport manager Bruce Loy.
Carrier representatives made their pitches Wednesday night during the Aiport Advisory Board's regular meeting. While airport leaders have significant input, the Department of Transportation will make the decision, which is expected in March. The current contract runs through May 31.
Four carriers, including the current one, American Airlines connector RegionsAir, submitted bids. The lowest bid came from Great Lakes Airlines based in Cheyenne, Wyo., which is asking for a $949,956 federal subsidy for service between Cape Girardeau and St. Louis. That is about $200,000 less than the current two-year contract from Regions.
Loy said the low bid took him by surprise and that it will be strongly considered by the Department of Transportation.
"It's not completely the lowest bid wins, but the lowest bid means a lot to DOT. They don't want to spend any more than they have to," Loy said at Monday's Cape Girardeau City Council study session.
Great Lakes packaged the proposal within a bundle of six cities, including Burlington, Iowa; Fort Leonard Wood, Mo.; Jackson, Tenn; Marion, Ill.; and Owensboro, Ky. The total proposal from Great Lakes came in at $5.57 million.
However, Great Lakes does not have a "code share" agreement with American Airlines that lets the smaller carrier share the reservation system and use the name of a larger airline.
Monica Taylor, Great Lakes director of sales and marketing, said her company will begin negotiating such an agreement if it is selected.
"We definitely would want to pursue a code-share with American. That would be the best thing for American and the community," she said.
Taylor said Great Lakes did not make the bid with any intention of undercutting the competition but used a mathematical formula estimating the passenger load from Cape Girardeau at 16,500 people annually and the airline profit at 5 percent.
"There's always a concern with any contract you sign, but we're not really guessing. We're going off historic traffic levels. So if that changes, there's always a possibility of being locked into an unprofitable contract," she said.
RegionsAir submitted six options to the Department of Transportation. Its bids range from $6.5 million to $8.8 million, depending on number of flights and airports.
Reliability, airport officials and city leaders say, has been a problem for RegionsAir in recent months.
In 2006, the carrier canceled more than 8 percent of its flights out of Cape Girardeau. Cancellation rates in the three previous years were never greater than 4 percent, according to airport and Bureau of Transportation Statistics figures.
Regions president and CEO Douglas Caldwell said the airline was struck by a spate of mechanical problems since spring 2006 and had to take eight of its 14 planes out of service. He pledged better performance if selected by the Department of Transportation.
He said his company miscalculated fuel costs during its last contract and had to cover a gap of $1 per gallon. Caldwell does not want that to happen again. "We think even though our bid is somewhat higher, it reflects a more realistic view of what the costs currently are and will be in the short-term future," he said.
The only carrier with a proposal for flights to Cincinnati was Big Sky Airlines based in Billings, Mont. Big Sky is a Delta Connection carrier. It bundled all six airports with options of hubs out of St. Louis or Cincinnati.
Cincinnati is the headquarters of Procter & Gamble, which employs about 1,200 people locally. Loy said his staff is researching how many trips P&G representatives make to headquarters yearly to determine feasibility of this option. He said some people who travel west have resisted the idea of shifting to a Cincinnati hub.
However, Cincinnati/Northern Kentucky International Airport offers 380 daily flights, more than double St. Louis' 175 daily flights.
Loy said the number of federally subsidized flights from Cape Girardeau will likely remain at three daily. He does not anticipate a return to four round-trip flights.
The other carrier that submitted a bid was Mesa Airlines of Phoenix. Mesa submitted eight proposals ranging from just under $1 million to $8.76 million. Big Sky submitted proposals ranging from $3.2 million to $8.3 million for bundles ranging from three to six airports.
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