Conservative U.S. State Wants to Create its Own Airline

The State of Wyoming, in the western USA, finds itself between a rock and hard place. Without perpetual generous subsidies, it cannot sustain commercial air service to smaller airports. But a lack of air access to international hubs hurts state commerce and limits quality of life. Thus, the largely conservative state is looking into (essentially) starting its own airline in order to ensure air service to eight Wyoming airports.

While demand is the main culprit, two things have hurt Wyoming. First, airlines are retiring smaller 50-seat regional jets which were well-suited to balance demand to/from smaller Wyoming cities. Second, legislation that emerged from the deadly crash of a Continental Connection flight in 2009 requires pilots to have more flight hours prior to flying commercial. Wyoming blames both of these for its commercial air service woes.

Wyoming could keep throwing money at the issue via subsidies, but legislators are proposing a different plan of attack:

The Wyoming Department of Transportation has a possible, if ambitious, fix. The agency wants to contract with airlines to provide regular service to airports in the state, similar to how large airlines like United contract with smaller carriers like GoJet to provide regional air service.

This is called a capacity purchase agreement. Each airport would in Wyoming would set the frequency, destination, number of seats, and price of flights. In exchange, the contract carrier would be paid a negotiated rate. Obviously, this would be pricier than a simple revenue guarantee via tax-breaks or other subsidies.

The Goal: Shuttle to Denver

The core goal would be bringing three daily round-trip flights to Denver to all nine Wyoming airports with commercial air service, ideally with prices aligned with national averages and few to no cancellations or delays. While the program’s proposed model could eventually be built out to include connection to other hubs such as Minneapolis or Dallas, Denver remains the largest regional hub for Wyoming, with connections to carriers like United, Southwest and Frontier.

Such a plan would implicate the following airports:

• Casper
• Cheyenne
• Gillette
• Rock Springs
• Riverton
• Laramie
• Cody
• Sheridan

Well-served Jackson is not on the list…

Let’s not kid ourselves. Airfare to Wyoming is more expensive because of limited demand. Contracting with airlines to operate on a pre-specified schedule rather than one that suits the airline will only boost ticket prices up further. I hope Wyoming has examined real costs and how much it will have to subsidize airfare to make it “affordable”.

CONCLUSION

Wyoming’s concept is neither new nor novel. I am highly skeptical that it will work without being an egregious subsidy to air travelers at the expense of other Wyoming residents. At the same time, I understand that a lack of air access limits commerce and can be commercially destructive. We’ll see how this plays out.

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