For the week of December 17 - 23, 2003

Subsidized flights
deplete $600,000
federal grant

Despite losses, California
flight program being expanded

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Horizon Air’s new flight schedule

Seattle-based Horizon Air this winter will use a single, 70-passenger Bombardier Q400 aircraft to service three daily routes between the West Coast and Hailey. The carrier’s new Wood River Valley flight schedule is:

• Depart Hailey at 7 a.m. for Los Angeles; arrive in Los Angeles at 8:20 a.m.
  
   
• Depart Los Angeles at 9 a.m. for Hailey; arrive in Hailey at 12:22 p.m.
  
   
• Depart Hailey at 1 p.m. for Seattle; arrive in Seattle at 1:46 p.m.
  
   
• Depart Seattle at 2:30 p.m. for Hailey; arrive in Hailey at 5:01 p.m.
  
   
• Depart Hailey at 5:35 p.m. for Oakland; arrive in Oakland at 6:55 p.m.
  
   
• Depart Oakland at 7:25 p.m. for Hailey; arrive in Hailey at 10:35 p.m.

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By GREGORY FOLEY
Express Staff Writer

All of a $600,000 federal grant put forth to subsidize air service between Los Angeles and the Wood River Valley will be needed to cover revenue shortfalls incurred in 2003.

Carol Waller, executive director of the Sun Valley-Ketchum Chamber & Visitors Bureau, announced the news Thursday, Dec. 11, to the Sun Valley City Council.

During a quarterly report on Chamber programs, Waller told council members that the entire sum of a $600,000 grant from the U.S. Department of Transportation will be used to repay Seattle-based Horizon Air for losses the air carrier suffered in offering daily nonstop service in 2003 between Hailey and Los Angeles.

The grant—which was issued in 2002 through the DOT’s Small Community Air Service Development Pilot Program—was administered to help guarantee that Horizon would not suffer extensive losses in offering the new air service for a one-year period. The contracted trial period for the flight service was from Dec. 15, 2002, through Dec. 14, 2003.

In a three-party contract governing use of the grant, provisions were made that the federal funds could be issued to the city of Hailey and then transferred to Sun Valley Co. to pay Horizon for revenue shortfalls up to the specified $600,000 cap amount.

Waller said last week that the total sum of revenue shortfalls on Horizon’s Hailey-to-Los Angeles route will likely be approximately $800,000. Horizon will be responsible for absorbing any losses not covered by the grant, she noted.

Waller said passenger numbers on the flights were satisfactory during the summer and winter tourist seasons but dropped sharply last spring.

Despite the losses in the last year, regular flight service between Los Angeles and Hailey’s Friedman Memorial Airport will continue in 2004.

Sun Valley Co. in September agreed to provide a new set of revenue guarantees for Horizon to continue the service through March 28.

The company also signed a contract with Horizon to guarantee daily airline service between Friedman and Oakland International Airport. Service to Oakland is scheduled to start today, Dec. 17, and continue through March 28.

With no federal funds to subsidize the service, Sun Valley Co. will be solely responsible for guaranteeing Horizon’s income goals are met if revenues from passenger fares fall short of projections.

Sun Valley Co. has declined to disclose the maximum amount that it might have to pay Horizon to subsidize a sub-par level of ticket sales this winter. Sun Valley City Councilman Lud Renick said last week that Sun Valley Co. has committed $600,000 to guarantee revenues for Horizon on the two California routes.

Chamber officials this summer submitted a new $225,000 grant application to the DOT seeking funds to subsidize flight service to Oakland, but the grant was denied.

Jack Sibbach, Sun Valley Co. director of sales and marketing, said company officials are optimistic that the California routes can ultimately succeed in the marketplace. "We are confident, or else we would not have backed the flights with Sun Valley money," he said.

Sibbach noted that numerous factors worked against the success of the Los Angeles service in 2003. "We were dealing with the effects of 9-11, the war in Iraq, the economy and sometimes the lack of snow in the Northwest last winter."

Advance bookings for the Los Angeles flight are outpacing those of last winter and reservations for the Oakland flights are off to a "good start," Sibbach added.

If passenger numbers on the California routes meet projections this winter, the flights will likely be curtailed next spring and resumed in full next summer, Waller said.

 

The Idaho Mountain Express is distributed free to residents and guests throughout the Sun Valley, Idaho resort area community. Subscribers to the Idaho Mountain Express will read these stories and others in this week's issue.