Airport officials will meet with SkyWest today

By Jo Rafferty, Staff Writer
Wednesday, August 27, 2008 | 12 comment(s)

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Two airport officials flew to Salt Lake City late Tuesday afternoon to negotiate with SkyWest Airlines for round-trip flights with Portland.

Gary LeTellier, Southwest Oregon Regional Airport’s executive director, and Mike Lehman, chairman of the airport’s governing board, were scheduled to meet SkyWest officials at 1 p.m. Pacific time today, pursuing a deal that will secure the flights after Horizon Air’s Portland service terminates Oct. 11.

“I move we let Mike negotiate the very best deal we possibly can, within the parameters of the agreement,” said Commissioner Helen Brunell Mineau, at an emergency meeting before the two men left.

Commissioner Joe Benetti seconded the motion, and the board unanimously approved a tentative agreement that, among other things, would guarantee SkyWest up to $713,136 a year to ensure the airline will at least break even on its Portland flights. If the tentative contract is agreed upon, SkyWest would send the district a monthly report and invoice, which would show passenger revenue for the preceding month. If revenue falls below SkyWest’s break-even level, the district would have to pay SkyWest the difference within 15 days, or the airline could terminate the contract with five days’ written notice to the district.

LeTellier declined to say where the funds would come from.

“There’s a plan,” he said. “I’m sure that we’ll be in a position to disclose that very soon.”

The only reference to funding in the contract refers to the Northwest Regional Air Service Initiative, saying, “(The) district is a party to the ... initiative, which has been granted funds from the Oregon Department of Transportation to support the scheduled service.”

The initiative is a consortium of Washington and Oregon communities that were awarded a $180,000 Transportation Department grant to help improve scheduled airline service in the region, according to the state’s Web site.

The tentative contract calls for two round-trip flights between Portland and North Bend per day, using 30-seat Embraer Brasilia EMB-120 or equivalent aircraft. SkyWest would operate the service as United Express, in cooperation with United Airlines.

Benetti asked board members what they thought about adding a provision to the contract that would increase the number of flights if there were a sufficient number of passengers aboard the two flights. He said, for example, he would like the airline to add another round-trip flight per day if the passenger count on the airplanes exceeds 70 percent. Bay Area Hospital would need more than two flights, he said.

“Three or four flights would be more practical, if we can get there,” Benetti said.

Lehman said once he had the board’s authority to do so, he would negotiate at his discretion, but he warned the others that the timeframe is crucial.

“I would like the board to be able to execute a contract by Friday,” said Jerry Lesan, the airport district’s lawyer.

The contract, if agreed upon, allows renegotiation of the airline’s minimum revenue requirement if fuel costs increase by 25 cents a gallon.

The current price for a gallon of jet fuel is $4.40 per gallon, the contract says.

The term of the agreement is one year, starting Oct. 12 and running through Oct. 12, 2009.

Lesan said the agreement is modeled after a contract the district has with SkyWest for round-trip flights to San Francisco.

Lehman and LeTellier were scheduled to take a flight to Utah about 10 minutes after the meeting ended. They all agreed Tuesday they need a signed contract this week.

Airport officials are seeking a speedy agreement, in order to prevent gaps in service when Horizon pulls out.

In a similar revenue guarantee decided upon earlier this year, SkyWest was promised up to $250,000 per year if it didn’t break even on its San Francisco flights.

SkyWest just came on board at Southwest Oregon Regional Airport last month. Flights between North Bend and San Francisco began July 7. Horizon Air, which has provided the Portland flights at the airport for 27 years, filed its notice of termination on June 27, four days before the grand opening of a $20 million air terminal.
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Objective Observer wrote on Sep 3, 2008 6:22 PM:

A guarantee to SkyWest of up to $713,136 per year? Is that realistic?

Has anyone bothered to find out what revenues were generated by Horizon flights to/from CB over the past few years?

Let's do our homework before making any promises.

What a Shame wrote on Sep 3, 2008 3:02 PM:

You airport supporters have to realize that this is not a huge metropilis, this is a smalltown area with big ideas and suffering from the economy just like everyone else we are talking about. So learn to live with it. If the airport board wants support from the citizens then, for once, do what the citizens want. Small aircraft is ok for this airport. If the rich and the high rollers want to come to this area, maybe they could blow the cobwebs off their private jets and go ahead and fly in. With the redictious prices it cost to fly from to NB to Portland now, who can afford the prices later. Last year my daughter got on line and found round-trip from New York City to Portland and back for $205.00. I could not take her to Portland airport so she had to fly from from NB to Portland. The ticket from NB to Portland cost $187.00. Kinda sad isn't it. Fly over six thousand miles for $200.00 but have to pay $187.00 to fly a little over $200.00

Matthew wrote on Aug 30, 2008 2:13 AM:

A 25 cents/gallon jet fuel price increase allows a renegotiation? Lets see, if a barrel of crude is 42 gallons, then the price of crude oil has to rise by $10.50/barrel before they'll come asking for more money... Who wants to bet that that will happen on, ohh, Tuesday, when Hurricane Gustav hits New Orleans?

I applaud the effort, but really, this contract will not last very long...

clif wrote on Aug 29, 2008 1:38 PM:

Leham is clearly not smart enough to handle negotiations like this. I would have more confidence in a basset hound conducting negotiations.

toolittletoolate wrote on Aug 28, 2008 11:23 AM:

Horizon and it's employees have served this community for over 20 years. it's too bad the airport board has never been on their side...maybe they could have fought harder, worked together and made it possible for them to stay, instead of working against them. In my opinion from what I know, the airport officials have never been a team "Horizon" player. Watch your backs
Skywest, the best of luck to you.

Tempest in a Tea Pot wrote on Aug 28, 2008 7:49 AM:

There are too many paying customers for there not to be sometype of service to Portland. The whinners that use this comments section to "act out" once again prove they know nothing about anything. No Way, No How, Know Nothing.

Ginger wrote on Aug 28, 2008 5:42 AM:

I hope Lehman doesn't screw up the negotiations. I wish I could be more hopeful but these people don't seem to use their brains to full capacity.

OBSERVER II wrote on Aug 27, 2008 2:42 PM:

Hopefully this flight that our two fearless leaders are taking is ONE WAY,NOT ROUND TRIP.......

Reader wrote on Aug 27, 2008 2:27 PM:

FYI - also from Oregon Business Magazine article: "Small towns across the country are facing similar cutbacks. The federal DOT reports that so far this year airlines have asked to cut service to 27 rural communities subsidized by the EAS program, including the three in Oregon. If those requests are finalized, it would mean that since 1996, 320 rural communities nationwide have lost their air service.
“I think you are going to see wholesale cancellation of rural flights, accelerated by fuel costs,” says Maurice Parker, executive director of Regional Aviation Partners, a national lobbying group. The group says that, since 2001, the number of carriers serving EAS communities has declined by 40%. Since May 2007, 48 of 106, or 45%, of EAS communities have had a 90-day termination notice filed by the air carrier serving their community."
Did anyone on the Airport Board read these articles?

Good Luck wrote on Aug 27, 2008 2:25 PM:

FYI Excerpt from the Oregon Business Magazine: "The cutbacks “sent shock waves through Oregon; and Washington is in the same boat,” says Bob Noble, executive director of the Oregon Airport Management Association. He says the short hauls that serve rural areas generally are not profitable and need a subsidy, and the right size of smaller aircraft are not available to allow a willing carrier to fill the gap. Most airlines, such as Horizon, are purchasing more profitable 70 or 90-seat aircraft. “This storm was coming without the fuel problem,” he says.

everyman wrote on Aug 27, 2008 1:15 PM:

I like skywest...hope it works out...

Just An Observer wrote on Aug 27, 2008 11:58 AM:

Playing "Let's Make A Deal" with no money in the envelope and uncertainty regarding where the funds for the subsidy isn't giving me a warm fuzzy feeling. It's like trying to bargain for an used car but coming with an empty wallet...LOL! Better get your ducks in a row before you go negotiating!


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