Mayor, chamber of commerce raise money for revenue guarantee

Friday, August 24, 2012 | 10:39 p.m. CDT

COLUMBIA — Mid-Missouri businesses and institutions have committed more than $3 million to a revenue guarantee intended to draw more flights to Columbia Regional Airport, Mayor Bob McDavid said.

The revenue guarantee would compensate airlines for up to $3 million in losses they might incur by adding flight service to Columbia. The money would be put into an escrow fund and would be released only if the airline lost money on the new flights.

"We don't intend it to be a subsidy," McDavid said.

The city is pursuing "multiple leads" with airlines for new flights, McDavid said. He wants to add flights to a western hub to complement the flights to Atlanta added in June and flights to Orlando that will begin in November. He also has his sights set on flights to Chicago, which he said would benefit the city because it is a major recruiting source for MU and an international hub.

The Columbia Chamber of Commerce has been working with the mayor to raise money from the mid-Missouri business community for the revenue guarantee. So far, the chamber has raised $482,000 from 27 businesses, chamber Executive Vice President Kristi Ray said. Other businesses have promised donations but have not specified the amounts.

The contributing businesses include Shelter Insurance, Central Bank, Veteran's United Home Loans and the Gerding, Korte & Chitwood accounting agency, said Greg Steinhoff, who chairs a task force the chamber established to explore ways to improve and expand the airport.

In May, Boone Hospital Center signed a lease extension agreement with BJC Healthcare that included $500,000 earmarked to the fund, McDavid said. MU also has promised to contribute but has not set an amount, Vice Chancellor Jackie Jones said.

The chamber has given presentations to business leaders in Jefferson City to persuade them to contribute to the fund, Steinhoff said. Presentations also have been made to business groups in Fulton and Moberly but only to encourage them to use the airport, not seeking contributions.

"We've had breakfasts, lunches and one-on-one meetings," Steinhoff said.

In giving these presentations, chamber members used information provided by consultants the city hired from Boyd Group International Inc., an aviation consulting agency, and Mead & Hunt, Inc., a firm that specializes in architecture and engineering. The consultants provided access to airlines and data about airline traffic, McDavid said.

At the presentations, council members emphasized the economic development Columbia Regional Airport brings to mid-Missouri and its proximity to their cities, noting that using the airport would allow employees to save time and avoid sleeping in a hotel, Steinhoff said.

The presentations also brought up the possibility that if the airport doesn't stay competitive by adding more flights, it could lose the flights it has to competing airports.

"What happens if we don't have air service?" Steinhoff said.

With Lambert-St. Louis International Airport losing flights and getting older, and with Interstate 70 becoming a "deathtrap," Columbia Regional has an opportunity to attract more passengers, Steinhoff said.

McDavid began discussions for the revenue guarantee in March, when he established his "40 in 2020" initiative. It calls for Columbia Regional to conduct 40 percent of mid-Missouri airline travel by 2020.

Regional airports are risky destinations for airlines because small jets are less fuel-efficient than large jets, McDavid said.

"We realized that a major airline would not service a smaller city without a revenue guarantee," McDavid said.

In forming the revenue guarantee, McDavid used Manhattan Regional Airport as a model. In 2009, the city of Manhattan, the Manhattan Chamber of Commerce and the Kansas Department of Transportation established a revenue guarantee agreement with American Eagle Airlines to establish twice-daily flights between Manhattan and Dallas/Fort Worth International Airport.

The agreement succeeded, according to documents from Manhattan Regional Airport. In 2010, American Eagle added a daily flight between Manhattan and Chicago O'Hare International Airport and a third daily flight between Manhattan and Dallas.

The Columbia Chamber of Commerce is continuing its effort to raise money, despite the fact that the mayor's $3 million goal for the guarantee already has been met.

"If we secure a new flight, other airlines might take notice and want to add flights, which will take more guarantees," Steinhoff said.

Steinhoff believes that if businesses in other cities contribute to the guarantee fund, they will be more likely to use the airport.

"The likelihood that they will use the airport would go up because they are invested in the project," Steinhoff said.

Supervising editor is Scott Swafford.

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