City Council approves deal with American Airlines for new flights

Monday, October 22, 2012 | 9:32 a.m. CDT; updated 11:21 a.m. CDT, Monday, October 22, 2012

COLUMBIA — A deal to provide American Airlines with a $3 million revenue guarantee for new flights between Columbia Regional Airport and Dallas and Chicago won the approval of the City Council at a special meeting Monday morning.

The revenue fund would guarantee the airline a certain amount of average monthly revenue on the flights. The airline could receive up to $1.5 million in each of the next two years as compensation for any losses.

The city is designating $3 million to the fund from the Designated Loan Advance Account, the Convention & Tourism Fund Balance Account, and the Capital Project Contingency Account. The actual allocation by the city, however, is $1.2 million. The rest will come from Jefferson City ($100,000), Cole County ($100,000), Boone County ($500,000), MU ($500,000) and 39 members of the Columbia Chamber of Commerce (contributing a total of $600,000).

"This is remarkable," City Manager Mike Matthes said. "I've never seen anything like this in my career. It's quite a broad reach in its collaboration."

The agreement is also subject to the approval of American Airlines.

The council passed four ordinances containing elements of the deal. One of the ordinances was an arrangement with Zimmer Radio to promote the new flights. The company agreed to donate $150,000 worth of advertising per year, while the city would buy $50,000 worth of advertising per year.

Matthes said they will work hard to get the word out about the service in order to avoid having to use the revenue guarantee.

The deal also includes waivers of landing fees and rental costs for the airline.

Mayor Bob McDavid said the revenue fund is necessary because of the fragility of the airline industry.

"We understand how hard the aviation business is," McDavid said.

He expressed concern that if Columbia Regional does not grow, airlines could abandon it when the industry endures hard times in the future.

All five members of the City Council who were present expressed support for the deal. First Ward Councilman Fred Schmidt and Fifth Ward Councilwoman Helen Anthony did not attend.

"I agree with the mayor that we need to be bold and pursue opportunities to grow the airport," Second Ward Councilman Michael Trapp said. "We have risk, but it's shared among many."

Sixth Ward Councilwoman Barbara Hoppe said the flights would satisfy the "huge existing demand" for flights in the region. "We've lost opportunities for conventions because of the lack of capacity in our airport," she said.

McDavid ended the meeting by declaring his intention to negotiate with Delta Airlines for a possible new deal. Delta has threatened to end its flights between Columbia and Atlanta if it does not receive a revenue guarantee of its own.

"Delta is an important partner with us for its access to the southern and eastern regions," McDavid said.

Supervising editor is Scott Swafford.

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Richard Saunders October 22, 2012 | 10:53 a.m.

Lemme guess. They're also going to offer Delta $3M that they don't have?

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