COLUMBIA — American Airlines cashed in on $22,562 of its revenue guarantee during its first two weeks as an airline carrier at Columbia Regional Airport.
American Airlines offers two flights to and from Dallas and one flight to and from Chicago daily. It gets reimbursed from the revenue guarantee fund if Chicago flights fail to bring in at least $4,403 per flight or if Dallas flights fail to produce revenue of at least $5,012 per flight.
The agreement between American and the city caps the revenue guarantee at $3 million over the next two years, or a maximum of $1.5 million each year.
“(The fund) is just to get the airline here and to guarantee the citizens will use it,” city Finance Director John Blattel said, adding that the amount paid from the fund was larger because of low passenger numbers during heavy snow in February.
American Airlines debuted its flights from Columbia on Feb. 14. During the two-week period, 84 percent of the flights seats were sold.
“It did exceed expectations,” Blattel said. “We’re very, very happy with that number. We believe it will continue to go up.” He said the bookings are strong, with few seats left on many flights.
The city paid $1.2 million into the fund, while members of the Columbia Chamber of Commerce chipped in $600,000. MU and Boone County contributed $500,000 each, while Jefferson City and Cole County added $100,000 each.
If payments from the fund were to continue at the rate of the first two weeks, American Airlines would collect a total of about $1.17 million over the two-year contract.
“We believe that we’ll only be paying this revenue guarantee for about a three-month period,” Blattel said. He predicted the flights will become even more popular as people become more familiar with the service.
Blattel said American Airlines could raise its fares at any time, and it would only take a small increase in ticket prices to avoid tapping the guarantee fund.
St. Louis' and Columbia's flight fares to Dallas and Chicago are comparable. Fare prices for Tuesday flights were listed on American's website as:
- Round trip between Chicago and Columbia: $316 to $404
- Round trip between Chicago and St. Louis: $284 to $372.
- Round trip between Dallas and Columbia: $580 to $668.
- Round trip between Dallas and St. Louis: $544 to $632.
Michael Detrick, the vice president and managing director at Adelman Travel Group, which has an office in Columbia, said it's difficult to assess how competitive American's rates at Columbia Regional Airport might be, given that airline markets are so different.
Supervising editor is Scott Swafford.