City Commission Approves Community Letter Authorization for Air Service Request

At Monday's City Commission Meeting, Commissioners heard the USDOT Essential Air Service Request for Proposals Response Community Comment Letter Authorization.

BACKGROUND:

Scheduled air service for Salina and Saline County is partially funded by the USDOT Essential Air Service (EAS) Program. EAS Program funding meets an airline's gap between revenue and expenses at a community. The EAS Program does not require a local match. Salina has been eligible for EAS Program subsidy since the early 1980s. An EAS Program subsidy contract is between the USDOT and the selected air carrier. An air carrier selection is the result of airline responses to an RFP issued by the USDOT. Air carrier proposals received by the USDOT are shared with the community and each community has an opportunity to comment on the proposals. USDOT takes community comments into consideration before making an air carrier selection. Funding for an EAS contract comes directly from the USDOT to the selected air carrier per a contract between the USDOT and the airline.

SkyWest Airlines has been providing scheduled, United Express air service at the Salina Regional Airport since April 2018. The airline's current contract with the USDOT is for daily flights to/from Denver and Chicago at an annual subsidy rate of $3,310,166. The current, multi-year contract is scheduled to expire on September 30, 2023.

It is worth noting that the USDOT and EAS Program air carriers have had difficulty with the airline proposal process due to the ongoing, national pilot shortage. For several EAS communities, the USDOT has not received proposals for either continued service or replacement service due to lack of pilots.

In advance of the expiration of the SkyWest contract the USDOT requested proposals from interested air carriers for a new Salina EAS program contract. Air carrier proposals were due on July 6, 2023. The USDOT received proposals from SkyWest Charter (a new SkyWest airlines subsidiary) and Denver Air Connection.

The USDOT indicated that both the SkyWest Charter and the Denver Air Connection proposals are not acceptable as presented. The SkyWest Charter proposal is not acceptable since the SkyWest subsidiary has yet to receive a final air carrier fitness determination by the USDOT. The SkyWest Charter application for operating authority is expected to be approved by the end of this calendar year. Other than the lack of final USDOT operating authority, the SkyWest Charter proposal meets community needs and requirements for scheduled air service.

The Denver Air Connection proposal is not acceptable since it is contingent on a July 1, 2024, start date. A replacement air carrier is expected to start service with 3 months after selection. Also, the Denver Air Connection per passenger subsidy would be $380 which would be greater than the statutory, eligibility limit of $200 per passenger.

Since the proposals received are not viable, the USDOT will schedule a new date for Salina proposals. The new proposal due date will probably be in January 2024. In the meantime, SkyWest will continue to operate daily United Express flights per a contract extension.

The City, County and Airport Authority have approved funding to establish a SkyWest Charter overnight maintenance hub at the Salina Airport. The local incentive is contingent on SkyWest Charter being selected for the next multi-year USDOT EAS contract to serve Salina.

FISCAL NOTE:

There is not direct fiscal impact to the City of Salina related to this action item.

The motion to authorize the mayor to execute the community comment letter as presented was approved 5-0.