Why Wyoming wants in on the airline business

by Reid Wilson - 04/03/18 2:10 PM ET

The next time you try to book a plane ticket to Sheridan, Wyo. — the gateway to Bighorn National Forest — you might be booking your flight with an airline that works for the state of Wyoming.

A new proposal from a Republican state senator could put Wyoming in the airline business, at least tangentially. The plan, currently being considered by an advisory board, would establish a partnership between the state Department of Transportation and an airline — likely a small regional carrier — to fly into several small towns across the state.

{mosads}“We’re saying to a contractor, whether it be one of your airlines, how much do you want per hour for that aircraft? And we want you to handle the ground crews, and we want to use your website,” state Sen. Michael Von Flatern (R) said in an interview.

Wyoming would pay the airline for flight time, ground support, insurance and other costs. Passengers would still book tickets through the airline itself, but any revenue generated beyond the airline’s costs would go back to the state.

Guaranteeing air service to cities around the state, he said, is critical for economic development at a time when Wyoming is struggling with the global commodity bust. While Wyoming’s economy surged during the recession, when coal and natural gas prices were high, falling prices have taken a toll on the nation’s least populated state.

Wyoming lost about 5,000 residents between 2016 and 2017, according to the U.S. Census Bureau. Last year, the state’s unemployment rate was higher than the national average for the first time since 2000, according to the Bureau of Labor Statistics. Today, Wyoming’s unemployment rate, 4 percent, is almost identical to the national 4.1 percent rate.

“It is essential to economic development and expansion of existing businesses. You cannot survive without that air service,” he said.

Von Flatern maintained that the state isn’t going to be competing with United, Delta or American Airlines anytime soon. But he said it makes sense to create new flights into parts of the state that need economic development.

“We’re not going to run an airplane at all. We’ll do nothing but take in the money beyond what they need to run their aircraft on an hourly basis,” he said.

Wyoming currently guarantees airlines flying into and out of three state airports a minimum amount of revenue per flight, a program similar to the federal Essential Air Service program that creates incentives for airlines to operate between small regional airports and major hubs. Under that minimum revenue agreement, Wyoming has doled out about $40 million to airlines to cover unsold seats since 2004.

Von Flatern said the proposal would cover flights into three cities: Riverton, Sheridan and Rock Springs. The flights would likely come from Denver, the nearest major hub. Another airport, in Gillette, might be covered eventually.

The advisory committee will issue a request for proposal by the end of the summer, in hopes of having a proposed contract in hand by the end of the year. When the state legislature reconvenes in January, it would consider a bill to spend $15 million on the new arrangement over five years, with an option to extend the agreement to 10 years.

Von Flatern has proposed hiring a consultant to monitor the economic impacts of the program, to make sure it makes fiscal sense. If all goes according to plan, the first flights could begin as early as September 2019.

“The passenger will see no difference at all,” Von Flatern said. “Their luggage will still make it all the way to Melbourne, Australia. We’re hoping it doesn’t go to Melbourne, Fla., but you never know.”