Admittedly, those of us who don’t fly so often have had a hard time grasping the fervor for bringing new airline routes to the Eureka-Arcata airport. Is it really as important as the jet-setters among us claim it to be? Is it really worth potentially dropping millions of dollars of public funds into the pockets of major airlines, just to avoid the indignity of a couple-hour layover in San Francisco?

Take this latest potential deal with American Airlines, which is currently wavering. In order to guarantee service for two years, the airline wants a revenue guarantee pool of $1.25 million. After many twists and turns, it turns out that the only bureaucratically feasible way to do this would be to drop the requested dollars from the county’s big economic development pool — the Headwaters Fund.

In other words, we would have to be prepared to completely give away about 6 percent of the total of that hard-won fund, on this project alone. And then, after two years were up, there would be nothing to prevent American from walking away with the cash, as Delta Airlines did a few years ago under a similar arrangement.

There’s plenty of skittishness out there about this new American Airlines deal, and not just among we morlock-like 99 percenters who tend to have to drive places. The deal is close to collapse.

This is a point that Gregg Foster acknowledges in a memo sent out to potential supporters last night — a memo that probably makes the best possible case on the deal’s behalf. He mentions that San Francisco International is about to become a total clustereff of a mess for the next few years, a subject much in the news this morning. He also argues that having multiple routes into and out of Arcata-Eureka benefits the county in a number of ways, beyond the obvious one of shuttling powerful people to their destination in a way that inconveniences them least.

Give it a read. Foster is a member of the Humboldt County Airline Advisory Committee and the former executive director of the Redwood Region Economic Development Commission (and — full disclosure — a former employee of Lost Coast Communications). He has been the county’s point person for courting airlines in both an official and an unofficial capacity.

Memo follows:

Good evening,

I am sure you are aware of the twists and turns of the effort to secure a contract with American Eagle. As of now, while we are in their schedule starting June 14th (2x day nonstop jet service), there is no contract that’s been executed. The Headwaters Fund had agreed to a loan for the minimum revenue guarantee, but this option has been taken aaway because of FAA rules and the Headwaters Charter cannot make loans that will be repaid by the County General Fund.

So as of now, there is no source of funds designated for the minimum revenue guarantee. This places the LAX service at risk.

I realize that the notion of providing a minimum revenue guarantee is a controversial one. There are legitimate arguments on both sides of the issue. I understand that there is a community group running ads against providing a guarantee. That’s fine. But we must realize that by denying this request, we may be making the choice of forgoing service to LAX. At a basic level our arguments are irrelevant to American Airlines. They have made us an offer. Our choice is to accept it or not. They have also agreed to an amount that is significantly less than they first proposed.

We have spoken to many airlines over the past years in an attempt to secure new service. As of right now American is the only airline that has made a tangible offer. The others we are talking to are:

  • United. They have indicated that they will not offer service to LAX. However, they showed some interest in further exploration of adding a flight to Denver.
  • SkyWest. We have met multiple time with top management, including the president of the airline. They will support our efforts with United, but have not expressed a strong desire to move without their contract.
  • Allegiant. Multiple meetings and presentations since 2009. They are interested in 1x week service to Las Vegas.
  • Delta - No longer interested in our market.
  • Frontier - Not interested unless we can demonstrate a strong potential for folks wanting to fly only to Denver from this market.
  • Alaska - We’ve continued to talk to them since they pulled out of the market. There is little chance they will return.
  • Southwest - Two meetings. Not interested in this small of a market.
  • Seaport. Small niche airline interested in providing service to Portland.

The Headwaters Fund will now be considering making a grant for the minimum revenue guarantee for the LAX service. But I think this may be an uphill battle. To be honest, there really has not been enough community support shown to demonstrate that this is a top priority. Few have attended those meetings. There have been few, if any, official statements of support from community, business, and economic development. When we sent ouf a request for donations of items to represent our community at our Tampa recruiting trip, all we received were 10 caps and some t-shirts.

To be blunt, we either want this or we don’t. I’ll remind you that the Horizon LAX service was started with a minimum revenue guarantee of $581,000 used during their first year of service (not including fee waivers and free advertising). Delta, of course, used $500,000 and got fee waivers and free advertising. This, unfortunately, is how the game is played these days. We are in stiff competition with other airports that are offering way more than we are in incentives. I don’t like it either. But how I feel about it is irrelevant.

As to the benefits of having this new service, many are obvious and others are not. But here are a few:

  • Potential for reduced airfares. Fare data showed that the presence of Delta helped flatten and/or reduce fares. And the average fare out of ACV rose dramatically after the departure of Alaska/Horizon. Assuming that we return to 100,000 enplanements with the restoration of LAX service (a conservative estimate), even a $5 drop in fares will mean that the community will benefit in an amount equal to the revenue guarantee.
  • Increased reliability. This will be especially acute once SFO closes one if its runways. Imagine having flight delays every day for 3 years. This is a strong possibility.
  • Increase revenue to the County. County Aviation Division will see increased operational revenues from parking and concession fees in the first year. In the second year, the fee waivers will be over, and the county will get landing, fuel flowage, and terminal rents.
  • Increased ability to secure FAA funding for facilities. Each ticket will have a “Passenger Facility Charge” of $4.50. This money is used to leverage FAA investments in our airport infrastructure and was critical for the new runway and terminal expansions. In addition, if we are ever to make a successful argument for a tower at ACV, we’ll need the traffic to support that. Traffic drives towers, not the other way around.
  • Economic impact. How many businesses will save time and money with a more direct connection? What is the dollar value of that? In a recent conversation with the Film Commissioner, I learned about how many commercial and other productions we have lost due to the fact that we cannot service the LA area. What would be the affect on tourism? We’d be only 90 minutes away from L.A.

The bottom line is this. We are at a crossroads. We have been presented an opportunity that we have not yet taken advantage of. If this deal with American does not work, they will not be back. And there are no other airlines that have expressed interest in that market. Another airline entering and leaving our market will have a chilling affect on our efforts. We’ll have been shown to be a weak market, one that is not worth the risk of investment.

I have heard folks say that they don’t want us to have the “Delta”experience again. Neither do I. And we have no guarantee that American will stay past the 24 month period of the contract. However, there are fundamental differences between the Delta and American services:

  • LAX, of course, was served until last year and we have good data to show that the service will be used.
  • We are adding a second, not a third, airline to the market.
  • General economic conditions have changed (the banking collapse happened at the half-way point of the Delta service).
  • LAX is a much larger hub than SLC.
  • SFO will be experiencing significant delays due to construction (the FAA has already downgraded it)

So, what can you do? At the very least, you should contact the Headwaters Fund,, and let them know if this is important to you. Secondly, you should tell your colleagues and business associations to do the same. You should also provide your expressions of support to Supervisor Mark Lovelace and his colleagues. Supervisor Lovelace has taken the lead seeking a solution to this issue.

Finally, we should strongly consider a private sector based fundraising drive to match a Headwaters Grant. By matching them dollar for dollar, we can show how important this service is. For example, if the fund decides to grant $250,000 per year for a revenue guarantee, then the private sector could match that.

Bottom line is this. It’s time to fish or cut bait. If we want this a a community, then we must act. These opportunities do not come often, if even twice. I can tell you that there are other airports just waiting for us to pass on this deal so they can make it.

If this is important to you, now is the time to act.

Note also, that the opinions expressed here are my own. Thanks. Please let me know if you have any questions or comments. Please feel free to share this email with your friends and colleagues.

Gregg Foster