United subsidy not unusual

By Dan Dickten

Special to The Vindicator

Contrary to some questioning, a “revenue guarantee” for United Airlines to serve the Mahoning Valley from the Youngstown-Warren Regional Airport is absolutely something businesses and governmental agencies in the Mahoning and Shenango valleys need to fully endorse — and are endorsing.

The shortfall for the $1.75 million needed revenue guarantees has gone from $550,000 to $246,000 in less than three weeks due to the contributions from local business and governments. They all understand that United would be taking a huge risk to fly from Youngstown-Warren, given there has been no daily scheduled service at YNG in over 12 years and therefore no recent passenger data with which to compare.

The need for financial assistance is simply a business decision the airline gets to make because it has something we need — daily air service — and the airline doesn’t wish to lose money providing that service to us. The revenue guarantee keeps the airline profitable at a nominal margin. Once the route sustains itself — in this case there is a high probability it will do so within four to eight months — the subsidy stops all together and United Airlines is on its own to operate without subsidy. Any funding we have remaining can either be used for other destinations, or in some cases, possibly returned to the originator.

Two dailY round-trip flights

Most cities that have not had daily service in over 12 years would be grateful to have such an opportunity afforded them by an airline like United Airlines. The service, if approved, actually starts with two daily round-trip flights (early morning and late afternoon) and could increase to three daily flights with a mid-day flight if the market proves to be profitable.

Airlines are very risk-averse nowadays as a result of tumultuous decades of financial losses and uncertainty. Revenue guarantees for “risky” markets are how all airlines go about their business of providing air service to communities in need of connectivity to the rest of the world. The fact that United earned $1.1 billion in 2013 has no bearing on this business proposition whatsoever.

Is the price too high? Absolutely not. United has agreed to keep the fares the same as can be purchased in Cleveland and Pittsburgh. With the fares at the same cost and only $6 per day for long-term parking ($30 maximum per week), $7 per day for short-term ($35 maximum per week) at YNG, not spending gas and not paying tolls to get to other airports one to two hours away, and the time saved (time saved being of the utmost importance), it will actually be cheaper to fly from Youngstown-Warren to Chicago and the more than 130 one-stop connecting destinations beyond Chicago. Remember, this is more than just service to Chicago; it’s also service to anywhere through Chicago.

Economic advantages

Unlike the current vacation-type service that sends people to the South for leisure, the daily United Airlines service affords people the opportunity to fly directly into the Mahoning Valley to invest in our community, create jobs for our workers and contribute to our growing economy. These visitors will also spend money staying in our hotels, eating at our restaurants, using local rental cars, shopping in local stores, etc.

Daily air service has a huge economic-development impact on the communities that have it through the increased access those flights provide travelers for business and leisure. Daily air service is so important that many companies choosing to invest in a region will only do so if that region has daily air service. These companies look at daily air service as a standard utility necessary to conduct business much like running water, electricity and paved roads.

Bringing United Airlines to the Youngstown-Warren Regional Airport will reconnect the Mahoning Valley to the world in a way that will pay dividends thousands of time more valuable than the $1.75 million being pledged.

We are very close to reaching our $1.75 million revenue guarantee goal. We should have a decision from United in the coming months regarding the status of its service to our community. And hopefully we will not need all of the revenue guarantee funds to sustain it.

How can anyone who wants to see this community prosper not support the daily United Airlines service?

Dan Dickten, A.A.E., is director of aviation at Youngstown-Warren Regional Airport.