Phoenix flights become profitable
Community group behind daily air service says further subsidies won’t be needed for rest of year
The leader of a community group that contributed money to support direct air service between Santa Fe and Phoenix says passenger loads have grown since flights began in December and it’s unlikely more money will be needed to subsidize American Airlines’ costs.
“I’m so excited I can’t stand it,” said Paul Margetson, general manager of Hotel Santa Fe and one of the founders of the Northern New Mexico Air Alliance, which has a contract with American Airlines to guarantee a profit each quarter on the route for the first 24 months.
The once-a-day, round-trip American Eagle regional jet service between Santa Fe Municipal Airport and Sky Harbor International Airport, which provides a major connecting hub for travelers, started Dec. 15.
The alliance, a nonprofit business and community group that also receives lodgers tax money from Santa Fe city and county governments, was expecting to pay $300,000 to American to guar-
antee revenue for the first three months of the service, through mid-March, 2017. Those flight loads were below 60 percent, not enough for American to turn a profit.
But the bill was actually $225,000.
“I do not believe there will be any subsidies for the second quarter or even the rest of the year,” Margetson told the city’s Occupancy Tax Advisory Board on Tuesday. Margetson said the flights broke even in April. May occupancy is 71 percent. Preliminary numbers for June, July and August show significantly higher travel loads.
Santa Fe Municipal Airport Manager Cameron Humphres said the April loads actually averaged 70 percent. “That’s fairly strong for April, and advanced loads for the next few months out are averaging 75 percent.”
Advocates for the service say the slow start was not a surprise during the winter travel season, a time when many in Arizona typically stay for the warmer weather. Additionally, marketing and advertising for the new flights are only now taking hold.
Also an issue has been the Phoenix departure time. Though the Santa Fe-bound takes off at midmorning in Arizona, that can be difficult for travelers coming from California, who must leave before the morning traffic rush to catch originating flights in Sacramento, Oakland, San Diego, Los Angeles and Orange County.
The flights arriving at the Santa Fe airport have seen almost 20 percent fewer passengers than the ones departing from here.
Currently, the 70-seat aircraft departs Phoenix at 9:49 a.m. It then leaves Santa Fe at 11:49 a.m. for a return to Sky Harbor.
Humphres said the issue was raised with American in January, just a month into the new service, and the company agreed to push back the Phoenix departure time.
Starting June 2, the jet will leave Phoenix at 12:15 p.m. with arrival in Santa Fe at 2:38 p.m. The return leg from Santa Fe will depart at 3:05 p.m., according to American’s website.
Almost immediately after the schedule change, the passenger booking numbers started to change on the inbound flights from Phoenix, Humphres said.
But Humphres said that all commercial airlines face a pilot shortage, and for flights to sustain themselves, they need to run at about 80 percent capacity.
That means the flights to and from Santa Fe need to be near 100 percent in the summer months to compensate for the slower winter season.
“For this flight to be viable long term, we need to approach 80 percent load factors,” he said.
The city of Santa Fe received a $500,000 federal grant to support the flight with direct subsidies as well as marketing and promotion. The state also has pledged money for marketing the service.
Even though the flight is gaining acceptance, Randy Randall, director of Tourism Santa Fe, said advertising will continue. The city has a billboard at the Phoenix airport and purchased internet and print ads in the Phoenix-Tucson market.
Data tracking for the city’s tourism website shows the effort is driving more web traffic to the Santa Fe site. “Google analytics is showing a significant increase in our market from Phoenix/ Tucson,” Randall said.
The alliance has received financial backing from 50 members, including businesses and local governments, including Santa Fe city and county governments. It has so far raised $350,000 in addition to the state and federal grant money.
The Santa Fe airport also has nonstop service to Dallas on American and to Denver on United Airlines. After American canceled a direct connection to Los Angeles in 2015, the city worked to get an airline to provide West Coast service, especially as the moviemaking business in Santa Fe grows.
Restaurateur Al Lucero is a believer in the local airport. He said he returned to Santa Fe from Dallas last week on a flight with just a few empty seats. Upon arrival at 11 p.m., his car was a minute away.
“I was gone four days and paid $12 for parking,” he said.
To raise awareness of the airport, the Santa Fe Chamber of Commerce will host its Business Awards Red Carpet Gala from 5:30 to 7:30 p.m. June 8 at the Santa Fe Municipal Airport’s Jet Center Hangar, 121 Aviation Drive.