City wants EAS provider to stay Southern Airways
The city wants Southern Airways Express to continue providing subsidized commercial air service to and from Hot Springs Memorial Field, writing a letter to the U.S. Department of Transportation expressing its support for the Florida-based carrier.
A resolution authorizing the city to submit the letter is on the Hot Springs Board of Directors consent agenda tonight.
SAE has been providing round-trip service from Hot Springs to Dallas/Fort Worth International Airport since 2017. The twoyear contract DOT awarded it in 2019 for 18 weekly round-trip flights to Dallas paid it a $2,729,284 annual subsidy, according to a DOT report.
The contract expires at the end of February. Airport Director Glen Barentine said DOT will make an announcement soon on the 2021-23 contract. Five airlines submitted proposals.
Hot Springs is an Essential Air Service city benefiting from federally subsidized flights connecting small airfields to large or medium-hub airports. The program started in response to the Airline Deregulation Act of 1978, which allowed carriers to choose the airports and routes they want to serve. EAS was created to ensure airlines would continue serving small airports.
EAS proposals include profit margins of up to 5%.
The city’s letter of support asked DOT to approve 14 weekly round-trip flights to Dallas and four to Memphis International
Airport. According to SAE’s proposal, it would require a $2,719,768 subsidy in year one of the contract and $2,787,762 in year two.
“There is also a long history of people traveling to and from Memphis and Hot Springs, whether it be for family, leisure or business,” the letter of support said. “In the past, when airlines provided service to Memphis, the route was very popular. The Hot Springs Advertising and Promotion Commission invested heavily in both the Dallas/ Ft. Worth and Memphis markets. Allowing the four weekly round trips to Memphis would provide access to additional cities for passengers to travel eastward and would offer passengers in Memphis a better way to travel to Hot Springs.”
Barentine said in addition to the subsidized flights, SAE plans to offer two round-trip flights to Memphis, El Dorado and Harrison on Fridays and Sundays. The six flights would not be part of the EAS program.
“On a Friday morning an aircraft would fly from Memphis to Hot Springs,” Barentine said. “That aircraft would either go to Harrison and back and El Dorado and back. Once it gets backs here after making those round trips to Harrison and El Dorado, it will go back to Memphis that afternoon, and on Sunday they’ll do the same thing.”
The letter asked DOT to continue subsidizing the 18 weekly round-trip flight to Dallas if it rejects the four round trips to Memphis. According to SAE’s proposal, it would require a $2,698,837 subsidy in year one of the agreement and $2,766,308 in year two to continue providing the 18 flights to Dallas. Information presented to the board said the four round trips to Memphis would replace the four Dallas flights with the lowest passenger loads.
Barentine said SAE’s 2020 enplanements have rebounded from their low in April. Enplanements for the airline’s nine-passenger, turboprop Cessna Caravans fell from 65% in February to 9% in April, Barentine said. They improved to 45% in August.
Barentine was part of the selection committee that unanimously chose to endorse SAE’s proposal over those Boutique Air, SkyWest Airlines, Denver Air Connection and AirChoice One submitted to DOT. Deputy City Manager Lance Spicer, Visit Hot Springs CEO Steve Arrison, Greater Hot Springs
Chamber of Commerce CEO Gary Troutman and Airport Advisory Committee Chairman Scott Lauck were also on the committee.
AirChoice One proposed 18 weekly round trips to Dallas aboard a nineseat Beechcraft 1900C for subsidies of
$2,591,309 in year one and $2,669,048 in year two.
The St. Louis carrier also proposed
12 round trips to Dallas and six to Memphis for subsidies of $2,651,574 in year one and $2,731,121 in year two. A third option, with 12 flights to Dallas and six to Hartsfield-Jackson Atlanta International Airport, requested subsidies of $2,860,479 and $2,946,293.
Boutique Air of San Francisco proposed servicing the 18 flights to Dallas for $2,684,324 and $2,738,010.
DOT doesn’t always select the local choice. It tapped SAE to provide subsidized flights to Dallas during the March 2017 to February 2019 contract period despite the city endorsing Boutique Air’s proposal for six-day-a-week round-trip service to Dallas and Atlanta.
The city said the $3.98 million annual subsidy Boutique proposed would have been the largest ever for commercial air passenger service in Hot Springs, with the Atlanta route generating more fuel sales for the airport.
The city’s Essential Air Service resumed in early 2017 after its previous EAS provider, SeaPort Airlines, filed for bankruptcy in September 2016. Portland-based SeaPort received a $1.63 million annual subsidy for routes connecting Hot Springs to Houston and Memphis.