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December 9, 2013

Effort to land L.A. air service could take flight

The city’s effort to restart air passenger service with Los Angeles could be taking off, which officials say would be a boon for travelers, the economy and securing funding for Modesto Airport.

The city’s effort to restart air passenger service with Los Angeles could be taking off, which officials say would be a boon for travelers, the economy and securing funding for Modesto Airport.

The City Council is expected tonight to consider modifying the city’s agreement with its airport consultant that calls for the consultant to collect pledges from businesses, residents and others that they would spent $1million on tickets for Los Angeles flights during the first year of service.

The consulting firm – Oregon-based Sixel Consulting Group – makes money only if it lands the service.

Sixel Consulting Group owner Mark Sixel said the pledges would demonstrate the region’s commitment, and he has an “oral understanding” with a carrier that if his firm can collect the pledges, it would start the flights. He declined to name the carrier.

The pledges are nonbinding. They would be solicited from legitimate prospects, such as firms that fly employees to Los Angeles for business. Sixel said the pledges need to be collected by February, before travelers start booking flights for spring and summer and airlines set their routes.

“There is a strong possibility that we could be a contender for Los Angeles service by this summer,” interim Public Works Director Dave Rudat said.

The flights are important because:

• Rudat said they ensure the airport keeps its annual passenger count at more than 10,000, which is the threshold for receiving $1million in annual federal funding for capital projects. Funding drops to $150,000 if the passenger count falls to less than 10,000. He said the airport is on target for 11,000 passengers this year, reflecting the steady decline of several years.
• Southern California is the top destination for Modesto Airport passengers. Modesto sees its airport as an economic benefit for the region. Reliable air service can help keep and recruit businesses.

SkyWest Airlines provides the only regularly scheduled commercial flights from Modesto Airport – three daily flights to and from San Francisco. City officials say those flights often are delayed because of bad weather and construction projects at San Francisco International Airport, causing Modesto travelers to miss their connecting flights.

In 2006, Modesto helped persuade SkyWest Airlines to restart Los Angeles service by offering up to $550,000 in payments from a federal grant if the route was not profitable. The flights were often full, but SkyWest dropped the service in 2008. Prior to SkyWest’s service, the last flights to Los Angeles were in 1992.

Modesto does not have the money or a grant to offer as an incentive for air service. Sixel said the pledge campaign will target Stanislaus, Tuolumne, Calaveras, northern Merced and southern San Joaquin counties. He said about 1million people live in that region but only 5percent use Modesto Airport.

Sixel said a handful of cities have used pledge campaigns. He said his firm conducted one for San Luis Obispo, garnering $1.3million in pledges in the city’s ongoing effort to establish passenger air service with Denver.

Sixel said changes in the airline industry favor Modesto, such as the greater availability of 50-passenger jets for airports the size of Modesto’s. The previous Los Angeles flights were in slower, less comfortable turbo-prop planes that carried about 30 passengers. Sixel said carriers are phasing out the 50-passenger jets at larger airports and replacing them with 70- to 90-seat jets.

In January, the city extended its contract with Sixel Consulting with an incentive-based agreement, which stated that the firm would receive $2 for every passenger who boards a plane for Los Angeles. Sixel Consulting also received a one-time payment of $15,000, as well as expenses, which a city report estimated at $21,000 a year.

Tonight’s modification would pay Sixel Consulting an additional $2 for every passenger arriving from Los Angeles.

Sixel estimates his firm would receive $120,000 annually with the modification, based on two daily flights at 80percent capacity. The modification requires Sixel Consulting to have an engineering firm conduct an airport review required for the additional flights. Sixel said the firm has agreed to be paid only if Sixel Consulting lands the Los Angeles flights. Sixel Consulting would pay the engineering firm.

Rudat said city officials are determining how much Modesto would make from the deal but said it would be “positive cash flow” for the city. A January city report estimated the potential revenue for the city for the Los Angeles flights at more than $243,000 annually.

Sixel said that in the past decade his firm has entered into agreements with about two dozen other local governments that are similar to its deal with Modesto.

“We believe in this market,” he said. “We think there are enough people there to make it work.”

The City Council will meet at 5:30 p.m. in the basement chamber, Tenth Street Place, 1010 10th St.

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