Staff recommends that the City Council accept the $1 million Small Community Air Service Development Program Grant from the U.S. Department of Transportation and authorize the Mayor to execute the grant documents.

The City Council approved an air service consulting agreement with Mead & Hunt Inc. on January 23, 2023 to assist with air service development initiatives, including the preparation and submittal of a Small Community Air Service Development Program (SCASDP) grant application. The SCASDP grant is a program through the U.S. Department of Transportation (USDOT) that the City used previously to help provide a revenue guarantee to secure the American Airline service to Dallas that began in July 2017 and currently continues to serve the community. The City's Airport staff in conjunction with members from the Billings Chamber of Commerce Air Service Committee, the staff of Big Sky Economic Development (BSED), and Board members and staff of the Tourism Business Improvement District (TBID), have all been working closely together to entice new and needed air service to Billings. One of the necessary requirements needed to be successful when working to enhance local air service is the ability to offer a revenue guarantee to the airline being courted. The revenue guarantee provides the airline the ability to consider the new market (Billings) without the fiscal worry of startup costs, marketing, and immediately making a profit in a new market with entrenched competitors.  Typically, the revenue guarantee is funding raised or pledged by the local business community.  Smaller airports can also apply to the DOT for a SCASDP grant to supplement the dollars already pledged by the community, thereby allowing for a more robust revenue guarantee offer to the airline being pursued.  The grant application submitted was to provide a revenue guarantee to recruit, initiate, and support new daily service to between the Billings airport and either Los Angeles International Airport or San Francisco International Airport.  The grant application requested $1 Million in federal funding, with $755,000 in local match from the community and Airport and Airport fee waivers.  The Airport received notice that the City’s 2023 application has been approved and the grant agreement, certifications and assurances require City Council approval for grant acceptance. The grant funds will again be used to secure new direct airline service to markets in California.

 

City Council may:

• Approve  the acceptance of the SCASDP grant and authorize the Mayor to execute the SCASDP grant agreement, certifications and assurances; or
• Not Approve the acceptance of  the SCASDP grant agreement, certifications and assurances, thereby reducing the potential to secure enough funding to provide an adequate revenue guarantee for pursuing new airline service.

The federal grant amount is for $1 Million.  Local contributions total $755,000, which include $750,000 from local community organizations and $5,000 from the Airport.  The Airport will also contribute $80,000 in in-kind contributions via a one-year landing fee waiver.  The total project cost is $1,835,000.