ENDOW endorses capacity purchase agreement

January 11, 2018

In “charting a new course” for Wyoming’s economy, a council created to provide recommendations for diversification of the state’s economy named improving and expanding Wyoming’s commercial air service a top priority.

The group, Economically Needed Diversity Options for Wyoming (ENDOW), released a list of 10 recommendations Jan. 2. A $15 million funding request to expand commercial air service in the state was at the top of the list.

ENDOW’s report recommended support for a commercial air service plan the Wyoming Department of Transportation proposed in August.
The report said: “Commercial air service is a significant limiting factor to expanding and diversifying Wyoming’s economy … Wyoming must be aggressive in finding a solution that will support attracting and retaining reliable air service. Air service is critical to supporting businesses, residents, and entrepreneurs.”

The new air service proposal in the form of a capacity purchase agreement originally came from a series of meetings from a working group of Wyoming leaders, which was later presented to WYDOT’s Aeronautics Commission by Aeronautics Administrator Amy Surdam.

A capacity purchase agreement could give the state more ability to decrease local airfares, improve service hours for flights, and flights would be less likely to be late or canceled, Surdam said.

Airfares in Wyoming are higher than neighboring states and 27.9 percent higher than the national average, meaning Wyoming customers are paying excess airfare of $100 million each year. 

The average flight costs:

  • $215 nationally,
  • $171 in Colorado,
  • and $275 in Wyoming.

Surdam said these issues lead to a high leakage rate – the rate at which people leave the state to access commercial air services. Wyoming’s rate is around 50 percent.

Surdam said a capacity purchase agreement, which is common in the aviation industry, would be a contract with one carrier to provide commercial air service throughout the state.  The goal would be to have air service out of all commercial airports up to three times daily to one major hub. The Jackson Hole Airport would not need to be part of the agreement, as the area already supports robust commercial air service.

The ENDOW report quoted William Swelbar, Chief Industry Strategist, Delta Airport Consultants Inc., as saying: “With the exception of Jackson, Casper and Gillette (and potentially Cody), Wyoming commercial air service is vulnerable by virtually any metric that is important to sustainable air service.”
In other cities in Wyoming, carriers may come and go. 

Allegiant Air announced in September it will stop providing service out of Casper in January. Great Lakes Aviation announced it would end service from Riverton to Denver on Nov. 1. Sheridan lost commercial air service for a few months in 2015 when Great Lakes stopped providing service, which was later picked up by Key Lime Airlines. Commercial air service in and out of Worland discontinued completely in the last year when the city lost Essential Air Service funding from the USDOT, and Great Lakes stopped providing services as a result.

This new air service proposal would help address the difficulty some municipalities have in keeping commercial services, it would also address the high cost of continuing to fund air service under the current model, said Surdam.

Currently, the department would need to spend $35 million over the next 10 years for service to be maintained at current levels with use of the Air Service Enhancement Program (ASEP).

While ASEP has been successful – increasing air traffic in Wyoming 47 percent since its inception in 2004 – Federal Aviation Policy and UAS Program Manager Sheri Taylor told the working group programs at a, Aug. 23 meeting in Casper that other states have taken notice of the Wyoming program's success and may start setting up their own. If other states implement similar programs to ASEP, Taylor said Wyoming could end up in a bidding war that the state cannot win.

Surdam said the new proposal would cost the state less than continuing the current model at $27 million over the next 10 years. Twelve million dollars of that is already available under current appropriations and would be important to maintain for growth markets in communities such as Cody and Jackson. The $15 million ENDOW recommended would cover the remaining needed funding for a capacity purchase agreement in primary markets such as Riverton, Rock Springs and Sheridan, which have one route to a major hub.

The media release from ENDOW titled “Chart New Course” represents the first steps in long-term efforts, according to ENDOW Chairman Greg Hill.

“Actions that must be implemented now include opportunities to grow and diversify our education and workforce training opportunities, improve our infrastructure and develop an entrepreneurial ecosystem that nurtures and retains Wyoming talent,” Hill said in the release. The full preliminary report classifies the expansion of air service as part of its “focus on infrastructure.”

Additional preliminary recommendations from ENDOW included: 

  • Improve Access to Broadband and Technology ($10,350,000 funding request)
  • Provide Equitable Opportunities for Students to Learn Computer Science (no funding request)
  • Improve Higher Education Attainment and Retention of Graduates (no funding request)
  • Allocate Resources for Workforce Training (investment request pending discussions)
  • Building Wyoming’s Entrepreneurial Ecosystem by creating a dedicated organization called Startup:Wyoming ($5,000,000 funding request)
  • Establish a Wyoming Research and Innovation Fund ($6,000,000 funding request)
  • Establish In-State Contractor Preference for State Technology Contracts (no funding request)
  • Authorize Virtual Currency Businesses to Operate in Wyoming (no funding request)
  • Update ENDOW Statute to reflect the composition of the Executive Council or the leadership structure adopted by the Executive Council (no funding request)

In addition to these 10 recommendations, the Executive Council included its support of efforts to encourage research and development of Blockchain, Vertical Take Off and Landing technology, and renewable, wind energy development which are considered to have high potential for diversifying and differentiating Wyoming’s economy. 

A full copy of ENDOW’s report can be found at www.endowyo.biz.

“The hard truth is diversifying our state’s economy for the long-term is going to take some investment – investments we believe strongly will pay dividends for future generations of Wyoming citizens,” Hill said in the release. “We should not embark on these efforts unless we fully understand they will be multi-year and multi-million dollar undertakings. If we are not prepared to act decisively and commit for a significant period of time, we are wasting time and money.”

In 2018, the Executive Council will be evaluating how to position Wyoming as a global competitor in a number of areas to drive future economic growth. Actions will include putting in place key enablers such as greater access to capital, enhanced government policies and structures, and more active state marketing programs. It will also include actions to drive future economic engines - areas of opportunity based on Wyoming strengths, business trends and expertise. In the coming weeks, the Executive Council will be undertaking a thorough comprehensive public engagement process to garner feedback from key stakeholders on these preliminary recommendations.

“This is a marathon – not a sprint,” said Bill Schilling, former president of the Wyoming Business Alliance and Wyoming Heritage Foundation, in the release. “The work of ENDOW is really just beginning. Wyoming has unmatched potential when it comes to our people, resources, beauty and grit and ENDOW will work to foster it all.”

Air service generates $1.4 billion in economic activity in the state annually and supports more than 12,000 jobs, according to a 2013 Economic Impact Study for Wyoming Airports prepared by ICF International, Kramer Aerotek and Jviation.

The 2013 study indicated 90 percent of businesses rely on commercial airline service, and many businesses factor in air service when determining where to locate. The study found that 38,000 non-aviation jobs in the state had improved efficiency through the use of air service.