Financiers discuss feasibility of Phoenix flights

June 5, 2014 • Local News

By Jeff Tucker
Record Staff Writer

Advocates of air passenger service between Roswell and Phoenix told a Roswell committee Thursday they are optimistic about establishing air travel as early as April between the Alien Capital of the World and the Valley of the Sun.
The proponents told members of Roswell’s finance committee Thursday morning that convincing Envoy to establish air service between Roswell and Phoenix would take a regional effort, with the city of Roswell as the project’s fiscal agent.
Envoy is the new name of regional air carrier American Eagle, owned by American Airlines Group. Envoy continues to fly routes for American Airlines, which also contracts with other regional airlines to operate flights under the American Eagle name.
Reaching a deal with Envoy will require a minimum revenue guarantee of several hundred thousand dollars, said Jon Hitchcock, president of Roswell’s Pioneer Bank, and Bill Armstrong, managing partner of Roswell’s Armstrong Industries.
Hitchcock and Armstrong presented the proposal to the finance committee Thursday.
Both Hitchcock and Armstrong are past presidents of the Economic Development Corp. of Roswell-Chaves County, and both of them worked to establish air service between Roswell and Dallas-Fort Worth several years ago.
The project will also require a consultant and marketing effort, Hitchcock and Armstrong said.
Necessary marketing costs for Phoenix flights were estimated at $60,000.
Hitchcock said the city needs a consultant “with the ear of American Eagle.”
In total, the projected price tag over two years for Roswell and its potential regional partners to convince Envoy to establish air service between Roswell and Phoenix ranges from $1.7 million to $2.3 million, stated a “Fly Roswell” handout Hitchcock and Armstrong presented to the finance committee Thursday.
Hitchcock said the city of Roswell’s financial backing of the project is [auth] critical. He said those advocating for Envoy to establish air service between Roswell and Phoenix need to offer something to assure the airlines of its financial risks, which would be the purpose of a minimum revenue guarantee contract.
“It’s not something Roswell can do alone,” Hitchcock said. “We need (support) down to Carlsbad and Ruidoso. Roswell has to take the lead because the city owns the airport.”
Hitchcock said he is hoping to reach a deal with Envoy to establish 13 departing flights a week from Roswell; two a day, with one on Saturdays.
“It’s our premise that we have sufficient demand,” Hitchcock said.
Hitchcock said a similar deal was reached several years ago when air service was established between Roswell and Dallas-Fort Worth. That deal also required a minimum revenue guarantee agreement, which Hitchcock said was not utilized because the airlines made enough money.
“The MRG (minimum revenue guarantee) was not called upon because passenger boarding generated sufficient revenues, that it wasn’t necessary,” Hitchcock said after Thursday’s meeting.
The proposed MRG agreement with Envoy is not in perpetuity and would expire after two years, Hitchcock said.
The city of Roswell budgeted $25,000 in the city’s preliminary 2014-15 fiscal year budget for an air service consultant to help develop air service to Phoenix. The Chaves County commissioners did not include funding for the Roswell-Phoenix project in the county’s 2014-15 interim budget of $44.9 million.
Armstrong said the project would be “dead in the water” without support from the city of Roswell.
“We’re not here to ask for dollars today, but to prepare you,” Hitchcock told the finance committee, saying he hoped to reach a contract with Envoy by August and then present it to Roswell city leaders for consideration.
Hitchcock said establishing air passenger service between Roswell and Phoenix would benefit other cities, such as Artesia, Carlsbad and Ruidoso, which supported air service between Roswell and Dallas-Fort Worth. Other regional partners for air service between Roswell and Dallas-Fort Worth are Chaves and Eddy counties.
“The fact was they all participated and helped make it happen,” Hitchcock said.
Hitchcock said increased air passenger service in Roswell for both business and leisure travelers would provide a big economic benefit for the entire southeastern region of New Mexico, particularly in association with the oil boom in southeast New Mexico.
Hitchcock said the next step is reaching out to leaders of Artesia, Carlsbad, Ruidoso and Eddy County for financial support.
Artesia Mayor Phillip Burch, contacted after Thursday’s meeting, said a Roswell-Phoenix air connection is important for economic development in Artesia and elsewhere in southeastern New Mexico.
“We were a part of the group in 2007 that worked very hard to get air service from Dallas-Fort Worth to Roswell,” Burch said. “We view this opportunity the same way. We need air service to the west for economic development and just for our citizens.”
Artesia is among those southeastern New Mexico cities experiencing an oil boom in the Permian Basin, but Burch said many other Roswell-Phoenix air passengers are envisioned.
“A lot of people that travel to southeast New Mexico for various reasons need the access to the west,” Burch said. “The big customer that we foresee in our area is the Federal Law Enforcement Training center (in Artesia).”
The website of the Artesia training center encourages commercial air travelers coming to Artesia to route their travel plans through the Roswell International Airport, serviced by Envoy (formerly American Eagle), via the Dallas/Fort Worth airport.
Burch said city of Artesia leaders would seriously consider financially backing air travel between Roswell and Phoenix.
“We were certainly quick to try and hold up our share of that guarantee when the Dallas-Roswell connection was made,” Burch said. “We’ve not seen the numbers yet on the travel west. It’s certainly something we will consider because it’s important to our community, as well as the rest of southeastern New Mexico.”
Hitchcock noted Southwest Airlines, which makes up more than half the air traffic at Albuquerque International Sunport, announced recently that in November Southwest Airlines will offer six fewer Albuquerque flights than a year earlier. Flights to be eliminated are three daily trips to Dallas, and one each to Las Vegas, Nev., Phoenix and Seattle.
Southwest Airlines is also eliminating flights to Albuquerque, and El Paso, Lubbock and Midland, Texas, due to the expiration of a federal law.
“The reason this is so critical right now, (air passenger) capacity is shrinking in every state contiguous to Texas,” Hitchcock said.
Hitchcock described Phoenix as “the gateway to the West,” and said airfares will likely increase because of the reduced flights.
“Phoenix is a place where you jump from one plane to another,” said Roswell City Councilor and finance committee member Jason Perry.
Roswell Mayor Dennis Kintigh said he is a strong backer of air travel to the west between Roswell and Phoenix to complement air travel east between Roswell and Dallas. Kintigh said it’s is an important component of economic growth in Roswell and Chaves County.
“It’s extremely important and I fully support it,” Kintigh said after Thursday’s meeting. “This has a huge potential.”
The finance committee took no action Thursday.
Committee chairman and City Councilor Caleb Grant said the presentation was for informational purposes.

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