Subsidized Airline Service In Bismarck Flops As Frontier Pulls Out
In February of 2012 the City of Bismarck agreed to $200,000 of “minimum revenue guarantee” for Frontier Airlines in order to lure them into serving the city.
Now Frontier is pulling out of Bismarck, though there’s nary a mention of the subsidies the airline received in the reports I’ve read:
BISMARCK, N.D. (AP) — Frontier Airlines will suspend its service at Bismarck Airport effective Jan. 5.
Airport Manager Gregory Haug on Monday said the airline has notified the airport about its decision. Haug says the carrier is evaluating whether to offer flights in and out of Bismarck on a seasonal basis.
The airline offers passenger service between North Dakota’s capital and Denver International Airport.
Frontier spokesman Todd Lehmacher says Bismarck’s airport “has performed in line with expectations,” but hasn’t “shown the strength necessary” for year-round service.
It’s remarkable that Frontier couldn’t cut it in what has been a booming market for air travel. The state’s airports have seen boardings increase dramatically in recent years. In fact, statewide boardings set another record in July with Bismarck coming in as the second busiest hub for air travel in the state (behind Fargo).
I’m not familiar enough with the air travel market, and Frontier’s practices, so speak to what went wrong in Bismarck. But I do think Frontier pulling out is an indictment of the sort of financial incentives to move into the market they received.
If a company has a sound business model, they don’t need subsidies. If they don’t have a sound model, the taxpayers shouldn’t be on the hook.