SHERIDAN — Shawn Parker, president of the Sheridan and Johnson counties Critical Air Service Team, asked local legislators during the Sheridan County Chamber of Commerce’s legislative forum Tuesday to secure between $1.2 and $1.4 million in state funding for the next biennium to avoid interruptions of local air service.
That funding would extend the state subsidy CAST receives from the Air Service Enhancement Program, which representatives from the Wyoming Department of Transportation have said will likely run out of money this summer, through 2020 and allow CAST to maintain its current agreement with Key Lime Air, which operates out of the Sheridan County Airport as Denver Air Connection.
The future of ASEP funding has been complicated by legislation passed during the latest budget session that created the state Air Service Improvement Council, which has been working on creating a capacity purchase agreement among four critical air service communities, including Sheridan.
The agreement is designed to leverage the combined purchasing power of the four communities to contract with a large air service provider.
The recent agreement between Denver Air Connection and United Airlines, however, addresses some of the needs the CPA would address. Entering in the CPA would most likely mean starting over with a new partner.
CAST will eventually have to choose whether to continue its current agreement with Key Lime Air or enter into the state’s CPA, but Parker said his group does not have enough information to make that choice yet.
If it cannot secure continued state funding, it will essentially be forced into the capacity purchase agreement.
“If we’re forced into a position where we have to take the capacity purchase agreement, I don’t think we can recover in time,” Parker said. “We’d be interrupted. If we can’t sign that contract in January because we don’t know if we can fund it going forward, we can kiss service goodbye for the next six months.”
Key Lime Air’s agreement with Sheridan and Johnson counties includes a minimum revenue guarantee that ensures the company will make a profit regardless of ticket sales. The state currently pays 60 percent of that MRG — just under $600,000 — with a subsidy from the ASEP. The city of Sheridan, Sheridan County, Buffalo and Johnson County split the remainder of Key Lime’s MRG.
Denver Air Connection’s ticket sales have increased over the past three years and as a result, the MRG Key Lime currently requires is nearly half of what it was a year ago. As the service continues to develop and its revenue becomes more reliable, that MRG will likely continue to shrink. How long it will take to shrink to a point where the local partners can afford it without state assistance, however, is unclear.
Parker noted during his presentation that an industry-wide hike in fuel costs has, at least in the short term, hurt the service’s profitability and impacted CAST’s ability to negotiate a lower MRG in next year’s contract with Key Lime Air despite increases in ticket sales.
“Brighter days might be ahead with decreases in fuel costs coming here, but it’s been a tough year,” Parker said.
CAST’s current agreement with Key Lime ends June 30. Sen. Dave Kinskey, R-Sheridan, said he and Rep. Mark Kinner, R-Sheridan, who both serve on the Legislature’s Joint Appropriations Committee, will look into funding that could potentially fulfill CAST’s request. That committee will convene for its final interim meeting next week.