But it’s not because the board is dissatisfied with the bids; rather, the board is leaning heavily toward getting out of the Essential Air Service subsidy program under which it is currently getting service and going another route with the Alternate Essential Air Service program.
Currently, Contour Airlines is being paid $4.2 million a year through the federal EAS program for a two-year contract providing 30 roundtrip flights per week between Tupelo and Nashville.
While the traditional EAS program gives the subsidy to the airline on a monthly basis following the completion of flights, Alternate EAS gives the money directly to the city or airport authority.
According to the U.S. Department of Transportation, “this allows the community to recruit air service that would not otherwise meet EAS guidelines, such as more frequent service with smaller aircraft, less-than-daily service, flights to differing destinations at different times of the year or week, on-demand air taxi service, scheduled or on-demand ground surface transportation, regionalized air service or even purchasing an aircraft. This alternative program has most often occurred as a public charter arrangement.”
It’s a matter the board has talked about before, and Contour CEO Matt Chaifetz, has lobbied Tupelo to go the Alternate EAS route.
Given the success of Contour since starting service in April 2016, the program might better serve Tupelo and Contour. Many flights on the the converted nine-passenger Jetstream planes flown by Contour are filled to capacity, which means lost revenue.
By choosing Alternate EAS, Contour – or any airline interested in providing service – can use planes with more seats. In Contour’s case, it would switch to 19-seat planes, which is how the Jetstreams are originally configured.
“I think Alternate EAS would work,” Chaifetz said. “I think we can serve Tupelo effectively with four flights a day on 19-passenger planes instead of five flights a day with nine passengers. It would ensure a more effective tool, and from the Department of Transportation’s perspective, it would be slam dunk.”
The key point is that to maintain the subsidy, the average cost per passenger must be $200 or less. Right now, Contour is close, but not quite to that level.
Since more flights are getting full, using bigger planes will allow more passengers to board. And more passengers flying leads to lower average costs.
But how much subsidy the Alternate EAS provides is up to the DOT. It could be as much as the current amount or it could be less.
Board member Jim Newman favors the Alternate EAS approach and thinks most, if not all, of the five-member board supports it as well.
“I can’t speak for all of them, but that’s the indication I’ve received,” he said. “We’ll find out Tuesday, but it’s likely to be a short meeting.”
Cliff Nash, executive director of the Tupelo Regional Airport, said in an earlier interview that he too prefers the Alternate EAS program.
“We like the flexibility of Alternate EAS that would allow us to work directly with the air carrier to amend the routes and to add additional seats,” he said.
The DOT has set a deadline of Oct. 19 for the airport’s response to the current bids, but the board can ask for an extension if it does reject the bids.
A new bidding process would be required for the Alternate EAS proposal.
Chaifetz hasn’t ruled out that Tupelo could eventually get a 30-seat regional jet to provide service again.
“There’s a potential … if Tupelo wanted a jet we could do that, probably twice a day,” he said. “We’d have to price it to see what we could do.”