Wednesday, December 5, 2012

Missoula pursues lower airfares

Posted By on Wed, Dec 5, 2012 at 11:00 AM

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The Missoula Economic Partnership has spent the better part of the past eight months courting Frontier Airlines, hoping that the low-cost carrier service will commit to flights in and out of Missoula starting next spring. But Frontier isn’t the only prospect MEP’s been cultivating. Last month, MEP President and CEO James Grunke flew to Chicago to speak with United Airlines officials about an unusual offer.

As Grunke reported to the Missoula City Council on Nov. 15, MEP is now in talks with United about offering a revenue guarantee if the airline agrees to lower airfares across the board in Missoula. Typically such offers are only made to carriers like Frontier that don’t yet have a presence in the market, Grunke says. That’s exactly what caught United’s attention.

“They’d never had anybody approach them on that before,” Grunke says.

MEP had originally raised a pot of money with which to entice Frontier into the Missoula market. It occurred to Grunke and others this fall that, with the money already there, they could simply reach out to current providers about reducing the cost of existing flights. It’s a more complicated discussion, Grunke says, because those flights are already full and a reduction in airfare would cut into United’s profits in Missoula. However, if Frontier does establish service in Missoula, United would be faced with a low-cost competitor anyway. And Grunke isn’t ruling out a similar conversation with Missoula’s other major carrier, Delta.

“Our goal is really simple,” Grunke says. “We want to decrease airfare. We’re not really concerned about the who. It makes some sense to use an existing carrier.”

Grunke adds that MEP’s conversations with United don’t necessarily have any impact on their desire to see Frontier begin service in Missoula.

Grunke says United is now crunching the numbers. The discussion hinges, he says, on convincing the airline that it would benefit from a revenue guarantee. Meanwhile, MEP expects confirmation from Frontier no later than mid-January. The company is currently mapping out its service network for the coming year, Grunke says, taking into account a reduction in its aircraft fleet. Frontier announced last month it would be dropping service in Billings in 2013; days later, the airline said it would be extending service in Great Falls through next summer.

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