01/22/2024
2024-01-22 (5) LWS Peeps – In our last LNPC Airport Board Meeting we had a joint meeting with the Lewiston City Council and Nez Perce County Commissioners to give them information about United’s Minimum Revenue Guarantee (MRG) contract. I thought this would be a good time to inform the LC Valley what MRG is, and my opinion about the United MRG.
First, United flies a 50 seat regional jet from Lewiston to Denver International. Last year this flight accounted for 47% of all passengers traveling out of the Lewiston Airport. Denver is the 3rd busiest airport in the United States and this United flight makes the Lewiston airport a gateway to hundreds of destinations with a single stop. Also, according to the Idaho DOT, the LWS Airport has an annual economic impact of $73.5 million and this United flight contributed $23 million to that total.
The United flight to Denver has been operating for about two years now, and has had its share of problems. The pilot shortage has been hard on the airline industry and that contributed to United moving the Denver flight from a morning flight to a noon flight. In the summer, the midday heat raises the airports “density altitude”. The airport is about 1400ft above sea level, but the heat causes an airplane’s performance to degrade as if the airport were a much higher elevation. This caused the maximum take-off weight of the United jet to be dramatically reduced. If the airplane is to reach Denver, it cannot load less fuel, so United is forced to load fewer passengers to reduce weight. This caused the average passenger load drop to 60% in the summer, when loads were 87% the rest of the year. Also, if the noon jet was delayed even an hour, it missed most of the East Coast connections in Denver.
The issues above have been fixed with this new United MRG contract that makes the flight an RON morning flight. RON stands for “Remain Over Night”, which means the airplane flies to Lewiston in the evening, parks overnight, and flies out first thing in the morning. This means the flight will have very few delays and reliably make all connections in Denver. It also means the summer heat issues will be eliminated and average passenger loads will likely stay around 87%.
How much is this going to cost the City of Lewiston? The MRG contract is based on passenger load and could cost the City of Lewiston as much as $4.1 million, or less than $1 million, depending on the passenger load. (See attached pricing table). In my opinion, the final cost will end up being between $1 and $1.5 million based on an average passenger load of 87% ( Note: MRG is calculated from each flight’s passenger load) .
Why is the City of Lewiston paying the MRG instead of the LNPC Airport? FAA “Grant Assurances” do not allow the airport to pay the MRG. Two years ago Nez Perce County paid the United MRG to initially entice United to fly out of Lewiston. This time around it is the City of Lewiston’s turn to pay the MRG.
Are other communities paying MRGs? Yes, Twin Falls, Idaho Falls, Yakima, and Wenatchee are just a few examples of other communities that are currently paying MRG’s to retain their air service.
Joe, what do you think of this MRG deal? I strongly support this deal! Personally, I wish the pilot shortage and fuel prices had not caused the airline industry to have to make communities choose between paying MRGs or losing their air service, but that is the state of the industry today. Many communities are losing their air service without even being given the option to keep it by paying MRGs. There just are not enough pilots to go around. The airport’s air service committee has been working very hard to give our community this option and, in my opinion, it is a very good option for our community. Even if I’m wrong and this contract ultimately costs Lewiston $4 million instead of $1.5 million, the return on this money in economic impact is still $23 million. Where will the City of Lewiston ever see a return on investment this large? Also, businesses and professionals (like doctors), that are considering moving to Lewiston are doing so, in part, because of the air service we have to our three major hubs. Lewiston’s growth is dependent on retaining all of our air service. Because of all this, I believe the decision to pay the MRG and keep our United flight to Denver is a “no brainer”. I will add, that I would have a completely different opinion if this flight had not been moved to an RON morning flight.
One last comment… I have been seeing on social media several comments from people who are not informed about this issue because they did not attend the public meeting where this MRG contract was explained to the city council and county commissioners. This meeting had public comments at the end, so the public could ask questions after seeing the airport director’s presentation. I’ve seen comments where a former city official used the term “black mail” in regards to this MRG deal. I urge everyone to reach out to the members of the airport board or the airport director if they have questions about United MRG. Our goal is to give the Lewiston City Council (and all members of our community), the most accurate information possible so they can make the best decision for our community.
Regards - Joe Gish, LNPC Airport Board Commissioner
