Airline Revenue Guarantee Could Make Touchdown in Branson
Branson Airport (BKG) made news in 2009 when it became the nation’s only privately constructed and operated commercial airport. Unfortunately, in large part due to poor timing, passenger levels were far below expectations and the project has been in financial trouble for the last couple years. The airport’s problems trebled when Southwest decided to halt service to the market last year.
Stripped of its only major airline, Branson Airport management has been trying to lure new service. To do that, the airport plans to use $1.5 million of private money and $500,000 of public money (courtesy of Taney County) to create a revenue guarantee for prospective airlines. If an airline agrees to serve Branson Airport and fails to turn a profit, this guarantee will make up the difference.
We’ve seen the use of revenue guarantees before in Missouri, notably at Columbia Regional Airport. The Columbia region provided a revenue guarantee to American Airlines, which prompted Delta Airlines (who was already serving the airport) to end service. In essence, publicly funded airline revenue guarantees take the risk of providing airline service from the private sector and give it to taxpayers. This is a questionable use of public resources, and it subsidizes air travel.
Even though Branson Airport is a private operation, a revenue guarantee would not be the first public support it has received. The city of Branson has paid a set amount to the airport for every out-of-town passenger that it has brought in, and Taney County helped the airport secure initial financing. With the airport on the verge of financial collapse, and the county now preparing to subsidize commercial air service, the question becomes whether the public should be invested in bailing out this private venture. Especially with nearby Branson-Springfield National Airport (SGF) growing briskly in the last couple years, it may be in the interest of the taxpayer to let the airport sink or swim on its own.