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Wanted: Airport revenue

Wanted: Airport revenue

Jul 21, 2017 - By Alejandra Silva, Staff Writer

A new agreement between the City of Riverton and its air service consultant includes an incentive to generate increased revenues.

The Riverton City Council renewed its agreement with Forecast Inc. at the end of June.

The new contract says the company will receive a $5,000 bonus if Riverton Regional Airport produces at least $5.5 million in annual revenues.

If revenues exceed $6.5 million, Forecast gets a $12,500 bonus.

The bonus continues to increase at the $7.5 million and $8.5 million revenue marks.

Fees down

The new monthly fee to be paid for the consulting service is $5,000; that amount was included in the city's budget for fiscal year 2018.

Last year, Forecast was paid about $6,500 a month.

"(Now) part of that money that they get is based on what the actual revenue they are able to produce," Riverton Mayor Lars Baker said. "We're hopeful that that will be a good deal."

Consultant required

Flight provider Denver Air Connection doesn't establish ticket prices or sell tickets for Riverton Regional Airport because of the type of license it utilizes. According to city staff, DAC has an agreement with Charter Alliance Group to sell individual tickets, and the airline relies on the airport community to set ticket fares.

"This model provides a refreshing amount of control to the airport community when establishing ticket fares but requires a high level of expertise," city staff wrote in a report to council members.

The city entered into an agreement with Forecast on April 5, 2016. The company provides revenue management, inventory management, scheduling, and capacity planning and sets loading fares. Forecast constantly monitors fare activity and ensures that seats on the planes are full.

"They are basically the guys that manage this for us so that we get the absolute maximum revenue to the City of Riverton that reduces the minimum revenue guarantee that we have to pay out," Baker said.

The city guarantees DAC will earn a certain amount of money at Riverton Regional; this year's contract with DAC set the guarantee at roughly $3.7 million. If that dollar amount is not reached, the city and other contributors make up the difference.

Before entering into a new agreement with Forecast, a "request for qualifications" was prepared to solicit interest from interested firms. Forecast and Embark Aviation were the two firms that responded. The Fremont Air Service Team and Sheridan-Johnson Critical Air Service Task Force reviewed the statements provided by the firms and determined Forecast was the most qualified.

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