Colorado’s ski resorts are bracing for steep increases in the subsidies they pay airlines to deliver out-of-state skiers to their slopes. Record-high fuel prices have changed the economics of luring vacationers to the state. Airlines are trimming flight schedules and trying to raise fares, making it more difficult and costly for skiers to fly here next winter.
Daily and weekly nonstop flights from cities such as New York, Chicago, Atlanta, Dallas and Los Angeles are so important to Colorado’s inner-mountain resorts that many have negotiated agreements that lock in service levels close to or greater than last year.
Under the subsidy contracts, ski areas, often in partnership with local governments and businesses, agree to pay airlines what they lose on their mountain flights. Without the contracts, called minimum-revenue guarantees, airlines would probably use their aircraft elsewhere.
But there’s a price. Resorts are agreeing to higher caps to their potential payments, and they are expecting actual payments next year to rise as much as 30 percent.
“This is as volatile and challenging an environment as I’ve ever seen,” said Andy Wirth, chief marketing officer for Intrawest, owner of Steamboat Ski Resort. “We’re seeing the single highest year-over-year cost increase ever. That’s the case at other resorts, too.”
Steamboat agreed to pay airlines as much as $2.8 million in subsidies, up 14 percent from $2.45 million last year, Wirth said. The resort accepted slightly fewer flights than last winter, a record season.
Steamboat expects its actual costs to be between $1.5 million and $2.5 million, compared with $1.7 million last season. If costs come in on the upper end, which could happen if fuel prices continue to rise, the increase could be nearly 50 percent.
Steamboat resort picks up about 60 percent of the cost; a special district that levies a 2 percent tax on hotel rooms picks up about 40 percent; businesses in the area also contributed about $150,000 last year.
The story is similar at many resorts. Vail Resorts also negotiates revenue guarantees with airlines but does not split the costs with the community. Vail officials would not discuss their airline agreements.
Aspen does not pay airline subsidies.
Telluride guaranteed airlines up to $1.96 million for service next winter, up from $1.16 million last season, said Tom Hess, president of the Telluride-Montrose Regional Air Organization, which negotiates with airlines. Telluride will get one additional Chicago flight this winter.
Actual costs were $450,000 last year but are likely to rise this year because of fuel costs, Hess said. Telluride Ski Resort shares the cost with the communities of Telluride and Montrose.
Crested Butte’s cap on airline subsidies rose to $1.4 million from $1 million, said Scott Truex, executive director of the Gunnison Valley Transportation Authority. But the resort secured several new flights.
Crested Butte paid airlines $650,000 last winter, he said. The authority collects a sales tax and splits the cost with Crested Butte Mountain Resort.
“Air service is critical to our economy,” Truex said.
Greg Griffin: 303-954-1241 or ggriffin@denverpost.com
