Cottonwood City Council rolled the dice for its business community last Tuesday night betting on the success of air service between Prescott and Los Angeles.
How big of a bet the council is willing to place, it hasn’t decided.
Jane Bristol, economic development director for the city of Prescott, appeared before council at its regular meeting April 1 to ask for financial help from the city.
“I think it’s something we owe the business community for our income,” Councilman Duane Kirby said.
The city’s income is from sales tax generated by business and this could be the city’s way of giving back to businesses.
Kirby said down the road, the city could see a big payback from the service.
Prescott is in the process of signing a contract for direct flight service to Los Angeles with Horizon Air, a sister carrier to Alaska Airlines.
One flight, carrying up to 76 passengers, will leave Prescott in the morning and return in the evening. The service targets business people who travel between Northern Arizona and California regularly.
The contract requires Prescott to agree to pay a subsidy only if Horizon Air doesn’t meet its customer projections.
According to documents provided by the city of Prescott, payment will be based on achieving 78 percent of the load factor at the end of a 12-month period starting in June 2008 and ending in May 2009. The amount of payment wouldn’t exceed $160,000.
Prescott’s original letter to Cottonwood asked for the city to commit to pay up to $20,000.
Bristol told the council the $20,000 was an estimate at the time Prescott drafted the letter but the figure is a suggestion, and not a demand.
With the city already facing budget constraints, Cottonwood Councilman James Chapman said he doesn’t think its fair for the city to ask its departments to make cut backs and then commit to spending money on the service.
Other council members agreed $20,000 is out of the city’s scope but thought it could contribute a smaller amount.
“It seems a little risky,” Councilman Tim Elinski said. “At the same time, we need to think progressively.” Elinski said he’s hesitant to spend the city’s money on something risky.
Prescott is also looking for help in marketing the new service and estimated $80,000 to $100,000 will be needed. Along with the subsidy and marketing, Prescott will invest another $45,000 to service a second terminal at its airport.
The city of Sedona was also asked to help with the costs, but Sedona City Manager Eric Levitt said city staff doesn’t see the service benefiting Sedona residents since Horizon Air is offering the same deal from Flagstaff.
Flagstaff City Council approved a similar contract with Horizon on March 18. Flagstaff committed to a refund up to $600,000 if passenger projections aren’t met but didn’t ask surrounding communities for financial support.
Prescott Valley recently signed a contract to help Prescott with a portion of the financial commitment.
Bristol said Horizon Air had not committed to a price for tickets but said it would be comparable to commuting to Phoenix to fly out.
Council directed City Manager Doug Bartosh to work with Prescott on an agreement but leave the amount the Cottonwood would contribute to the subsidy blank.
Mayor Diane Joens said she’ll also go to the business community and ask for help with marketing funds.