MASON CITY — Passenger totals at Mason City Municipal Airport dropped almost 50 percent last year — from 11,424 in 2011 to 5,879 in 2012, causing airport officials some financial pain and concerns for the future.
They’re not the only ones. Even with a federal subsidy, Great Lakes Airlines, which began serving Mason City in April, expects to lose $1.6 million on its Mason City operations in its first year.
Last year was the first time since 1987 that the passenger level in Mason City was below 10,000.
The airport receives a $1 million subsidy from the Federal Aviation Administration for airport improvements if annual passenger levels are 10,000 or above.
“The airport will receive the $1 million in 2013. In 2014, that level reduces to $150,000,” said airport Manager Pam Osgood.
“The airport can compete for discretionary funds to complete future infrastructure projects so FAA funding resources will still be available, just on a different playing field.”
Osgood said state funds are also available.
Another concern about the low passenger level is the Essential Air Service federal subsidy to help fund commercial air traffic to small airports such as Mason City’s.
Through the EAS program, airlines receive federal funds for serving the smaller markets, according to Bill Mosely, a spokesman for the U.S. Department of Transportation in Washington.
Current EAS standards call for an average of 10 people boarding a plane per service day to qualify for the funding, said Mosely.
In order to average 10 passengers a day for a full year, the total would have to be at least 3,650, and, despite the drop last year, Mason City’s total of 5,879 was well above the minimum, said Mosely.
The concern would be if passenger levels continue to steeply decline in the next few years.
The one variable at the airport from 2011 to 2012 was Great Lake Airlines taking over air service after Delta bowed out.
Osgood said Great Lakes has the capacity to easily meet the 10-passenger-a-day criteria. Its aircraft has a capacity for 19 passengers and offers four flights a day, Monday through Friday, and three flights a day on Saturday and Sunday.
The capacity is there — yet there was a 48.5 percent drop in passengers, she said.
Osgood said Great Lakes took over in April 2012 and there were some immediate problems.
“Several factors came into play,” she said.
Early on, several flights were delayed or canceled because of mechanical problems.
A mechanical problem, she explained, could be something as simple as a burned out light bulb or broken seat belt.
“There was uncertainty with the new carrier. It was a smaller aircraft and there were staffing problems in Minneapolis. For a while, Great Lakes flights were not on the monitors in Minneapolis so there were communication problems with the traveling public.
“All of these things have improved immensely since the start-up,” said Osgood.
While all of this was taking place air fares were going up, which also has affected passenger levels, she said.
On Friday, Delta announced it was postponing a policy change that would have affected passengers who purchased a ticket through Great Lakes in Mason City and a separate ticket on Delta from Minneapolis to their final destination.
Under the proposed new policy, those passengers would have had to retrieve their luggage in Minneapolis and check it through to their next destination. Delta said Friday it wants to rethink that change.
Monica Taylor-Lee, public relations director at Great Lakes, said the airline has the largest EAS service in the country.
She explained how passenger traffic affects the airlines’ budgeting.
“Each proposal we submit to serve an EAS community contains three major components: estimated operating revenues minus estimated operating expenses (which equals) estimated operating loss.
“In the case of Mason City, Great Lakes estimated 28,000 passengers arriving and leaving. The number 28,000 was based on historical traffic when Delta was serving the market.”
She said the 28,000 is multiplied by what Great Lakes considers the average one-way fare — $94.40. That produces annual projected revenue 0f $2,643,200. Other ancillary revenue such as air freight brings the total to $2,659,588.
They estimated operating expenses — insurance, fuel, maintenance, salaries et al — at $3,651,482.
Great Lakes receives an EAS subsidy of $1,174,468 to serve Mason City. But total revenue, including ancillaries from Mason City, was only $859,427.
So, even with the EAS subsidy, Great Lakes is on a pace to lose $1.6 million serving Mason City in its first year. The airline has a two-year contract.
“This is considered our loss and we will bid it differently when the time comes to renew our contract,” Taylor-Lee said.