Cody-Denver air service: Millions in federal subsidies will keep flights going

Posted 5/14/24

To keep commercial flights coming to the Cody airport in the fall, winter and spring, it will take more than $11 million worth of subsidies from the federal government over the coming years.

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Cody-Denver air service: Millions in federal subsidies will keep flights going


To keep commercial flights coming to the Cody airport in the fall, winter and spring, it will take more than $11 million worth of subsidies from the federal government over the coming years.

The U.S. Department of Transportation has long subsidized Yellowstone Regional Airport’s commercial air service in all but the peak summer months. However, the price tag for the “Essential Air Service” is rising significantly this year.

Last week, the Department of Transportation agreed to pay SkyWest Airlines a $3.46 million subsidy to provide twice-daily flights between Cody and Denver from October through May 2025. The contract calls for a $3.7 million payment in 2025-26 and $3.96 million owed in 2026-27. 

This year’s subsidy is more than triple what the department has been paying. However, at an estimated $84 per passenger, it’s significantly less than what’s being paid to secure commercial service to some other communities and it’s well below the $1,000 per passenger maximum.

“The Department finds SkyWest’s proposed service and subsidy levels reasonable,” Deputy Assistant Secretary for Aviation and International Affairs Cindy Baraban wrote in a May 7 order approving the arrangement. In her decision, Baraban noted the Utah-based airline’s record of reliability and community support, among other factors.

SkyWest’s pitch was “strongly” supported by Cody Mayor Matt Hall, who said the connection to Denver International Airport brings “immeasurable” benefits to the Cody community.

“... I believe that maintaining this vital link is crucial for the continued growth and prosperity of our area,” Hall wrote in a March letter.

Though it came after a March 29 deadline, Park County commissioners also submitted a letter supporting SkyWest’s proposal. The commissioners said the Essential Air Service program “allows us to do business outside of Wyoming, and especially to bring business and tourism to Wyoming.”

Although the program helped fund flights between Yellowstone Regional Airport (YRA) and Salt Lake City in the past, the airlines’ proposals since 2020 have only offered service to Denver. SkyWest was the only airline to make a proposal this year.


New operator

The 50-passenger, single-cabin CRJ-200 jets from Denver will continue to be marketed under the United Express banner, but the operators are changing: SkyWest, which has a long record of serving YRA, is retaking the route from CommuteAir later this month.

YRA officials had pushed for the switch — citing concerns about CommuteAir’s performance — and are excited about the change.

SkyWest has a better record of completing flights and completing them on time, YRA Director Aaron Buck said in a Monday interview. So for a traveler, “you’re looking at being able to make your connections, and you can actually buy a ticket with a little more confidence that you're gonna get where you need to go,” Buck said.

SkyWest will also operate the fuller and more profitable summer flights without a subsidy, offering three daily flights to Denver beginning on May 23. Then from mid June through August, the airline will provide four daily flights to and from the Colorado capital, Buck said.

However, while the busy summer flights can be profitable, commercial airlines have long refused to fly to YRA at their own risk in the fall, winter and spring, when tourist travel slows. And that’s where the Essential Air Service program comes in.


Projecting upgrades

The federal program offers subsidies to airlines willing to offer at least two daily flights between a regional hub and rural airports. Cody has participated in the program since 2011, but the recently awarded contract to SkyWest is the biggest by far.

Airline submissions say the more than tripling of the annual subsidy — from just under $1 million in 2022 to $3.46 million this year — stems from significantly increased expenses against slightly less revenue. SkyWest projects $8.3 million worth of expenses in the first year of the contract, which is a nearly $2 million jump from the prior arrangement with United.

Buck believes the airline’s increased costs include projected growth and needs — including the potential of replacing the CRJ-200s with CRJ-550s or 650s. That would represent an upgrade for YRA, as those jets not only include options for first class seating, but a better engine, Buck said.

“It runs and performs a lot better in our altitude,” he said, meaning such an upgrade would make it “less likely that people get bumped [from a flight] because of heat or because of weight restrictions.”


Tickets may be cheaper

Thanks to the federal subsidy, the 41,200 travelers expected to catch a Cody-Denver or Denver-Cody flight between October and June will be insulated from the rising costs. SkyWest said it will charge an average of $128 per ticket, which is actually below the $139 segment fare of two years ago.

Ultimately, SkyWest expects that the $5.2 million received from passengers will cover only about 60% of its costs. The U.S. Department of Transportation government will pick up the remainder, including a 5% profit for the airline.

Assuming Congress continues to fund Essential Air Service, the feds will pay SkyWest $3.7 million and $3.96 million in the second and third years of the deal.

While it’s a large sum of money, Cody’s subsidies pale in comparison to those needed at some of the other 110 participating communities in the lower 48 states. As one example, SkyWest has requested over $5 million — or $157 per passenger — to make 12 flights a week between Laramie and Denver.