United's Denver-Columbia Service Depletes Revenue Guarantee Funding

Apr 13, 2018

When United Airlines began transporting between the Columbia Regional Airport and Denver last August, the city and a number of community partners backed that service with a revenue guarantee fund -- money the airline could ask for to keep its flights financially viable during their first year. 

Friday, Columbia City Manager Mike Matthes said in a statement that United has billed the city for $600,000, the entire fund, just to make up for revenue shortfalls in the first six months of service.

In the past, the city has given revenue guarantees like the one offered to United to others, including a $3 million fund guaranteeing revenue to American Airlines that remained largely unused and was eventually returned to investors with interest.

Though the guarantee funding is gone, Columbia City Manager Mike Matthes said United plans to continue service for at least a full year from its start date. 

"We must remember that the revenue guarantee did exactly what it's supposed to do," Matthes wrote. "Revenue guarantees are for the purpose of building a new market. Our investments in the revenue guarantee worked as it brought new service, new destinations and new choices to our market."

United's service is one of several expansions at the Columbia Regional Airport, including a proposed new terminal, built in part with funds from a 2016 hotel tax measure.

Kate Czylok contributed to the audio version of this story.