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Jeff Bourk: Several major carriers are interested in flying out of Branson.
Jeff Bourk: Several major carriers are interested in flying out of Branson.

Taney County votes to assist BKG

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An investor who felt confident about the future of the private Branson Airport LLC, could – assuming bondholders were willing to sell – buy the whole enchilada for a few million dollars.

The $114 million generated from the sale of municipal bonds used to construct the airport that opened in 2009 were selling for less than 8 cents on the dollar at the end of March, according to Municipal Securities Rulemaking Board records.

“All you’d need is 51 percent to get a majority interest. If the bonds sold at a premium, or around 10 cents, it would take around $5 [million] to $6 million,” said Michael Hynes, a Branson-based aviation consultant.

The historically low trading prices on bonds shows a faltering confidence in the airport even after Taney County officials moved last month to assist airport officials in the quest to land the next big airline.

On March 23, Taney County Commissioners approved $500,000 in risk abatement funds – contingent on $1.5 million from unidentified sources – to make the airport more attractive among potential carriers in the post-Southwest Airlines (NYSE: LUV) era. The Dallas-based carrier left Branson in June, and the smaller Frontier Airlines followed suit in December.

In January, the airport inked a deal with Sanford, Fla.-based Orange Air LLC to offer three charter flights starting in May. It will become the third carrier to operate public charters through the Branson AirExpress name, along with Buzz Airways and Elite Airways, according to Springfield Business Journal archives.

Under the terms of the two-year risk-abatement agreement with the county, the Branson Airport Regional Transportation Development District could use the combined $2 million to reimburse any operational losses an airline that comes to Branson might experience.

Branson Airport Executive Director Jeff Bourk declined to say from where the additional funding would come, but he said several major carriers were interested in flying out of the airport.

He declined to say what airlines or when they might sign on.

“This agreement is designed to permit our community to compete for good air service on a national level,” Bourk said in a news release.

“The combination of these funds will be utilized to minimize the risk to a major airline interested in starting service in Taney County.”  

Reached by phone, Bourk said he didn’t have more to say beyond what was in the funding announcement.

Taney County Presiding Commissioner Mike Scofield said the commissioners are eager to grow passenger volumes and tourism in the city.

“We wanted to step up and partner with our business community,” Scofield said.

Transportation district administrators worked with airport officials to craft the proposal, and Scofield said the supporting $1.5 million would be raised through various community sources.

As an economic driver for the city, Scofield said the airport deserves community support.

“There’s a Missouri Department of Transportation study from 2012 that said the airport had a $91 million economic impact on the region and created 1,460 jobs locally. We want to see what happens. I’d like to give it another shot and get a national airline in here,” he said.

“Maybe that’d attract some manufacturing jobs here, too.”

However, the risk-mitigation announcement didn’t move the needle on the value of the bonds, and it seems the airport’s history of financial losses has Branson Airport LLC in a holding pattern.

“I really thought they’d bottom out at around 15 cents. Now, I think it might be around 5 cents,” Hynes said of the bonds’ value.

The 40-year industry analyst who runs Hynes Aviation Service Industries said he supports the county’s move. The reality, however, is that major airlines aren’t looking to expand, and moves to ensure they wouldn’t lose money by banking on Branson aren’t enough, he said.

“I’m glad the county is willing to go on record to support the airport. That’s a great move. But let’s look at the reality of it,” Hynes said.

County commissioners cite a similar move in mid-Missouri.

In October 2012, Boone County commissioners approved $500,000 in risk-abatement dollars in the $3.3 million public-private fund to attract American Airlines to Columbia.

According to the Taney County news release, American Airlines came to town and has since accessed only $25,000 from the fund.

According to Hynes and reports out of Columbia, the move appears to have had unintended consequences. Delta Air Lines left the Columbia Regional Airport in early 2013.

“There’s actually less air service today in Columbia than there was in 2012,” Hynes said.

With both Southwest and Frontier out of the picture, Hynes doesn’t feel the risk-abatement funds are a risky move. He questions whether they’ll be effective.

“It’s one thing to guarantee an airline that you’re not going to lose money coming into Branson. But they’re not in business to break even,” he said. “If I could go somewhere to make money, why would I go to Branson to break even?”

With airline consolidation and airplane shortages being an industry norm, Hynes has speculated Southwest, in particular, left Branson for more profitable markets even though it was filling planes.

A couple of years ago, Hynes projected Branson Airport could turn profits by 2017 or 2018 given rising passenger volumes. Now, he suspects it could take another eight years for it to move into the black, and the airport would need to add route options to make that happen.

“I still think 20 years from now, it will be an asset to the community, but there’s going to be an awful lot of bleeding in the meantime,” Hynes said.[[In-content Ad]]

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