Fort Worth-based American Airlines has inked a deal with the city of Stillwater, Okla., and Oklahoma State University that will pay the carrier up to $4 million over the next two years to keep daily flights.
“American is willing to continue such air service only if it is able to limit its economic risk by receiving a revenue guarantee,” an agreement between the airline, the city and the university said.
The deal comes as dozens of small communities across the country are facing the loss of air service from major air carriers that no longer see a profit outside of major cities. American Airlines has cut service to nine airports in the US since the beginning of the COVID-19 pandemic, including cities such as New Haven, Conn., and Joplin, Mo., in late 2021 when rules from the $60 billion in federal airline stimulus expired and left rural areas on their own to support air service.
Other even smaller cities were cut early in the pandemic and service hasn’t returned.
“Due to the severe impact of the COVID-19 pandemic on air travel across the nation, especially our community, American Airlines has requested financial support in order to continue air service throughout the recovery period of the pandemic,” Stillwater Regional Airport’s staff wrote in a presentation to Stillwater’s City Council. “Airlines are facing increased operational costs due to unusually high fuel prices and lower ridership.”
Stillwater agreed to cover half the costs and OSU the other half.
In the fall, United Airlines said it was cutting service to 11 small airports, including Killeen-Fort Hood and Easterwood Airport in College Station, both in Texas. Killeen-Fort Hood and College Station are also serviced by American Airlines, leaving one air carrier at the airports that previously had two.
For cities such as Stillwater, American Airlines is the only option for travelers and college students not wanting to drive two hours or more to Oklahoma City or Tulsa to catch a flight.
The deal means the local government and the university will cover any revenue short of $4 million, starting this June and ending at the end of 2023.
It’s common for airports to extend aid to airlines to lure routes and increase service. Usually, that includes money for billboards to advertise routes or discounts on airport gate and landing fees.
In this case with a revenue guarantee, the city and university could end up paying substantially less or even nothing at all if enough passengers book flights. But it also puts the risk on the city and school, not American Airlines, which lost nearly $2 billion in 2021 and is seeing increased costs from fuel along with a shortage or regional airline pilots.
American Airlines did not return The News’ request for comment.
American has been flying back and forth between Stillwater and DFW International Airport, the carrier’s biggest hub, twice a day on its regional carrier American Eagle. It started service there in 2017 and has carried about 225,000 passengers since, according to city documents.
While the greater Stillwater area only has about 79,000 residents, the 25,000-student Oklahoma State University has an active alumni base throughout not only Oklahoma, but into Texas as well.
“Oklahoma State University is a tier-one research university, and our faculty members travel around the world,” said University of Oklahoma spokeswoman Sharon Rigsby. “The partnership with American Airlines and the City of Stillwater is a valuable asset to the university.”
“Having the ability to fly out of Stillwater Regional Airport is not only convenient but saves time and money,” she said. “The direct connection to Dallas is a gateway to the globe for our students, their families as well as OSU faculty and staff.”
Other cities, such as Waterloo, Iowa, are relying on federal air service grants to keep airlines such as American Airlines. American recently reached a new deal with the US Department of Transportation, which will help subsidize 13 flights a day to Waterloo, said Keith Kaspari, Waterloo Regional Airport’s director of aviation.
American is also the only carrier flying to Waterloo.
“During the COVID Pandemic, and like many airports around the US when passenger travel was significantly depressed, AA did reduce our service to only one flight per day – and I cannot blame them,” Kaspari said. “AA did return our twice-daily service this past June.”