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Tourism Bureau in tough shape: A shortfall in TOT, rising fuel costs force probable air service changes

March 2, 2012

Having just completed his second year as executive director of Mammoth Lakes Tourism, John Urdi suddenly is facing a perfect storm.

With the town facing a shortfall year in terms of winter Transient Occupancy Taxes (TOT), coupled with rising costs in jet fuel, Urdi is feeling the pinch, big time.
“One of the challenges is fuel cost,” he said in an interview after delivering a short update to the Airport Commission on Tuesday afternoon.
“I don’t think it (fuel costs) is going to hurt us from a drive market, but the costs for the air service are going to go up substantially. That’s what happened to us this year. The costs just killed us.  
“Last summer we were hovering at a 57-60 percent load factor, which was fantastic. But the cost went up so much that it made the subsidy go up because of the price of fuel, and some of the landing costs in L.A.—things like that. 
“If fuel keeps going up, even if we add 10 percentage points to the number of people flying here, we’re probably still going to be looking at a tough situation.
“Those are all things we need to look at.”
Urdi’s budget comes entirely from TOT. In addition to his department’s subsidy, air flights are also subsidized by Mammoth Mountain Ski Area and Mono County.
The result is that things just can’t keep going as they are, no matter how much each party wants that to be so.
Urdi said that he, MMSA marketing director Howard Pickett, and Kent Myers of Airplanners consultants are planning a trip to Seattle in two weeks to discuss alternative plans with Alaska Airlines, which serves the Southern California market as well as San Jose.
“I think as much as everyone wants to maintain year-round service and maintain seven-day-a-week service,” Urdi said, “we really have to look at things, because I won’t have $340,000 next year to spend on subsidy.
“We need to look at raising subsidy in other ways to continue to provide the exact service that we have right now. Or we need to look to alternative service.  
“We may look at early season; we may run four days a week, Thursday through Sunday.  In the peak summer months, we may run seven days a week.
“We may opt not to fly in the month of May and the month of October. There are a lot of ways we can look at trying to make this more reasonable.”
The problem, Urdi said, is that he and his staff are working in the dark.
In front of the commission, Urdi was far more succinct.
“I just wanted to clarify that there’s been a misunderstanding that we are not in the process of cancelling our summer flights or changing the schedule in any way.
“The biggest challenge that we have right now is that TOT [revenue] is falling. My budget probably is going to see a pretty substantial hit just from TOT, let alone the settlement that we’re faced with (the MLLA lawsuit) from the town.
“Our goal is to keep the service year round as well, but we’re really looking to figure out how we can fund that without completely annihilating the marketing budget for the rest of the tourism cycle.”
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