Norwegian Air is reducing service from Denver to Paris just two months after starting the nonstop flights.
Despite that reduction, Denver City Council was still set to consider a $4 million incentive package that allows Norwegian Air to get back some of the money it pays to serve Denver International Airport.
In April, Norwegian Air started twice weekly nonstop flights from Denver to Paris. Denver Mayor Michael Hancock and members of his staff flew on the inaugural flight.
On Friday, the airline announced it would no longer offer the nonstop service year-round.
"Due to lower demand than anticipated, Norwegian has seasonally adjusted the recently launched Denver-Paris route, meaning it will operate during the popular summer months, but not during the winter season," said Anders Lindstrom, the communications director for Norwegian Air.
"We, actually were, kind of, surprised when Norwegian originally came to us and said they were going to fly year-round. Most airlines in that circumstance would only fly seasonally, so that was a surprise, so to actually see them adjust really wasn't that surprising," said DIA Vice President of Communications Stacey Stegman.
Monday, on 9NEWS Mornings at 6 a.m., anchor Gary Shapiro asked Hancock about offering the airline a full incentive package despite the reduction in service.
"We have to allow Norwegian to find its sweet spot in terms of a frequency between Denver and Paris. The goal is to keep that flight alive," said Hancock. "Those four million that you're talking about are chiefly for marketing dollars, and without them we can't expand and we can't make sure that that flight stays viable."
Actually, the $4 million is for operational goals. On Monday night, Denver City Council was also considering a $570,000 marketing package, that would allow Norwegian Air to market its Denver to Paris nonstop with money kicked back from DIA, as long as the airline did not drop service more than 50 percent.
The $4 million operational incentive is also based on not dropping service by more than 50 percent. Even with Norwegian Air's reduced schedule, it will still qualify for both incentives.
"Basically, you're offering credits to an airline for the number of passengers they carry," said Stegman. "They add more flights, they get more money. They reduce flights, they get less."
Norwegian Air's incentive offers $30 credit for each passenger on a flight from Denver to Paris. The aircraft holds 344 passengers. Assuming each flight was fully booked, that would earn Norwegian Air $10,320 each flight. Twice a week for a full year would have been more than one million. Over the life of the two-year incentive package, Norwegian could have earned more than $2 million if each flight was fully booked.
"Realistically, with what Norwegian is planning, they'll be able to reach about $500,000," said Stegman.
Essentially, the incentive package helps pay back an airline some of what it is paying the airport, along with money passengers pay for concessions and parking.
"The airline pays for the use of the airport, so they pay landing fees, they pay lease fees for the space that they lease in the airport," said Stegman.
Copa Airlines, which recently started four nonstop flights to Panama City, receives $20 per passengers on its four flights. The airline is eligible for up to $1 million in incentives.
As of this week, Copa Airlines' schedule still shows four nonstop flights.
Air Canada recently completed its incentive timeframe. It also received $20 per passenger on its nonstop flights from Denver to Vancouver. From May 18, 2017 to Sept. 10, 2017, Air Canada was required to have two nonstop departures a day, and then reduced to one departure a day from Sept. 11, 2017 through May 18, 2018.
According to an Air Canada spokesman, the airline kept two nonstop flights through Sept. 10, 2017 and then reduced to one flight through Mar. 31, 2018, before increasing back to two.
"We have been pleased with the response from the local community and thank the large number of Denver and area residents who have chosen to fly with us, the response has been positive and we now have three flights per day from Jun. 1, 2018 to Sept. 4, 2018," said spokesman Peter Fitzpatrick.
With those two incentive deals either having met or meeting the original schedule, we wanted to know if Denver City Council should be concerned with approving Norwegian Air's full incentive amount despite the already reduced service.
"City council should be delighted with this decision, because again, it's already being reduced. It's already a proportional credit to them, based on their decision, so we're not paying them for something they're not doing," said Stegman.