Boutique Air to Cease Operations to Las Vegas on February 15

02/09/2016

Boutique Air has announced the cessation of its service in the Las Vegas area beginning February 15. Until that point, the airline will continue to run scheduled service to and from the city of Merced, California and Phoenix, Arizona, which began in October of last year.

All passengers that booked a flight to or from Las Vegas on Boutique Air from February 15th onward will be notified of the change and will receive full refunds.

Citing economic discrimination on behalf of McCarran International Airport's policies which privilege larger carriers, Boutique Air will regretfully cease service while continuing to avidly search for a financially feasible solution for operating to the popular destination. The company has been in discussion with the FAA, McCarran airport officials, and state legislators in pursuit of a viable solution for reinitiating service in the future, but is unable to provide a timeline at this moment.

On Friday, February 5, Boutique Air issued a formal Part 16 complaint against McCarran's executive leadership after months of inhibited progress. The complaint has been on the grounds of economic discrimination, the basic text version of which is available below. While the company awaits a response from the FAA and McCarran officials, it must regrettably cease service for the time being.

Additional questions or requests for further information can be forwarded to Boutique Air's customer service e-mail at cs@boutiqueair.com.


Text of Boutique Air Part 16 complaint:

Dear FAA Part 16 Airport Proceedings Docket:

I hereby certify that I have this day served the foregoing Part 16 complaint on the following persons at the following addresses by mail:

Clark County Department of Aviation - McCarran International Airport

Rosemary Vassiliadis, Director of Aviation; (702) 261-5211 Philip Detmer, Aviation Affairs Manager; (702) 261-4224 James Chrisley, Deputy Director of Aviation, Operations; (702) 261-5321 Darla Hook, Aviation Contract Specialist; (702) 261-4697

P.O. Box 11005, Las Vegas, Nevada 89111-1005

Dated this 5th day of February, 2016.

Signed,

Shawn Simpson , for Boutique Air


To Whom It May Concern,

This letter is issued to formally serve as Boutique Air’s complaint filed under Part 16 against:

McCarran International Airport

As a result of the McCarran International Airport’s noncompliance with the Airport Improvement Program provisions under the Airport and Airway Improvement Act, Boutique Air’s business and passengers have been directly and substantially affected. Pursuant to 14 CFR §16.21, Boutique Air has made substantial and reasonable good faith efforts to resolve the disputed matter informally prior to this filing. Despite several months of discussion with the McCarran International Airport (initiated in October of 2015), no reasonable prospect for a practical and timely resolution of the dispute has been presented to Boutique Air. These efforts to resolve informally were conducted recently via e-mail correspondence, and are demonstrated in the attached pages. Firstly, we will demonstrate why we believe McCarran International Airport to be in violation of the Airport and Airway Improvement Act, substantiate the allegations, describe the direct and substantial affects incurred to Boutique Air and its customers.

The provisions which we believe Clark County to be in violation of are the Grant Assurances provided under the Airport Improvement Program as dictated by the Airport and Airway Improvement Act. The McCarran International Airport is a recipient of Airport Improvement Program funding (having received $109,663,454 between 2010-2015) and, as such, is bound to grant assurances we believe them to be in violation of, specifically including the assurance of Economic Nondiscrimination, detailed below:

  1. Economic Nondiscrimination. It will make the airport available as an airport for public use on reasonable terms and without unjust discrimination to all types, kinds and classes of aeronautical activities, including commercial aeronautical activities offering services to the public at the airport. Each air carrier using such airport (whether as a tenant, non-tenant, or subtenant of another air carrier tenant) shall be subject to such nondiscriminatory and substantially comparable rules, regulations, conditions, rates, fees, rentals, and other charges with respect to facilities directly and substantially related to providing air transportation as are applicable to all such air carriers which make similar use of such airport and utilize similar facilities, subject to reasonable classifications such as tenants or non-tenants and signatory carriers and non- signatory carriers. Classification or status as tenant or signatory shall not be unreasonably withheld by any airport provided an air carrier assumes obligations substantially similar to those already imposed on air carriers in such classification or status.

According to the grant assurances specified above, Clark County has an obligation to make the McCarran International Airport available for all types and classes of aeronautical activities, based on reasonable terms, and without unjust economic discrimination. This should include Boutique Air. However, McCarran does not have flexible rates and standards to accommodate a small air carrier within a non-sterile area (nor in a sterile one, were we to offer that type of service). Within this constrained environment, we have tried to negotiate with the airport for space and fees that fit the operational needs of Boutique Air. Their refusal to negotiate upon a reasonable turn fee for the size of our operation is, in our belief, a violation of the grant assurances specified above.

To detail this specifically, the McCarran International Airport proposes to charge us the exact same rate as a 737 narrow body jet with 150 seats. This rate is not economically proportionate or feasible for us with our 8 passenger aircraft. The amount they want to charge us per turn is $462.50. If we have a 50% load factor of 4 passengers each paying $100, our total revenue for a flight might only be $400, not even covering the turn cost, not to mention our pilots, fuel, maintenance, customer service agents, and the purchase of our airplanes.

The single fee detailed above (not including additional fees imposed by the airport for badging, lease agreements, etc.) is economically discriminatory for a small-sized, community airline. McCarran proposes to charge us in excess of $27,750 per month ($462.50 per turn, with two scheduled turns per day, calculated over 30 days), simply for these ramp fees. By contrast, the landing fees per month at Los Angeles International Airport (the third largest airport in the U.S., and the fifth largest in the world by passenger traffic) are only $2,907 per month; roughly one tenth of the cost. While every airport structures its fees differently, our total monthly expenses for every fee owed to the Los Angeles International Airport each month do not exceed $11,484.96; this amount is still a fraction of the costs for just ramp fees at McCarran (not to mention additional expenses). Every single airport we operate at, including LAX, PHX, DFW, BNA, DEN, and OAK, have provided us with a financially feasible way to run our operations at their respective locations. If some of the world’s largest airports can still feasibly accommodate our operation under the assurances that dictate their receipt of AIP funding, surely McCarran can too.

Since initiating operations on November 1, 2015, Boutique Air has been directly and substantially impacted by the McCarran International Airport’s lack of ability to provide us with an economically feasible option for operating in a non-sterile fashion. After being denied access to Atlantic Aviation by McCarran International Airport representatives Philip Detmer and Darla Hook, and having already sold hundreds of tickets, Boutique Air was forced to divert flights to the only economically feasible location; Henderson Executive Airport. We were immediately forced to hire additional staff and purchase a shuttle vehicle that could accommodate the 20-30 minute drive from Henderson to McCarran in order to accommodate our passengers, resulting in the accrual of thousands of dollars in additional expenses and an exceptionally poor experience for customers, who are unable to make tight connections due to the transit time between Henderson and McCarran (subsequently resulting in thousands of dollars of losses for our passengers). As such, the inability to operate from LAS presents a major financial hardship for us, but also for our passengers, who are forced to change or cancel connecting flights due to the added transit time.

The documentation attached in the forthcoming pages attests to our good faith efforts to resolve this issue with the McCarran International Airport. Most importantly, we would like to point to the following effort to identify a solution for our operation at McCarran:

From: Shawn Simpson [mailto:shawn@boutiqueair.com] Sent: Tuesday, January 19, 2016 6:50 PM To: Phillip Detmer Cc: Ben Czyzewski; Chris Jones; James Chrisley; Michael Bennett; operations@boutiqueair.com; Dennis Anderson; Scott Kichline

Subject: RE: Boutique Air - LAS Operational Policy and Procedures

Phillip,

Thank you very much for the tour today. It was extremely helpful to me and my staff.

I believe the non-sterile option we reviewed today would work. We can certainly try it. The only thing holding us back (as mentioned) is the disproportionate fees which substantially penalize a small aircraft such as ours.

Given that our brand (and customers) continue to be distressed by the current situation, we would very much like to get it resolved in within a few days.

Please do let us know what can be done. We can certainly appeal to the FAA if you feel there is nothing that can be done.

Thanks again, Shawn

On Fri, Jan 22, 2016 at 2:06 PM, Phillip Detmer PhillipD@mccarran.com wrote: Good afternoon Shawn,

[...]

There is nothing that can be done about the current rates and fees, as these rates have already been reviewed and approved by the Airline Airport Affairs Committee (AAAC) and our Clark County Board of Commissioners. All Airlines operating at McCarran are required to pay the current rates and fees listed under Title 20 of the Clark County Code. > The next AAAC meeting will be held sometime in April/May, but any changes to the rates will not be effective until July 1, 2016. So, you will need to decide if this will be an issue for your start-up at LAS.

[...]

Thank you,

Phillip A. Detmer Aviation Affairs Manager

McCarran International Airport P.O. Box 11005, Las Vegas, NV 89111-1005 Office: (702) 261-4224 | Cell: (702) 401-6888 | Fax: (702) 261-5050 phillipd@mccarran.com | www.mccarran.com

It is clear from the above correspondence that McCarran is unwilling to provide us with an option to fly into the airport in a fashion that is not economically prohibitive for our operation. We replied to Mr. Detmer’s comments by suggesting several alternatives:

From: Shawn Simpson shawn@boutiqueair.com Date: Mon, Jan 25, 2016 at 1:32 AM Subject: Re: Boutique Air - LAS Operational Policy and Procedures To: Phillip Detmer PhillipD@mccarran.com Cc: Ben Czyzewski bencz@mccarran.com, Chris Jones chrisjo@mccarran.com, James Chrisley jamesc@mccarran.com, Michael Bennett MichaelB@mccarran.com, "operations@boutiqueair.com" operations@boutiqueair.com, Dennis Anderson DennisA@mccarran.com, Scott Kichline ScottK@mccarran.com

Phil,

Ok--thanks for the info. All very helpful to know.

So as much as we would like to be able to start operations, paying the same turn fee as a 737 simply does not work economically.

While it would be nice if we could wait several months to see how the meetings go, our brand is experiencing real damage, as is our operation. Our passengers are suffering from this situation. We simply can not wait.

I have a few suggestions: 1) allow us to operate from the FBO until the proportionate pricing matter can be resolved 2) have an emergency meeting to come up with proportionate pricing 3) waive the turn fees for us as a one time anomaly given the size of our aircraft and in recognition that it is simply not fair to charge us the same fee as a 737. Our aircraft has 8 seats for passengers, versus 169-189 passengers for a modern 737. This is between 21 and 23.6 times more expensive for us than competitors per seat.

As I know you have already discussed this internally and there has been no progress made on the subject, I'll go ahead and discuss with the FAA to see what they have to say.

Like I said, I wish we could hang out and wait, but this situation has already gone on much much longer than we would have liked and we can not afford the ongoing strains it is putting on our small operation.

If you believe that you might be able to swing any of the above suggestions I made please do let us know.

Best, Shawn


No representative of McCarran International Airport has responded positively to our urgent request, articulated above. We have been actively pursuing a resolution to this matter since November 2015, and after several months, it appears that McCarran is still unable to provide us with an option to operate in a manner that can be considered non-discriminatory. The full documentation of all of our written correspondence with McCarran officials is detailed in the final pages of this complaint.

We believe the airport is in violation of the Airport and Airway Improvement Act, and that as a result, our business model and passengers continue to suffer negative impacts financially while our brand image is tarnished via the denial of economically feasible means of operating at LAS as articulated to us by the airport’s officials. It is our request that the FAA intercede at this time in a formal manner, so that we can arrive at a solution that allows our operation feasible and fair access to the McCarran International Airport.

Thank you kindly for your attention.

Sincerely,

Shawn Simpson, CEO Boutique Air