Although SkyWest Airlines announced it would pull its Salt Lake City service from Yellowstone Regional Airport in late September, the airline is mandated to continue its flights to and from Cody until another regional carrier replaces it.

SkyWest, flying to Salt Lake City for Delta Airlines, announced in late June it would end flights from Cody because it wasn’t making a profit.

Thanks to a “hold-in” order from the U.S. Department of Transportation that guarantees small airports two commercial flights per day to major hub airports under the Essential Air Service program, SkyWest must stay.

“Department of Transportation says you (SkyWest) have to serve this market,” said James Klessens, CEO/president of Forward Cody and a member of Cody Yellowstone Air Improvement Resources.

Until the Department of Transportation finds another airline to fill the gap, SkyWest’s Delta service will remain, Klessens said.

The replacement airline’s destination may not necessarily be Salt Lake City. It could be Denver, for example. But the department will seek the public’s input before deciding, said CYAIR chairman Sen. Hank Coe, R-Cody.

Meanwhile, SkyWest is filing with DOT to get out of the Cody market.

“We can’t do it profitably anymore,” said Marissa Snow, corporate communications manager for SkyWest Airlines, on Thursday.

Klessens said SkyWest may be trying to get a DOT Essential Air Service contract — a subsidy paid wholly by the federal government to keep an airline flying to a hub airport like Salt Lake City.

“(It) doesn’t cost us a nickel,” Klessens said.

But Klessens called Essential Air Service contracts a waste of government money and political patronage.

The contracts have come under fire recently because the federal government winds up footing the pricey bill when small airports load only a few passengers on a plane for transport to big airports. For example, based on federal statistics, only 227 passengers flew out of the airport in Ely, Nev., in 2010, with the airline getting $1.8 million in federal subsidies. Passengers paid $70 to $90 for a one-way ticket. The cost to taxpayers for each ticket was $4,107, according to the Associated Press.

Grant application

CYAIR is applying for a $500,000 Small Community Air Service Development Program grant from DOT with a $100,000 local match, with the Yellowstone Regional Joint Powers Board as the sponsor.

Yellowstone Regional Airport Manager Bob Hooper, also a CYAIR member, was optimistic the application would get DOT approval.

“I’m highly confident we’re going to get it,” Hooper said at a CYAIR meeting Thursday.

However, the organization won’t know if the grant is approved until the spring of 2012, Coe said.

If the grant comes through, CYAIR does not have to use it to retain SkyWest; the money could be used to attract a different airline from another airport. Salt Lake City is a good hub, but so is O’Hare International Airport in Chicago, and many people from the Midwest visit Yellowstone National Park, Klessens said.

The community should be surveyed to see what it wants, Coe said.

Flights to Denver will continue this winter through United Airlines, running from October to May. A United plane will arrive at night and depart Yellowstone Regional in the morning, delivering passengers to Denver by around 9 a.m.

This year, United had asked for a $477,000 Air Service Enhancement grant through the Wyoming Department of Transportation Aeronautics Commission, but increased the price to $544,000 on the assumption that SkyWest will remain in Cody and thus increase airline competition, Coe said.

The commission agreed last month to the $477,000 figure, but Coe said he believes the commission would be OK with increasing it to $544,000.

At the time CYAIR tendered the application to the Aeronautics Commission, it did not know whether SkyWest would remain in Cody past late September, Coe said.

CYAIR voted in favor of signing the contract Thursday.

However, If SkyWest’s Delta service stays for the winter, United would not have total market control in Cody, so the airline said it wants to increase the contract amount.

“If Delta (SkyWest) stays in Cody, they (United) want a little more money,” Coe said.

Under the program, the state pays 80 percent and the rest is matched by local governments and businesses.

The 2010-11 contract with United was for $775,000, but the actual amount paid was reduced by nearly 60 percent, thanks to plenty of passengers boarding flights at Yellowstone Regional.

October through December of 2010, United flights were running around 70 percent full. The more passengers, the less Aeronautics and local sources have to pay.

Next year, when passenger numbers are tallied for monetary reimbursement, the $544,000 figure could be reduced by as much as $350,000. “But it is going to take putting people on planes,” Klessens said. “We’re on track in the 2012 calendar year to fly more people than ever before.”