The Louisville Convention & Visitors Bureau has given the Louisville Regional Airlift Development coalition a proposal, offering to help fund a minimum revenue guarantee, according to the tourism entity.
The inventive is used as a carrot for airlines. The minimum revenue guarantee ensure airlines a basement-level amount of revenue, which reduces the risk of starting new routes or locating in smaller markets. Should the airline not hit its revenue targets, then LRAD would tap into a pot of money to cover the difference.
The coalition is currently raising money from public and private entities in the hopes of getting nonstop flights to Los Angeles and Boston. Insider Louisville reported on how similar funds have worked in other cities.
CVB officials declined to say how much the organization has proposed to contribute to a minimum revenue guarantee fund. More than 90 percent of the CVB’s budget comes from the transient room tax; the tax is added on people’s hotel bills, meaning it is mostly out-of-town guests who pay the tax.
“The LCVB supports the LRAD initiative to increase non-stop air service to Louisville,” the tourism bureau said in an emailed statement to Insider Louisville. “The Commission has submitted a proposal for discussion with LRAD leaders. The next step is final approval from the LCVB Commission.”
The commission is expected to vote on the proposal at its September meeting.
If approved, the tourism bureau would be one of the civic partners that is expected to donate to the minimum revenue guarantee fund. According to a document submitted to the Kentucky Economic Development Finance Authority Thursday, the “Louisville-Jefferson County Metro Government and various civic partners” are expected to put a total of $1.33 million into the fund.
Louisville-Jefferson County Metro Government has approved a $200,000 allocation for the fund.
The Kentucky Cabinet for Economic Development is pledging an additional $1.33 million toward the effort to bring more nonstop flights to Louisville International Airport, and LRAD anticipates that another $1.33 million will come from private investors and companies.
The nearly $4 million in money from the various entities will go into an escrow fund that will be used only if a contract is signed with an airline to offer a new, in-demand flight.