Flagstaff is a (real) city in Arizona, frequently referred to by the Arizona residents as just "Flag".
It is very close to the Grand Canyon, and the airport is often used by tourists on the way to or from there.
See also the Wikipedia article on Flagstaff.
In the Spearfish Lake Tales universe Canyon Tours is in Flag. The Burro is a bar and grill not far from the office, and next door to a laundromat that is used by several of the Canyon Tours employees. Al's house and the girls house are not far from the Canyon Tours office.