Home » NEWS » Manufacturing » Jackson’s airport raising fees, cutting budget to offset loss of Southwest revenue

Jackson’s airport raising fees, cutting budget to offset loss of Southwest revenue

airplane-runway_rgbBoth airlines and travelers began paying more Oct. 1 to use Jackson Medgar Wiley Evers International Airport.

Travelers and visitors must pay 50 cents a day more to park in all but the long-term lot. The garage rate has risen to a maximum of $15.50 a day and the surface rate to $13.50.

Meanwhile, air carriers are paying 28 cents more per 1,000 pounds in landing fees, with the rate going from $2.71 to $2.99. As recently as 2013, while Southwest Airlines was still among the airport’s carriers, landing fees totaled $1.99 per 1,000 pounds.

Consecutive increases in January and April of this year brought those landing fees to $2.35 by April 30. The Jackson Municipal Airport Authority board increased the fees to offset the anticipated loss of Southwest Airlines, which ceased service in Jackson in early June.

» READ MORE: Grant rejection grounds prospects for Jackson-Orlando service

The Authority budget projects the increased landing fees will generate an additional $137,000, an amount that falls short of offsetting the $426,000 in fees lost through Southwest’s shutdown of Jackson service.

In all, airport budget writers expect aviation-related revenue of slightly over $6 million. They estimate last fiscal year’s aviation revenue totaled about $6.7 million.

Not everything is going up at the city-owned airport, however. The fiscal 2015 budget that went into effect Oct. 1 has no increase on rental car fees. Further, airport tenants will pay less in terminal rents, with the square-foot price dropping from $77.89 to $77.13.

Under pressure to trim operating costs in order to regain a more favorable credit rating from Fitch Ratings Service, the Airport Authority board cut the operating budget by nearly $1.4 million, reducing expenditures from $17.5 million to $16.2 million. “Building repairs, legal costs for arbitration and security provided at airfield gates in fiscal 2014 will not occur in fiscal 2015,” Airport Authority spokesman Gene Moore said in detailing the spending reductions.

Moore declined to make either COO Bonnie Wilson or CFO Gary Cohen available for interviews for this report.

Fitch Rating Service’s downgrading of $39.4 million of Airport Authority revenue bonds has forced a delay of security checkpoint upgrades and improvements to the terminal building at Jackson Wiley Medgar Evers International. Dirk Vanderleest, who retired as Authority CEO at the end of September, said last January that the borrowing could prove too expensive without restoration of the A- rating from Fitch.

In the same interview and in interviews that followed, Vanderleest said the drop to BBB+ came largely from Southwest Airlines’ decision to stop nearly two decades of service. Fitch predicted the loss of the airport’s second-largest carrier would likely lead to “measurable and potentially permanent declines in the airport’s small enplanement base.”

The Airport Authority expects a dramatic drop in enplanements in fiscal 2015. It expects an enplanement total for fiscal 2014 of 552,175 passengers to fall to 464,771 in fiscal 2015, according to the Authority’s new budget.

As a gauge of the steep decline brought by the loss of Southwest, Medgar Wiley Evers International had enplanements of 604,789 as recently as fiscal 2013.

Passenger declines can severely damage airport revenues by causing the loss of dollars from non-airline sources such as parking and rental car activities — both of which account for much of the airport’s revenues.

Nearly two-thirds of the Authority’s fiscal 2013 operating revenues of $17.6 million came from non-airline sources. Parking revenues alone counted for about $6.1 million, Fitch said in a report last year detailing the ratings downgrade.

The new budget projects that reduced passenger counts will cause parking lot fees to decline by $545,000, an amount that includes the 50 cents increase in parking for the garage and surface lots.

Fewer passengers also mean less money from rental car fees in the new fiscal year. The budget projects a drop of $199,000 in the fees.

In all, the new budget projects non-aviation revenue to account for 47 percent of total revenue at $7.6 million.

Vanderleest said in the January interview the $39 million bond issue would need to be delayed at least one year to keep the debt off the airport’s books until after Fitch reassesses the airport’s credit worthiness.

The Authority planned to use the $39 million for security and terminal improvements as well as a rental car “turnaround” facility.  The projects are part of the airport’s $88 million five-year capital improvement plan.

The capital expenditure’s portion of the new budget allocates $1 million toward the $9 million quick turnaround facility. Rental car companies will use the compound for vehicle cleanings and routine maintenance.

The 2015 capital budget also includes $502,630 for pole lighting and $450,000 for roadway signage.

While revenue and passenger counts are declining, the amount of money commercial air carriers are paying per passenger at Medgar Evers International is on the rise. Fiscal 2013 showed a per-passenger cost of $9.53. The Authority budget estimates that cost rose to $10.58 in fiscal 2014 and will climb to $11.38 in the new fiscal year. The $11.38 is still below the national average of $11.99, a figure based on rating agency information and various airport Bond Official Statements.

Despite challenges with lower passenger counts causing across-the-board declines in revenue, the airport still estimates operating income will exceed operating expenses by $3,073,530. The budget estimates that last fiscal year’s operating income totaled $3,259,783.

Here are some other highlights of the Airport Authority’s new budget:

>>> Concession revenues are projected to drop by a little more than $200,000, going from $2.6 million to $2.4 million.

>>>Employee salaries are projected to decline by $159,000, along with a drop of nearly $50,000 in employee medical and other benefits. The Airport Authority pays 100 percent of employee medical insurance costs and 50 percent of costs for dependents.

>>>Landscaping will cost $85,255 compared to $60,910 last year.

>>>Travel for Airport Authority board members will jump from $80,495 in the old budget to $112,153 in the new budget. Their meal money will stay the same, however, at $4,481.

 

About Ted Carter

Leave a Reply

Your email address will not be published. Required fields are marked *

*