Juneau International Airport’s board has approved rate increases for large carriers, sending the new regulations out for public comment, as part of a way to make up for a $600,000 deficit.
Deputy Airport Manager Patricia deLaBruere told the board Wednesday night the reason for the shortfall is largely due to a decrease in revenues, not spending overflows. The airport is no longer seeking Marine Passenger Fees, which it had traditionally received because it serves cruise ship passengers each summer. DeLaBruere said the fees are more intended for specific capital projects than annual maintenance and operations related to having cruise ship passengers.
She said the airport also is looking at losing a larger amount from decreasing contributions from the Transportation Security Administration for law enforcement officers.
Both of those funding sources combined equal a loss in normal revenue of about $350,000.
DeLaBruere said that Fiscal Year 2012 will be short by about $371,000, which will be made up for through the airport’s fund balance. DeLaBruere said the airport has had some pretty good years recently so it has been able to accrue a fund balance of more than $3 million.
“When you have a balance like that ... you always want a reserve, but that’s a large amount for this airport,” she said.
DeLaBruere said the finance committee also was preparing the FY13 and FY14 budgets, and found that both years also would have “major” deficits.
She said the committee used its financial planning model and is looking to raise some rates for large carriers. The board unanimously approved the committee recommendation, which increases landing fees and fuel flowage fees for the large carriers — predominantly Alaska Airlines and some Fed-Ex operations. This will not affect rates for small carriers — Part 135 operators or general aviation.
“How it came out was that after putting all the figures in the model, it was really the 121 carrier or Alaska Airlines and some of Fed-Ex that held that allocations of the funds that needed to be met,” deLaBruere said. “... We came up with some ideas for balancing. We hadn’t raised rates in a few years and because it was going to be such a huge amount to raise $600,000 we looked again at taking some of the airport’s fund balance because we’ve had some pretty good years where we ended up in the black. We offset FY13’s projected shortfall and mixed that with some rate increases. Alaska Airlines accepted it. They knew that this was run through the model and accepted the fact and appreciated the fact that we were applying some of the fund balance, as well as raising rates. It was very fair.”
The rate increases are separated between signatory and non-signatory operators. For example, it is expected to be $2.18 per 1,000 pounds of a signatory large carrier for a landing fee, which is a 20 cent increase. This is expected to gain the airport $140,000. For non-signatory, it’s proposed to be $2.73 per 1,000 pounds — an increase of 25 cents. This is expected to generate $6,300.
Fuel flowage fees for those carriers is a 4 cent increase per gallon for signatory, and 5 cent increase for non-signatory. This is expected to generate nearly $117,000 more.
One board member asked why the fees weren’t being increased across the board, instead of just the larger carriers. DeLaBruere said the fee allocations are derived from an agreed-upon model. As they ran figures through the model it showed that the general aviation and part 135 operators had actually paid a tiny bit more than their percentage ($3,000). She said the split for some costs is 95 percent to the 121 operators (large carriers) with the remainder to the smaller carriers, while other airfield costs and terminal costs are split 85 percent to large operators and 15 percent to the smaller ones. She said that was negotiated and agreed upon several years ago.
Despite the increase in fees, the budget is only projected to be balanced for FY13, leaving FY14 with a deficit of nearly $250,000. The airport plans on revisiting the FY14 budget next year.
Airport fees are set by regulation, so now that the airport board has approved them they go out for a 21-day public comment period before the issue returns to the board. It then has to go to the city Assembly for approval.
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