HIGHFILL -- Northwest Arkansas Regional Airport officials set rates and charges for airlines last Wednesday after the carriers declined to sign new leases.
The new rates and charges are essentially the same as those in the previous leases.
The resolution allows the airport to adjust rates charged to the airlines for space and operations annually. The airport won't have to share excess revenue with the airlines at the end of the year.
No airline representatives were at the Oct. 22 Airport Board meeting.
"We're not in a situation where we're worried about keeping them," said Kelly Johnson, airport director.
"You reset rates based on costs every year and you don't have to share the revenue with them."
In this case, XNA got caught up in the fallout from the nationwide fight between legacy airlines, which operate full schedules, and low-frequency airlines which may only operate out of an airport for several days a week or part of the year. Legacy airlines have become reluctant to sign leases with different rate formulas for the low frequency carriers they compete with, Johnson said.
The down side is airlines are free to walk away if they want to, a situation unlikely because XNA is one of the most profitable airports in the country for air carriers.
"The basic issue is how much money they're taking out of your airport. Your yields are one of the highest in the country," said Bonnie Ossege, a consultant with Ricondo & Associates, a Chicago and Cincinnati-based aviation planning group. "The tickets out of here are crazy high -- that's the technical term."
Airlines had revenue of more than $3.8 million on 556,074 passengers last year at the airport. Projections for 2014, using the resolution rates, show airlines would have made $3.5 million based on 561,634 passengers.
Ossege said Northwest Arkansas had the highest yields among the airport samples and is also the second least expensive airport. The sample included Tulsa, Okla., Little Rock and several other airports in the southeast region.
"There would be no gain for you right now to have a signed agreement," Ossege said. "They're not leaving."
Northwest Arkansas joins Phoenix, Orlando, Fla., and Little Rock, among others, in going to rates by resolution. The rates reset in January.
A year of negotiation failed to produce an agreement but that's a national trend, according to Johnson. The hang-up seems to be the legacy carriers want a better deal than newer, low-fare carriers which offer fewer flights.
"They've been given the order from on high not to sign these agreements," Johnson said. "For them, it is a matter of principle based on low-frequency carriers."
Board members also approved spending $457,146 with Reynolds, Smith and Hill Engineering on design and engineering for an expansion of the airport ramp area east of the airport.
"It's all about being able to bring larger aircraft into this facility," said Barb Busiek, airport project manager. "They're all bringing in bigger planes and charters."
The 120-foot expansion will improve traffic flow in and out of the terminal and cut down on standoffs between planes on the ramp, which isn't overseen by aircraft controllers, Busiek said. Bigger planes will provide more seats and more airport revenue.
The project is expected to cost about $3.5 million and will use 90 percent federal money and a 10 percent state match. Airport officials want to bid the project early next year.
Northwest Arkansas Regional Airport's board met Wednesday and: • Approved a new lease with rental car companies at the airport • Heard passengers at the airport have increased 11 percent, year-to-date, over 2013 • Heard the airport's on-hand cash position is back where it was before the new concourse was built • Heard the FAA will participate in a conference call with airport staff, contractors and engineers aimed at getting the discussion moving forward about the project to repair cracks on the main runway • Heard airport staff will meet with Arkansas Highway and Transportation Department officials next week to talk about the proposed airport access road.
Source: Staff report
General News on 10/29/2014