Posted on 16 September 2011.
Here in Mammoth, we have a penchant for stumbling upon a good thing … and then taxing the hell out of it until it goes away.
Let’s hope we’re not marching down the same path when it comes to commercial air service.
The Sheet obtained emails this week regarding a dialogue between the Town of Mammoth Lakes and Alaska Airlines. The subject: airport landing fees.
The Town currently charges the commercial airlines $220 per landing. It wishes to bump that rate to $240 this winter, a 9% increase.
In justification of the increase, Assistant Airport Manager Brian Picken argued in an email to Alaska Airlines that, “The Airport has expended $3 million in capital improvements to make commercial air service possible. (GSE [ground support equipment], Terminal, Terminal Annex, Security Upgrades). 62% of the Airports operating expenses are attributable to commercial air service. Only 18% of revenue (with the proposed fee increase of $240) is attributable to commercial air service. While we understand that commercial air service needs to be subsidized at our current level of service, the Airport’s request for a fee increase seems reasonable. In comparison with other airports our size, revenue of $5.14 per passenger seems appropriate.”
The reply from Kiran Limaye, Alaska Airlines’ Airport Affairs Manager, was not so sanguine.
“Unfortunately there is still a lot of concern over the proposed 9% increase. Our load factors have not been high enough to get the $5.14 cost per enplanement you are showing.
As you have more flight volume I don’t understand why you would also need to raise the rate – the unit cost should be going down or staying flat. Horizon operates three flights per day and we did not request the terminal annex nor were we consulted on it since we last spoke about it in February 2010. At that time, I stated that we were comfortable with the existing space.
Increased costs could put future service in jeopardy and request that the town hold rates steady or consider a more reasonable 3% increase.”
A cursory check online showed that most, if not all, resort airports charge landing fees based on weight. What follows is a small sampling:
Steamboat $4.28/1,000 lbs.
Aspen $4.12/1,000 lbs.
Telluride $3.70/1,000 lbs.
Jackson Hole $2.39/1,000 lbs.
The CRJ-700 aircraft, which United uses to fly into Mammoth, has a maximum landing weight of 67,000 pounds. A full plane at Mammoth’s current $220/landing fee, by my calculations, would amount to $3.28 per 1,000 lbs – on the low end of the above range.
The issue is load factor, as Alaska’s representative mentions above. If you’re filling 60% of the plane, that means you’ve got about 30 empty seats and 6,000 less pounds on board – but in a flat fee arrangement, you’re still paying the same. Which makes $3.28/1,000 lbs. become $3.67/1,000 lbs. If Mammoth increases the fee to $240 per planeload at a 60% load factor, then you’re at $4/1,000 lbs.
… And obviously more expensive on a per passenger basis at lesser load factors. This may not matter during seasonal periods where planes are full, but it may have a small impact on Alaska’s decision to operate at other times of the year.
Airport Commissioners were never consulted about the proposed landing fee increase.
At the special Airport Commission meeting Wednesday, Town Manager Dave Wilbrecht told Commissioners that “Your commission needs more support” and that “all commissions need to be treated the same.”
Damn, Airport Manager Bill Manning must’ve thought to himself. You mean, I actually have to take meeting minutes for real?
Commissioner Deb Pierrel suggested that “Any information we [as commissioners] request should be followed through on.”
This apparently doesn’t happen now.
“So much of what we get is after-the-fact,” added Commission Chair Pam Murphy.
The minutes, noted Pierrel, “should be inclusive and fact-based.”
Commissioner Lee Hughes diplomatically said he was cognizant of not trying to overload Airport Manager Bill Manning and Assistant Manager Brian Picken with too many requests – I suppose transcribing minutes of monthly meetings being one of them.
The ultimate question is whether or not Manning can adapt to an environment where he’s expected to be responsive to anyone other than himself.
The Sheet asked Wilbrecht if he had the guts to replace his airport staff in the event things do not improve.
“You know my record,” he replied sharply.
Which, for the record, is not an answer to the question.
Note: Picken sent the following email Thursday further explaining the Town’s position.
Mammoth Yosemite Airport (MMH)currently charges $220 per flight, as you noted. Airports use a variety of revenue generating methods for airline charges including, gross landing weight, fee per landing, terminal rent, counter rent, utility costs, or any combination thereof. In 2008 Horizon Air requested a per flight fee be used at MMH which is consistent with their other small airports.
Benchmark studies have been done which total the fees and rents airlines pay to airports and put it into a revenue per enplanement value. For this purpose we have used the attached study by Mead and Hunt for Hailey Airport. The benchmark survey included the following airports, Hailey, Friedman Memorial Airport, Aspen-Pitkin County Airport, Durango-La Plata County Airport, Gallatin Airport Authority, Glacier Park International Airport, and Jackson Hole Airport.
This 2004 study determined that the benchmark per enplaned passenger was between $4.57 and $4.69. Adjusted for inflation and put into 2011 dollars the benchmark would be between $5.48 and $5.52. This year we are proposing a fee per flight increase from $220 to $240, which is an increase of 9%. MMH is projecting 35,000 enplanements this year and with a landing fee of $240 this would equate to a per enplanement fee of $5.14. This remains well below the Mead and Hunt benchmark adjusted for inflation to 2011 dollars.
It should be noted that the current direct cost of commercial air service is $607K. With no fee increase airport revenue from commercial air service would be $165K. With the increase to $240 per flight MMH would receive an additional $15K annually.
Finally, our airline contracts are renegotiated annually and the proposed fee increase is still in the negotiation stage.
I have attached the Mead and Hunt Study for your review.
Click here to download the Mead and Hunt Study.