City Budget: Airport to Cut Spending to Keep Passenger Fees Low
October 15, 2013
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  • It’s been a tough year for the Colorado Springs Airport – Frontier Airlines ended service to Colorado Springs in April, triggering a sharp decline in passenger traffic that likely will hit a 22-year low this year. In response, the airport has restructured its staff and budget to cut costs and attract more flights.

    The airport, which operates as an enterprise and doesn’t use local tax money, plans to cut spending by nearly 15 percent next year to $18.3 million by refinancing $40 million in bonds issued in 1994 to build the current passenger terminal. It also would eliminate 25 unfilled positions, leaving 96 people on its payroll. The refinancing is scheduled for completion by late November and is expected to reduce the airport’s debt payments by at least 25 percent.

    Proposed budget change: 2013 amended (current) budget is $22.7 million, 2014 budget would be $18.3 million. The reduced spending results from $1.4 million less in salaries and benefits, $1.2 million less in bond payments and using a low-interest loan from the state rather than cash to pay for construction projects. The airport applied for the loan last month and would repay it using an existing fee paid by passengers.

    What it means: Dan Gallagher, the airport’s interim director, wants to stabilize the cost airlines pay per departing passenger at just under $9 and potentially cut it to as low as $6.57, depending on what interest rate the airport can get when it issues new bonds. Airlines would have been forced to pay $13.20 per passenger without the cost-cutting steps to make up for the $3.5 million a year in revenue lost with Frontier’s departure. Keeping the cost per passenger low is key to keeping the four airlines now serving the airport; a fifth carrier, Alaska Airlines, begins a daily nonstop flight to Seattle on Nov. 2.

    Who benefits: Lower costs make it easier for airlines to earn a profit from their Colorado Springs flights. Carriers are more likely to eliminate flights that are unprofitable or marginally profitable, leaving local residents with fewer travel options. A recent study found that the airport, including Peterson Air Force Base that sits on leased airport land, pump nearly $3.7 billion annually into the local economy. Local business leaders say that affordable air service is critical to attracting and keeping businesses and jobs in Colorado Springs.

    Sticking points: Council appeared to be agreeable with the proposed airport budget. But it may have an issue with another budget related to the airport. Mayor Steve Bach’s proposed budget would spend $300,000 from the Lodgers and Automobile Rental Tax fund on marketing for the Colorado Springs Airport. The money would come from the $2.6 million LART money slated for the Convention and Visitor Bureau. Council member Jan Martin, chairwoman of the LART committee, doesn’t favor taking money from the CVB budget. Instead, the CVB and airport should work together on a marketing campaign and CVB should decide how much it wants to spend on the airport.