"Northwest urges MAC to cut budget"

Thursday, November 4, 2004

Northwest urges MAC to cut budget 
By Dan Wascoe
The Minneapolis (MN) Star Tribune 


It's a predictable autumn ritual: Northwest Airlines urges officials at
Minneapolis-St. Paul International Airport to cut its proposed budget for
next year and trim charges to airline tenants.

But the script took a twist Wednesday. A Northwest representative admitted
sending mixed signals to the Metropolitan Airports Commission (MAC) by
recommending cuts ranging from consultants to snowplows while urging quick
action on the airline's desire to expand the airport.

Kathleen Nelson, a Northwest regional director for airport affairs, said the
commission's proposal to boost consultant fees by 54 percent since 2003 is
"just not sustainable." And she said spending $170,000 to attract new
competition would be wasted, considering the aviation industry's financial
struggles. 

The timing "could not be worse," she said, adding that such spending "has
just got to stop."

Commissioner Mike Landy said Nelson's remarks troubled him in light of
Northwest's recent $850 million proposal to expand MSP. It would start by
adding gates to the Humphrey terminal and shifting competitors there from
the main Lindbergh terminal.

Northwest's proposal, endorsed by Gov. Tim Pawlenty, has the commission
hustling to approve preliminary plans for the Humphrey project in December,
although the work would not be finished until 2007.

"I fully understand my comments are a mixed message," Nelson said. But she
said that unexpected increases in fuel prices are "killing the industry" and
that the commission's staff needs "parental guidance" to trim its requests.
She said it is "prudent" to plow ahead with the Humphrey expansion because
"Lindbergh is full" and more gates are needed not only for Northwest but for
airlines that might decide to enter the Twin Cities market.

MAC Chairwoman Vicki Tigwell agreed that the staff's proposed 2005 budget of
$108 million in spending is "problematic" because it meets only two of five
targets that the commission set this year. The targets include goals for
income, revenue, reserves, expenses and debt coverage.

Steve Busch, the agency's finance director, said an unexpected rise in
natural gas prices will add about $1 million to the budget and that he
"tried to take into consideration what is fair and what is the nature of the
airline industry."

Landy noted that Northwest wants the commission to cover more spending with
money from ticket surcharges paid by passengers instead of from rates and
charges paid by the airlines. 

"If I were the airlines, I would like to have all of this for free,
basically," he said. Even if that happened, he said, "They'd still be
behind. It's a tough industry."

Northwest and the MAC staff are expected to continue negotiating the
agency's budget between now and the end of the year.


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