"Fiscal Turbulence Jolts Florida Airport"

Tuesday, December 7, 2004

Fiscal Turbulence Jolts Airport
By GUY BOULTON and CARLOS MONCADA
The Tampa (FL) Tribune 


St. Petersburg-Clearwater International Airport, nearing the end of a record
year, suddenly faces lean times. 

Two airlines that account for nearly 75 percent of the airport's passengers
and roughly 25 percent of its revenue have shut down or are struggling to
emerge from bankruptcy court. 

The setbacks - a byproduct of the airline industry's brutal shakeout - mean
that an airport that has talked about expansion now must retrench and
rebuild. 

``These peaks and valleys aren't unique to this airport,'' said Noah Lagos,
the airport's director. ``They aren't unique to small airports, either.'' 

The airport reached one of those peaks this year: It is on track to have
more than 1.3 million passengers, up from 680,000 two years ago. 

``What we've done is proven that if the airlines put seats on the ramp, we
can put people in the seats,'' Lagos said. 

The airport has positioned itself as an alternative to Tampa International
Airport. 

``What's happened in St. Pete over the past five years proves that it's a
viable airport,'' said Dean Hill, president of Campbell Hill Aviation Group
Inc., a consulting company in Alexandria, Va. ``But they'll have some hard
times right now to replace the revenue from the airlines going out of
business.'' 

Lagos said he is optimistic the airport can recover from the recent setbacks
in the long term. 

In the short term, the setbacks will be lessened by cost-cutting steps and
by the airport's roughly $2.5 million in unrestricted reserves. 

The airport trimmed $600,000 from its operating budget about six weeks ago
when its largest carrier, ATA Airlines, filed for bankruptcy protection. For
the fiscal year ending Sept. 30, 2005, the airport has a $9.4 million
operating budget. 

``We are OK for this year,'' Lagos said. 

In addition, the airport expects the Federal Aviation Administration to
approve a so-called passenger-facility charge in April that could generate
$3 from each departing passenger. For the next few years, some of that money
could be used for operating expenses. 

The airport, which includes the largest Coast Guard airbase in the
continental United States, also serves private aircraft and charters. And it
generates about $2.2 million in revenue a year from an industrial park. 

Its growth, though, is largely tied to commercial carriers. And most
airlines are struggling. 

That includes the closing last week of Southeast Airlines, which accounted
for about 23 percent of the airport's passengers. And ATA Airlines, which
accounts for about 50 percent of the airport's passengers, filed for
bankruptcy protection in October. 

This week, the airline said it would lay off 40 employees at the airport by
Feb. 2. 

The other commercial carrier that operates at the airport is USA3000. 

The setbacks come as the airport is about to begin construction on a runway
expansion that will cost more than $13 million. The longer runway will
enable the airport to handle larger aircraft and potentially attract
international charters. 

Nearly all of the project is being paid for by a federal grant. The
airport's share is $325,000. 

The long-term hope is to attract charter airlines from Europe. 

``But that is not something I expect in the short run,'' Lagos said. 

With its strong growth in passengers - it has been one of the fastest
growing in the country - the airport also laid out an ambitious plan for
long-term expansion. 

On Tuesday, the Pinellas County Commission will meet to discuss the
airport's draft master plan update, including a ``financial capacity'' study
by consultant John F. Brown Co. 

Among other things, the report recommends a conservative approach in
projecting growth at the airport and not incurring long-term debt, instead
relying on a pay-as-you- go system, said Pinellas County Commissioner Bob
Stewart. 

``If you're going to deal with the airline industry, you've got to be very
flexible,'' Stewart said. ``And fortunately for us, we have not made any
long- term commitments, and we have not incurred long-term debt.'' 

Lagos said any expansion will hinge on future traffic, what projects need to
be done and how the improvements will be paid for. 

The airport terminal will need work in the future. 

``But from the perspective we have today, we have a pay-as-you-go
philosophy,'' Lagos said.


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