"Pennsylvania airport cuts budget by $500,000"

Wednesday, December 22, 2004

Airport cuts budget by $500,000
Changes reflect the loss of its No. 1 carrier, Southeast Airlines.
By Jeanne Bonner
The Allentown (PA) Morning Call


Lehigh Northampton Airport Authority has cut $500,000 in expenses from its
initial 2005 budget as a result of the loss of Southeast Airlines at Lehigh
Valley International Airport.

The employees affected most by the cuts are part-time baggage handlers, some
of whom have been laid off, and custodians, who will work fewer hours. The
airport will also cut overtime for police and firefighters. 

Southeast, the airport's No. 1 carrier for the last year, abruptly ceased
service at LVIA and six other airports on Nov. 30. The tiny Florida airline,
which flew mostly to warm-weather destinations and routinely accounted for
one in every four passengers at the airport, owes LVIA $1 million in
landing, baggage handling and other fees.

The airport has been negotiating with another airline that is interested in
taking over the Orlando, Fla., route. But in the three weeks since Southeast
left town, no agreement has been reached. 

The airport authority, which operates LVIA and the smaller Queen City
Airport in Allentown and Braden Airpark in Forks Township, unveiled its 2005
budget at its monthly meeting Tuesday. The authority also announced it
raised some parking rates.

LVIA was poised to reach 1 million passengers this year, largely because of
Southeast. That's unlikely now. Fewer passengers at the airport means lower
parking revenues and fewer passenger facility charges, which fund airport
improvements. The loss of Southeast means the airport will also collect less
in landing and baggage handling fees. 

The airport authority originally projected revenue of $22.05 million and
operating expenses of $16.3 million for 2005 when it drew up the budget in
November. With the loss of Southeast, the airport authority now expects
$21.07 million in operating revenue - $1 million less - and $15.8 million in
operating expenses in 2005.

Nonetheless, the airport's expenses will rise 2 percent, or $301,000,
compared to this year's estimated budget.

The airport's 2005 budget includes $4.1 million in debt payments. The
authority expects to end up with a $1 million surplus in 2005.

It is unclear whether the airport will proceed with a planned $17.6 million
project to improve security and upgrade the terminal. After LVIA completes
the design phase, officials will decide whether the project can go ahead.

The budget includes revenue from an additional airline that airport
officials hope will take over at least some of the Orlando flights. But
that's anything but certain.

''If we don't get even partial replacement , then you can expect deeper
cuts,'' said George Doughty, executive director of the airport authority.

The airport's finance committee will meet once a month in 2005 instead of
quarterly. That will allow it to react more quickly to changes in operations
at LVIA, said Joseph Leeson, acting committee chairman.

''It's a heightened level of oversight,'' said Leeson. ''The airline
industry right now is unstable. US Airways is in bankruptcy, and that also
has to be monitored closely.''

LVIA's attorneys are working in the Lehigh Valley and Florida to recoup
money Southeast owes the airport. Southeast has not filed for bankruptcy.
Company officials have not been in touch with Doughty since Southeast
stopped service.

LVIA is working with the U.S. Department of Transportation to recover
charges the airline collected for airport improvements. Airlines are legally
bound to put such charges in escrow. It is unclear, however, how much
Southeast has in escrow.

''We are trying to track down what's going on, which is difficult because
Southeast is a private company,'' Doughty said.

Southeast began service at LVIA in 2002. Within a year, it rose to become
the top carrier at the airport with cheap, nonstop flights to Fort
Lauderdale, Orlando and St. Petersburg. The airline cited the rising costs
of fuel as a main factor in its demise. Southeast was also battered by a
series of hurricanes in Florida that forced the carrier to cancel flights.


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