"Memphis airport raises gate fees, lowers landing costs"

Friday, May 18, 2007

Airport raises gate fees, lowers landing costs
Increases are rare in effort to hold down expenses to airlines
By Jane Roberts
The Memphis (TN) Commercial Appeal


The airport authority Thursday approved slight increases in gate rental
fees, the first hike in four years, and a sign that Memphis International
Airport is still in austerity mode. 

Under the $123.8 million budget, which goes into effect July 1, airlines
will pay $32.97 per square foot for ticketing and gate space, a hike of 5.7
percent to a rate that had not increased since 2004. 

Landing fees, on the other hand, will decrease 4 cents per thousand-pound
units, largely due to increases in cargo weight. 
"It reflects the fact that we've been very fortunate in increasing our
nonairline revenues from concessions and ground transportation," said Larry
Cox, president and chief executive of the Memphis-Shelby County Airport
Authority. 

Last year's budget was $120.6 million. The increase points to expenses the
airport has tried to keep down to help its airline partners through a slump
that started Sept. 11, 2001. 

In the year that begins July 1, for instance, airport employees will receive
raises -- the first time since 2005 -- equivalent to 5.25 percent over 36
months. With new hires and increased benefit costs, personnel expense will
rise $1.5 million. 

The authority is not taxpayer-funded. It pays costs from revenue it
generates from concessions, parking, car rental fees and fees it charges
airlines to use the airfield. 

In the coming year, it expects to generate $45.5 million in landing fees and
other airfield-related revenue, up from $45.1 million. 

"The increase is primarily in landed weight," said Scott Brockman, executive
vice president of finance. "It is up slightly more than 1 million
thousand-pound units, or 4 percent more than last year." 

The majority will come from growth at FedEx, but Frontier's new routes have
added more planes, and Northwest is upgrading some routes too. 

In order to keep airline fees low, the authority updated its food and gift
concession programs to augment that revenue stream. In March, the average
expenditure per passenger was $7.50, nearly double what it was in 2003. 

For the coming year, the authority expects concession revenue will be up
$818,000. Revenue from parking, car rentals and other ground transportation
sources is expected to rise $1.5 million, partly due to increases in rental
car rates and increasing numbers of local passengers. 

"We appreciate the efforts of management down to individual workers in
controlling costs," said Marcus Kemper, regional director of airport affairs
at Northwest Airlines. 

"We tend to hold Memphis up as an example of how things can work between an
airline and an airport." 

Capital costs will rise more than 100 percent this year for projects and
repairs Brockman says can no longer be delayed. 

The authority plans to invest $1.4 million in airfield improvements,
including replacing center-line light fixtures and transformers that guide
aircraft. 

"It's a significant increase compared to 2007, but it is not significant for
the size of the airport or for our capital outlay budgets prior to Sept. 11,
2001," Brockman said.

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