Friday, August 19, 2011
Overall Tulsa airport revenue down, but bright spots remain
By D.R. Stewart
Tulsa (OK) World
Concession revenue - from the sales of food, beverage and retail in the passenger terminal - accounts for two-thirds of the $34.4 million in revenue budgeted by the Tulsa Airports Improvement Trust in the 2010-2011 fiscal year that ended June 30, records show.
"(Aircraft) landing fees used to be the largest single source of revenue, but with (lighter) landed weights and smaller airplanes and the reduced number of seats, that has come down," said Carl Remus, deputy airports director of finance and administration. "Generally speaking, rental car revenue and parking revenue have been neck and neck."
In an audit compiled for airport trustees by Airports Auditor Tom Gann and Remus, concession revenue at Tulsa International Airport has decreased from $19.19 million in 2009, to $19.15 million in 2010 to $19.13 million in the fiscal year that ended June 30.
The audit found rental car revenue was the largest single revenue source, accounting for $6.18 million, or 32 percent, of fiscal 2011 concession revenue.
Landing fees - including the $2.90 cost per 1,000 pounds of gross landed weight for the major airlines serving Tulsa - represented $5.39 million, or 28 percent, of concession revenue in the last fiscal year, the audit found.
Parking revenue totaled $5.2 million, or 27 percent, of concession revenue.
Other major revenue sources were:
- Tulsa fuel flow fee (10-cent-a-gallon) - $669,981, or 4 percent, of concession revenue.
- Food and beverage - $557,178, or 3 percent, of revenue.
- Retail - $535,727, or 3 percent, of revenue.
Airport executives said concession revenue is driven by activity levels, such as passenger enplanements, the number of vehicles using the airport, gallons of fuel sold and the number of aircraft operations.
"There are different drivers for different revenues," Remus said. "Enplanements are down. It's people that drive concessions - parking, food, retail. Fuel sales and landing fees are driven by the price of fuel."
Although concession revenue is down less than 1 percent the past two years, it has not dropped in the same proportion as passenger traffic, which has fallen every year since 2007 when it peaked at 3.3 million, the highest total since the 3.35 million of 2001.
In 2010, passenger traffic decreased 1.46 percent, to 2.85 million passengers.
Through July, passenger traffic in 2011 is 1.6 million, down 2.6 percent compared with the first seven months last year.
The relatively strong showing of terminal concession revenue reflects the overhaul of the concession offerings that came about in conjunction with the $40 million terminal reconstruction projects of 2002-2005, airport executives said.
With the movement of the security checkpoints from the east and west concourses to the center terminal area and related construction required for Transportation Security Administration baggage screening, airport trustees, executives and contractors were able to place concessions in locations most convenient for passengers.
"Before, we had 60 to 70 percent of the (concession) square footage pre-security," Remus said. "Now, it's 20 to 30 percent pre-security and 70 percent post-security. It gave us the square footage where the market is.
"Food, beverage and retail used to have gross sales of $2 per enplaned passenger. Once we opened up the new concession program, it went to $6 per enplaned passenger."
New design and architectural motifs and new national brands, such as Starbucks, TGI Fridays, Mazzios and Quiznos, also helped boost sales, airport officials said.
The audit found rental car revenue rose 15 percent in the year just ended.
Rental car revenue consists of two components: a 10 percent assessment on gross rental car sales and a consolidated facility charge of $4-per-transaction day. The CFC pays for rental car facilities, such as the quick turnaround area in the parking garage, rental car queuing and fueling systems.
"Gross revenue is down slightly, which reflects enplanements," Remus said. "But CFCs are up because it is based on transaction days that represent business travelers flying in to rent a car.
"Leisure travel is soft, but business travel is up."