Wednesday, May 10, 2017
Why new deal could bring more flights to Sacramento airport
By Tony Bizjak
The Sacramento (CA) Bee
Sacramento International Airport has improved relations with Southwest and other air carriers.
Sacramento International Airport officials announced a deal Tuesday with airlines that will give the airport more financial stability in tough times, but reduce the sky-high rents the airport has been charging airlines to help pay for Sacramento’s billion-dollar 2011 facility expansion.
The five-year fee deal will go into effect in July, lowering the cost of the doing business for airlines in Sacramento, said airport chief John Wheat. That, in turn, will make SMF a more attractive place for airline service expansions and could help the airport attract several new low-cost air carriers that it is wooing.
“It makes us more competitive within California,” Wheat said. “That is the highlight of what this was aimed at doing.”
The deal also represents a return to more collegial relationship with the air carriers. Airport officials unilaterally imposed some of the highest fees in the country nearly a decade ago when gearing up to finance construction of Terminal B and a new concourse building. That move angered airline executives who said they were being required to shoulder much of the financial burden for what they called an oversized facility.
Wheat, who was hired by the county in 2013 to improve airport finances and relations with the airlines, said 11 of the airport’s 13 air carriers have indicated they will sign the deal, including Southwest, American, United and Alaska.
Southwest did not immediately comment Tuesday, but officials there have lauded the airport for entering into negotiations two years ago on the new fee deal.
Two small carriers, Volaris and Aeromexico, are not expected to sign. The airport will charge those two airlines a 20 percent premium to use the local airfield and terminal.
The airport is a self-funded branch of the county government, responsible for balancing its budget annually without assistance from the county general fund. It pays for its operations through fees it charges the airlines, passengers, parking and car rentals. The airport also receives federal government grants.
Under the new deal, if the airport runs into trouble meeting its annual debt obligations, airlines agree to help pay those debts until the airport can stabilize its finances, and repay the airlines.