Money un­wasted

Pas­sen­ger fee im­proves air­ports

Arkansas Democrat-Gazette - - VOICES - MIKE JOHN­SON Mike John­son is chair­man of the North­west Arkansas Re­gional Air­port Board.

Lo­cal air­ports levy and col­lect “pas­sen­ger fa­cil­ity charges” to gen­er­ate the rev­enue that’s needed to im­prove and main­tain our air­ports for our pas­sen­gers. It’s that sim­ple.

A re­cent guest col­umn in this space sug­gested that a pos­si­ble in­crease in the fed­er­ally reg­u­lated pas­sen­ger fa­cil­ity charge could en­dan­ger Arkansas’ eco­nomic growth and pros­per­ity. On be­half of the North­west Arkansas Re­gional Air­port (XNA), I re­spect­fully dis­agree.

The charges are sim­ply lo­cal-op­tion user fees. Only the peo­ple who use air­ports pay the fees, and the money from the fees goes to im­prove our lo­cal air­ports.

As North­west Arkansas res­i­dents know, XNA has been an amaz­ing suc­cess story. That suc­cess is a di­rect re­flec­tion of the growth and de­vel­op­ment of the busi­nesses and in­sti­tu­tions that proudly call North­west Arkansas home. Since we opened in late 1998, we’ve ex­panded the ter­mi­nal build­ing four times and pub­lic park­ing ar­eas seven times, and a park­ing deck will open in Au­gust.

The air­port author­ity was cre­ated al­most 30 years ago by seven lo­cal gov­ern­ments—five cities and two coun­ties. The may­ors and county judges of those seven gov­ern­men­tal en­ti­ties ap­point rep­re­sen­ta­tives to the author­ity’s board, and those ap­point­ments must be con­firmed by the city coun­cils, city boards and quo­rum courts. Over the years, the 14 ci­ti­zens who make up the air­port board have been suc­cess­ful busi­ness­men and women from our re­gion.

In the past 20 years, XNA has com­pleted con­struc­tion projects to­tal­ing over $150 mil­lion, and pas­sen­ger fa­cil­ity charge rev­enue was one of the sources for those projects. It’s been my priv­i­lege to serve on the XNA Board for nine years, the last two as board chair­man. I can as­sure the res­i­dents of North­west Arkansas that the board takes se­ri­ously its stew­ard­ship of pub­lic funds.

The fed­eral gov­ern­ment sets the max­i­mum al­low­able pas­sen­ger fa­cil­ity charge. But the de­ci­sion to im­ple­ment the fee is made at the lo­cal level, as are the de­ci­sions about spend­ing those funds.

The guest col­umn was cor­rect that air­ports of­ten main­tain fund bal­ances. The XNA Board has set a goal to main­tain a fund bal­ance of at least $10 mil­lion. Air­ports of­ten is­sue rev­enue bonds to fi­nance long-term cap­i­tal projects, and the air­ports get rating agen­cies to eval­u­ate the air­port’s fi­nan­cial po­si­tion prior to the sale of the bonds. The rating agen­cies’ guide­lines can in­clude pro­vi­sions that an air­port have 400 or 500 days of cash-on-hand to get an in­vest­ment-grade rating on the bonds. In XNA’s case, that pol­icy de­ci­sion was made by the board.

The guest col­umn was also cor­rect that air­ports are now al­lowed un­der fed­eral law to levy a fee of $4.50 for each out­bound pas­sen­ger, and that the fee per­tains to the first two legs of a trip. At XNA we get $4.39 in that fee rev­enue for each of our 700,000 an­nual out­bound pas­sen­gers. (The other 11 cents goes to the air­lines for col­lect­ing the fees.) For XNA, those fees will gen­er­ate about $2.8 mil­lion this year. Our con­struc­tion bud­get usu­ally ex­ceeds $3 mil­lion a year.

One of XNA’s cur­rent top pri­or­i­ties is to at­tract a low-cost car­rier. We are proud of the fact that the com­mer­cial air­lines of­fer di­rect ser­vice to 15 des­ti­na­tions from XNA, and pas­sen­ger fa­cil­ity charge rev­enue will help us ex­pand our fa­cil­i­ties to ac­com­mo­date even more air­lines and pro­vide pas­sen­gers with more op­tions.

The Amer­i­can So­ci­ety of Civil Engi­neers re­cently is­sued an In­fra­struc­ture Re­port Card that put the av­er­age in­vest­ment gap for air­ports at more than $4 bil­lion a year. By 2025, the in­fra­struc­ture in­vest­ment short­falls could cause the loss of nearly 257,000 jobs and $337 bil­lion in lost GDP. The $4.50 pas­sen­ger fa­cil­ity charge has re­mained un­changed for 17 years. Ad­just­ing for in­fla­tion, the ef­fec­tive buy­ing power in to­day’s econ­omy equates to only $2.20.

Also, as air­lines have im­ple­mented a la carte pric­ing, fed­eral rev­enue has suf­fered be­cause ticket taxes don’t ap­ply to bag fees or other dis­cre­tionary pas­sen­ger pur­chases. Last year com­mer­cial air­lines col­lected a com­bined to­tal of $3.4 bil­lion in bag fees alone.

It should also be noted that the guest col­umn was al­most word for word the sales pitch that the com­mer­cial air­lines have been us­ing for years against a pas­sen­ger fa­cil­ity charge in­crease. The air­lines know they aren’t the best de­liv­erer of that mes­sage. As our pas­sen­gers know, the air­lines have per­fected the col­lec­tion of their own fees.

On be­half of the XNA Board, let me close by say­ing thank you to the res­i­dents of North­west Arkansas. You have sup­ported re­gional im­prove­ments over the years that have con­trib­uted sig­nif­i­cantly to the qual­ity of life we all en­joy. Please know that we truly ap­pre­ci­ate that loyal cus­tomer base and are con­stantly look­ing for ways to im­prove our fa­cil­i­ties and our ser­vices.

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