Airport could become self-sufficient
A new air carrier coming to Medicine Hat could balance the regional airport budget next year, making it nearly self-sufficient and no longer in need of taxpayer subsidy, a city committee heard on Wednesday.
If so, it could join the municipal campground as one of the only nonutility civic enterprises to turn a profit.
West Jet’s regional service is expected to begin on June 22, adding a second regular carrier currently offering three flights daily to Calgary.
That revenue alone should erase an operating deficit at the city-owned airport, said administrators who only suggest a two per cent increase to cover inflation on most fees for next year.
The city’s financially fit budget strategy calls for yearly increases to account for inflation. The suggested rise for most charges is two per cent. Though the strategy also calls for consideration of cost recovery and bringing local charges in line with similar services elsewhere.
Coun. Phil Turnbull attended the meeting and said now is not the time to add additional fees.
“They’ve made their business case to come to Medicine Hat, and we’ve been dying to get a second airline here,” he said.
“We should be treating them as gently as we can until they get established.”
The changes were presented to a city committee this week and were forwarded to city council for approval at its June 4 meeting.
A general fee increase for inflation, would bring in about $41,000 in 2019.
However, brand new revenue from WestJet regional carrier take offs and landings, would bring in an expected $349,000, plus $33,000 in landing fees, based on forecast passenger numbers.
The current revenue projection in the 2018 budget in $943,000, including 40 per cent from leases, compared to $1.3 million in expenses.
Administrators use airports in Lethbridge, Red Deer and Cranbrook, B.C. to analyze the competitiveness of local fees.
Of those Medicine Hat is the only one that does not charge an Airport Improvement Fee to recuperate the cost of infrastructure upgrades.
The local facility will see more than $20 million in upgrades over the last four years including a terminal expansion, aprons and repaving the runway.
Runaway work, which forced the cancellation of all flights this month, is budgeted to cost $12 million, but was paid for entirely with a federal grant specific to local airports.
An airport terminal expansion, completed in 2015, was paid for by the Alberta Municipal Sustainability grant program, which can be spent on a wide array of infrastructure.
New work at the facility’s entrance is being covered out of the land department’s capital budget as they are reworking land for future commercial resale.