LR airport profit hits $1.2M
Fewer boardings don’t derail 6th-straight year of increase
Despite declines in boardings and many revenue categories, and an increase in operating expenses, the state’s largest airport finished 2014 with $1.2 million in profit, marking a record sixth year in a row that it has seen an increase.
Bill and Hillary Clinton National Airport/Adams Field received approximately $4 million in one-time reimbursements from the Federal Aviation Administration to offset the loss of more than 90,000 passengers and a decline in operating income of nearly $500,000, as well as a $500,000 increase in operating costs.
“Thank God we’re making money,” said Jim Dailey, the former Little Rock mayor and now a member of the Little Rock Municipal Airport Commission, which oversees the airport. “But there’s no question each of us has a concern about what we can do to stop the decline in passengers.”
The decline has come despite spending $67 million to upgrade the airport terminal and having, by all accounts, a talented airport staff, Dailey said. “It’s frustrating.”
The number of people departing and arriving at the airport slid 4.2 percent last year. In 2014, 2,076,551 passengers came through Clinton National, 90,979 fewer than the 2,167,530 that traveled through the airport the previous year.
The last year-over-year gain was in 2012 when 2,292,962 passengers arrived and departed, a 3.99 percent increase from 2011, said Shane Carter, the Clinton National spokesman.
Some of the decline in passenger traffic can be attributed to structural changes
in the airline industry, which is focusing on flights and federal investment at large hub airports, such as Hartsfield-Jackson Atlanta International Airport and Chicago O’Hare Airport, at the expense of smaller airports such as Clinton National.
“It’s a really troubling, complex, difficult time … for airports our size,” Dailey said.
The latest blow to Clinton National came when American Airlines announced that it will discontinue direct service between Clinton National and LaGuardia Airport in New York in March, less than a year after the flight began.
The airport’s new commission chairman, retired U.S. Army Gen. Wesley Clark, held a conference call with American executives in Dallas to persuade them to reconsider but received no commitments.
Clark has also instructed airport staff to develop an action plan on customer service that would include ways to keep and attract air service.
Dailey, whose background is as a salesman, said that he hopes the plan includes more one-on-one visits with airline executives by the commission’s seven members. Having someone of Clark’s stature, whose resume includes being a one-time White House hopeful, leading the commission can only help, he said.
“That’s something we must continue to do,” Dailey said. “Not to take away from staff, but the commission is in charge.”
Digging a bit into the finances of the airport shows softer income from operating revenue, which includes the income the airport receives from landing fees and other airline fees and charges; concession revenue; airport revenue; and rental car charges.
Operating revenue for 2014 totaled $30,687,596. That figure was about the same as the previous year, which totaled $30,654,394. Parking revenue, at $9,433,881, was down about $62,496 in 2014 compared with 2013. Revenue from restaurants and lounges also endured a slight decline, going from $1,020,561 in 2013 to $998,661 last year, a difference of $21,900.
Still, concession revenue overall was up 1 percent to $14,680,172.
The biggest hit in revenue came in the airport’s land leases, where the loss of income from the gigantic former Hawker Beechcraft facility was felt. Land lease income fell $225,450 last year to $1,541,500.
Meanwhile, airport expenses rose 3 percent in 2014 to $19,973,353, an increase of $502,979 compared with 2013. Salaries, wages and employee benefits increased 8 percent to $10,195,005.
As a result, net income from operations declined 4 percent, going from $11,184,010 in 2013 to $10,714,243 last year.
Income from non-operating revenues, such as investment income and interest expenses on bonds, declined 1 percent, leaving total net income for the year at $10,361,108.
But the airport’s financial footing was bolstered by income from what the airport staff calls reimbursement of historic costs. In short, the airport in the past has used its yearly income to acquire land and sought reimbursement from the Federal Aviation Administration.
It received nearly $1 million in 2013 from the FAA as reimbursement for land the airport acquired. The reimbursement came in the form of airport improvement program grants from the agency, which the airport staff said were unanticipated.
Clinton National also received more than $3 million in the reimbursement of “legacy” costs through airport passenger facility charges.
This strategy seeks reimbursement through the airport passenger facility charges for the costs of the airport’s “legacy debt,” which totals about $9 million. Legacy debt consists of costs that the airport took over on past projects that it didn’t pass on to airlines in the form of higher landing fees.
The airport can be reimbursed through its passenger facility charges for debt it took over, airport officials said.
The $4.50 passenger facility charge is a federally mandated charge for every ticket purchased for a flight from Clinton National.
Beyond the one-time reimbursements, the airport collects about $4 million annually from the charge but must secure approval from