Posted on 12/04/2005 10:21:22 PM PST by Paleo Conservative
Several Dallas City Council members, including Mayor Laura Miller, say they are surprised and upset that Dallas Love Field has been dipping into its reserves to pay off deficits.
Now they want answers.
Airport officials say they are trying to cut costs and raise revenues, looking at everything from parking rates to landing fees.
On Wednesday, council members Mitchell Rasansky and Angela Hunt sent a joint memo to City Manager Mary Suhm asking for a full council briefing "as soon as possible in January."
Hunt said she has also asked the city auditor's office to examine how the airport handles its money.
"I think we have to take a really close look at the way Love Field is operating financially," she said. "It really concerns me that we are operating at a deficit."
The city's Aviation Department is responsible for two airports: Love Field, which handles commercial and general aviation on 1,300 acres just north of downtown, and Dallas Executive Airport, which handles general aviation on 1,040 acres in the southwest corner of town.
But as the recently expanded Executive Airport continues a transition to new business, almost all the department's revenues and expenses lately have come from Love Field.
The Aviation Department has built up about $46 million in reserves, which airport officials say is primarily available for emergencies and long-term capital projects.
But for each of the past five years, the department has budgeted for deficits between $1.5 million and $5 million. That adds up to $15.7 million in budgeted deficits since the 2002 fiscal year, which began Oct. 1 of the previous year.
For two of those years, 2003 and 2004, budgeted losses of $2 million and $1.7 million, respectively, turned out to be surpluses of $2.8 and $2.9 million. Ryan Evans, the assistant city manager who oversees the department, said the department periodically dips into reserves to cover deficits.
Actual figures for the 2005 fiscal year are not available, but the deficit is estimated to be only $2.9 million rather than the $3.7 million loss that was budgeted.
For the 2006 fiscal year, the department has budgeted $30.3 million in revenue and $33.3 million in expenses -- a shortfall of $3 million.
In the end, it all leads to a $5.2 million loss at this point.
Evans attributes the shortfall primarily to passenger traffic levels, which are still down 18 percent since 2000, according to the Federal Aviation Administration.
Miller said it's unacceptable to use the reserve fund to pay annual expenses.
"I think it's a surprise to the City Council that we were doing that," she said. "There's no business in America that wants to operate by dipping into its reserves."
Evans agrees that the airport needs to get out of the red.
"If we're going to continue to eat $3 to $4 million in cash, we ought to be looking at ways to help that," he said. "I'm looking at all of our revenues, including landing fees."
But Miller said she doesn't buy the argument that Love Field is still hurt by the slowdown after the 9-11 attacks.
"Other airports around the country dealt with that blow and moved back into the black, and that's what we need to do now," she said.
Ed Stewart, spokesman for Southwest Airlines, said Love Field's financial problems could be eased by repealing the Wright Amendment, which restricts commercial long-haul flights from Love Field to nine states. On Wednesday, Missouri became the latest to be exempted.
Increased landing fees are not unusual, he said."You do that with airports all across the country," he said. "That's on a continuous basis."
Between 2001 and 2003, Love Field boosted fees for parking, terminal rent and ground leases. But landing fees have gone untouched for some time.
The airport, which charges 35 cents per 1,000 pounds landed, is talking to executives for two of its tenants, Dallas-based Southwest Airlines and Houston-based Continental Airlines, about raising landing fees. By comparison, Dallas/Fort Worth Airport charges $4.94 per 1,000 pounds.
The airport may not just be raising landing fees, which get passed on to travelers in ticket prices. Travelers might also be expected to pay more to park.
After all, it is the $59 million debt taken out in 2001 to build a new parking garage that's partly to blame for weighing the department down, said Kenneth Gwyn, director of aviation for Dallas.
The debt is scheduled to be paid off in 2011.
"When that goes away, the situation gets better," Gwyn said. "It's not a comfortable situation, but we're working to rectify it."
Councilwoman Hunt said she was first tipped off to a possible problem at Love Field after hearing testimony two weeks ago from Lori Palmer, a member of the Love Field Citizens Action Committee.
The Senate Aviation Subcommittee, which held a Nov. 10 hearing on the Wright Amendment, received a statement from Palmer that described Love Field's credit-rating drop, its below-average landing fees and a January report from the city's auditor that questioned its rental rates.
But Love Field's problem is not unique. Airports across the country have been aggressively looking for other ways to grow nonairline revenue, using parking, concessions and real-estate development.
But Love Field is different from D/FW Airport in the way its debt and profits are handled. For Love Field, the city is ultimately responsible for shortfalls. At D/FW, the signatory airlines are responsible for paying any deficits.
Love Field's parent, the Aviation Department, has been set up as an enterprise fund, meaning it stands alone almost like a separate, self-sustaining city business. The department isn't allowed to get any money from the city's general fund.
Rasansky calls the Love Field deficits "a sore spot" for him.
When he was elected to office in 2001, he complained that the airport wasn't increasing its rates for long-term land leases.
"I'm the most critical person on this because the deals they're making on this are just incredible," he said.
The city auditor's office echoed that sentiment in its January report.
"The reasonableness of these rates, as established by the Aviation Department, is questionable," according to the 11-page audit. "Aviation Department personnel stated that it has not raised rents for fear that tenants will terminate their leases and thus cause the loss of rental revenues and jobs."
Rasansky, chairman of the council's finance and audit committee, said he wants his committee to look at the airport's deficits.
Hunt said there's still more learning to be done.
"We've got to get our arms around these issues and understand whether or not our airport is being run in a financially sound way," Hunt said.
If you want on or off my aerospace ping list, please contact me by Freep mail.
Repeal the WrONG Amendment.
Those landing fees look like a modest increase would not be out of line at all.
Sure wish airlines charged ticket prices based on seat occupancy + weight. It might be incentive enough for many of the fatsos in the USA to lose weight.
The battle over Love Field vs. DFW is based on politics more than pragmatism. Love was supposed to close when DFW opened but, stubbornly, Southwest Airlines refused to move to DFW.
That refusal brought in the punitive restrictions of the Wright Amendment (named for disgraced former Speaker of the House, Jim Wright) to try and force the airport to close.
Southwest has weathered the test of time and the Wright Amendment deserves to be dispatched to the dumpster of dreadful and pointless laws. Many residents of Dallas County still prefer using Love Field than making the trek out to DFW where parking, access and simple convenience are expensive, at best. And, convenience is anathema to DFW.
I don't know what the Congress' love affair with the Wright Amendment is, but they have repeatedly refused to repeal it. The time has come and this final remaining obstacle to freedom (a fitting legacy for Jim Wright) needs to be dismantled.
"Sure wish airlines charged ticket prices based on seat occupancy + weight."
I'm for that, too, but I'd like to see the pilot and airport cartels broken at the same time that happens.
It's not clear to me from the article that Love Field is primarily responsible for the shortfall. Executive Airport was recently expanded, which must have either cost money out of pocket or an increased debt load. And what exactly does "a transition to new business" mean? Is Executive being sold or something?
That said, the landing fees at Love Field seem too low and should be raised a bit, if possible. There's no reason for Dallas to subsidize Southwest or Continental, two airlines that actually make money now and again.
If you're big blowfish who doesn't fit in one seat, Southwest charges you for two.
d.o.l.
Criminal Number 18F
Most government-types around here oppose competition
I don't think most people oppose competition in general; I think the pro-Wright people get their judgment clouded because they're anti-Southwest (or pro-AA). If those companies weren't involved with the issue, there would be virtually no support for Wright. I'm as anti-Southwest as most anyone, but I can't justify interfering with the free market based on personal preference.
In the case of Red Bird, it means they are trying to run off the petty theft guys and upgrade to carjackings.
On a more serious note, they are trying to attract corporate jets from Love and Addison airports. Execs that value their lives and property aren't willing to make the move to Red Bird. (The name was changed to "Executive" to try to fool out of town decision makers). Red Bird has primarily attracted GA fliers.
In the meantime, one major corporation has moved its jets to McKinney, a good 30 miles north of downtown Dallas.
It is my recollection that there was a change of managment to reflect the local 'diversity'.
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