Under protest from Northwest Airlines, the Metropolitan Airports Commission on Wednesday approved a $247 million operating budget for next year that raises landing and gate fees by 17.9 percent.
The 15-member commission, which runs the Minneapolis-St. Paul International Airport, approved the rate increase in a unanimous vote. At the same time, it left the door open to working with the Eagan-based airline on some form of relief on a myriad of financing arrangements that the airline has at the airport.
Northwest, which is restructuring in bankruptcy, had requested that the 2006 airline rates and charges be frozen, with no increases. But the commission noted that that would put it in an uncertain financial position.
Northwest is negotiating with aircraft leasing companies for better terms on payments on its planes as well as for wage and benefit cuts with its labor unions. Airports are next on its list.
MAC Chairwoman Vicki Tigwell said that while she understood the plight of the struggling airline, the commission could not grant relief until it had more information on exactly what cost cuts Northwest would seek.
Before the vote, Kathleen Nelson, Northwest's regional director for airport affairs, pointed out that the commission would end the year with $32 million in unrestricted cash. In view of that, a rate increase of 17 percent was "hard to swallow," she said. The rate increase will push Northwest's landing and gate fees up by $10.7 million, bringing its annual payment to the MAC to $72 million.
Tigwell said that the commission will be willing to discuss some form of relief with the carrier but that it need to pass its 2006 budget.
Northwest has indicated to the MAC that it will look at cost reductions at airports next but have not shared specific details. "We both recognize that certain changes are necessary," Nelson said after the meeting. "We just haven't discussed the details."
Northwest and its regional carriers lease 101 of the airport's 127 gates. Northwest also leases office space, parking space and maintenance facilities and hangars at the airport. The airline still owes the commission $269 million on a 1992 loan.
Julie Forster can be reached at [email protected] or 651-228-5189.
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