MIA Airline Costs Soar Sky High

Miami International Airport, already one of the most expensive U.S. airports for airlines, estimates it will have to nearly double the fees it charges airlines by 2015 because of rising operating costs.

Any increase makes it more difficult for the airport to attract new business, especially the low-cost carriers MIA is courting.

Airlines that fly to MIA will pay, on average, $18.10 per passenger in 2006, up from $15.78 this year. That fee could rise to $30 by 2010 and $34 in 10 years, according to airport planning documents.

By comparison, Fort Lauderdale-Hollywood International Airport charges airlines on average about $4 per passenger. Orlando International Airport's average fee: $4.70.

''In the current environment, I'm not sure how sustainable a $30 per-passenger fee is,'' said Coral Gables aviation consultant Stuart Klaskin, who has done work for MIA. ``It almost encourages airlines to look at other options.''

The main reason for the rising fees: MIA's $5.2 billion capital improvement plan.

Not only is the airport paying off construction bonds, it must pay to operate the new terminals it's building -- air conditioning, maintenance and security -- when those areas open. So far, there aren't any new airlines or flights bringing in new revenue.

Concerned about the impact of the fee increases, airport officials are studying changes in how MIA charges airlines rent to drum up new business.

The airport may allow airlines more flexibility in how they pay for gate space. Currently, airlines pay a flat rate each time they use a gate. Airport officials believe this hurts low-cost carriers whose business models depend on fast turnarounds and multiple daily flights.

MIA wants to have some gates available for a one-time rate, so airlines wouldn't pay each time they used it. Several airports such as Atlanta Hartsfield--Jackson, Dallas-Fort Worth and Washington Dulles use this method.

MIA wants to charge airlines less for using older concourses in the Central Terminal. When the $700 million South Terminal opens in the summer of 2006, some carriers will move over from the Central Terminal.

If an airline uses the older facilities -- such as concourses G or F -- it could see a one-third discount off its per-passenger fee.

''We have to find a way to cut our costs [fees to airlines],'' said MIA chief financial officer Susan Warner Dooley, who added the airport is meeting with investment bankers about restructuring its debt.

In addition to giving some airlines more flexibility, MIA believes that for the first time in several years it has an advantage over Fort Lauderdale-Hollywood: space.

After years of siphoning off domestic flights from MIA, Fort-Lauderdale-Hollywood's 57 gates are jammed, and there are no approved plans to expand. The airport is only using one runway for commercial jets. Delays during the winter months have become some of the worst in the nation.

MIA has four runways and plenty of gate space for airlines.

''Our competition has run out of space,'' Dooley said. ``We have taken airlines to Concourse F [in the Central Terminal] and they drool when they see the space. It's scary right now, but we see hope on the horizon.''

MIA produces large profits for many carriers, easing the sting of high fees, noted airline consultant Ken Cushine of Frasca & Associates. The higher fees will be offset by better facilities in the South Terminal and when the North Terminal for American Airlines is finished this decade.

But the high fees help explain why MIA has had a tough time luring low-fare carriers:

On a $300 American Airlines one-way ticket to London, the $18 fee is 6 percent of the ticket price. On an $80 flight to New York City, that same fee gobbles up more than 22 percent of the revenue.

If MIA could reduce its fee to about $12 per passenger for airlines using the older concourses, it could entice carriers such as Air Tran to add more flights or JetBlue to start service, Klaskin said.

``I think the potential is there, [the airport] just may be empty for the next 24 or 26 months.''

Klaskin last year studied five airports nationwide that are similar to MIA. Then, San Francisco had the highest per-passenger fee at $17.27. Boston ($12.89), Dallas-Fort Worth ($8.40) and Chicago O'Hare ($8.22) were cheaper than Miami.

Earlier this year, MIA agreed to waive landing fees to airlines starting new service. No one has yet qualified for the waivers.

Miami Herald


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