Louis Armstrong Airport Avoids Increasing Fees

Although Louis Armstrong International Airport is no longer busy enough to pay its bills, the New Orleans Aviation Board has voted to keep fees for airlines stable in hopes of speeding the return of air traffic to the city.

The airport spends about $72 million a year on expenses and debt service, but likely will take in less than $50 million in revenue in 2006, according to an analysis by Ricondo & Associates, a Chicago-based aviation consultant.

Air traffic is down to a third of the pre-Hurricane Katrina levels and many of the airport's concessionaires have yet to reopen.

Under normal circumstances, the airport would ask the airlines to pony up the difference, but airport officials said that would likely drive business away at a time that the city desperately needs more air service.

"If we raise fees, then we'd lose service. Then we'd have to raise them even higher," Aviation Director Roy Williams said.

Instead, the airport will adopt an airline fee schedule that puts the airlines' cost at $9.71 per enplaned passenger, in the upper range of other "medium hub" airports like Armstrong. The resolution made the terms retroactive to Oct. 1. Airlines were not charged for the limited service that was available in September.

Only months before Katrina, the airlines had agreed to a deal that would have set the cost at $7.69 per enplaned passenger. That measure is the yardstick by which airport costs are compared. In New Orleans, the number of people who board, or "enplane" an aircraft is roughly equal to those who get off, or "deplane" at the airport.

"Given our circumstances, none of the airlines pushed back when we proposed this," Williams said.

Airlines that sign a contract with the airport would pay $1.07 per 1,000 pounds of an aircraft's weight when empty, plus a "terminal fee" of $8 per passenger.

To make up the revenue gap, the airport will look to refinance its debt, either by borrowing more money to make debt service payments or seeking an interest-only extension for the next few years. No agreement on restructuring has been reached, but Williams said the airport is fortunate in that the bulk of its debt is within 10 years of retirement under the normal payout plan. The consultants offered two projections for the airport's recovery: one that brings the airport to a break-even basis by 2010 and the other by 2008.

The airport could break even on operations with 4 million enplaned passengers, or 8 million passengers total, the consultants said. Until Katrina, the airport was on pace to have 5 million enplaned passengers this year.

In the interim, the airport would run a cumulative $62 million deficit in a five-year recovery, and $41 million in a three-

year recovery, the report said.

"These projections have to be conservative. I think we're going bounce back after two years," Williams said.

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Matt Scallan may be reached at

[email protected] or (504) 467-1746.

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