Piedmont Triad International Airport (PTIA) has just adopted its new 2016-2017 budget totaling $29.7 million and, unlike a lot of area local governments that recently adopted budgets, the airport’s budget for the coming fiscal year is smaller than the final budget for the fiscal year that just ended on June 30.
The $29.7 million in total revenues and expenditures in the 2016-2017 PTIA budget is a slight drop from the $30 million total the airport raised and spent in the past 12 months.
On the expense side of the ledger, the new budget, which was approved unanimously at the Tuesday, June 21 meeting of the Piedmont Triad Airport Authority board and went into effect on July 1, includes $15 million in operating expenses, which is about $1 million more than the airport saw in 2015-2016.
In addition to the financials, PTIA’s new budget provides some insight into the airport’s plans over the next 12 months. Since PTIA is a central cog in the economic development plans for this area, many local elected officials and business leaders are watching the airport’s moves closely.
PTIA Executive Director Kevin Baker said this week that a number of key airport projects are finishing up, getting underway or moving forward in the next 12 months. One NC Department of Transportation (DOT) project that’s a huge part of the airport’s plans for fiscal 2016-2017 is the taxiway bridge that will allow planes to roll over I-73.
“The taxiway bridge is about a year from completion,” Baker said. “It’s a DOT project, but we’re very involved.”
That bridge is expected to promote economic growth around the airport by providing runway access to hundreds of acres of PTIA-owned property on the north side of I-73. That taxiway across the interstate opens up a large area to aviation companies that require runway access for their work.
Another major project at PTIA that’s also meant to increase economic development opportunities is the relocation of the giant antenna known as the airport surveillance radar (ASR).
“That’s the big antenna that sits in the middle of a big hill of about 12 acres,” Baker said. “I call it the ‘Hershey’s Kiss.’ The tower will be relocated to the side of the field by [West] Market Street.”
That move is going to free up prime airport real estate that can be used by aviation companies.
Private companies have been expanding operations at the airport and have projects of their own going on in fiscal 2016-2017. For instance, HAECO Americas has begun working on its aptly named “Hanger Number 5” project.
“That’s a $60 million state-of-the-art hanger,” Baker said, adding that he can see the work in progress from his office window.
PTIA is also conducting a major $20 million runway renovation effort.
The new budget reveals one big financial plus in the airport’s favor: PTIA is sitting on a giant pile of money – $42 million – held in its reserve fund. Many local governments keep between 8 to 15 percent of their annual budget in reserve to maintain liquidity and to stay prepared for an emergency. While airports typically keep more than that on hand, PTIA’s reserves are impressive by any measure.
“With an operation like this you have to be prepared for a catastrophe ” Baker said, adding that PTIA is in “very good shape” in that regard.
He said that, given that the operating revenues in the new budget are just over $15 million, the airport could run for nearly three years with no revenue coming in. Baker said it’s his understanding that, on average, airports have reserve funds large enough to cover expenses for about 700 days.
In addition to its operating expenses, PTIA has $5.8 million in debt repayment scheduled in fiscal 2016-2017 and about $8.8 million in capital expenses planned.
According to Baker, the cost of supplies and equipment at a major airport like PTIA are huge.
“You’re basically running a small city,” he said.
Baker said, for instance, he’d just approved a big payment for toilet paper.
When asked if PTIA purchased the good toilet paper or the very cheap one-ply stuff that feels like sandpaper, he replied, “We get the good stuff that we put at our offices, but we get the stuff that feels like sandpaper for the terminals” – though his tone suggested that he was joking.
He said there are many special operating costs when it comes to running an airport.
“Anytime there’s a snow event, there’s a large cost in chemicals,” Baker said, citing one example.
The $29.7 million in revenues is generated from a number of sources. Baker said airport revenues come in three categories that bring in roughly equal amounts of PTIA’s overall revenue. He said about a third of the airport’s revenue – roughly $7 million or $8 million– comes from parking and related charges. He added that another third comes from fees charged to airlines and passengers such as landing fees and rental car fees, or from the cut the airport gets from books, gifts, meals and snacks sold at the shops, stands and restaurants. Finally, he said, about one-third of the airport’s revenue is generated from non-airline activities such as fees from HAECO, HondaJet and others.
One reason growth at the airport is so important to area leaders is that the facility is so closely tied with the area’s strategic plan for job growth countywide. In fact, next week, Greensboro Partnership President and CEO Brent Christensen, who’s also a lead staff person for the Guilford County Economic Development Alliance (GCEDA), is attending the Farnborough International Airshow in England to help draw the attention of more aviation companies to PTIA.
“Aviation is one of our target industries – and that’s been helped by the aggressive stance that the airport has taken,” Christensen said.
He added that Guilford County had seen some solid success in that industry in the past and said the projects at PTIA that are opening up so much new useable space put the county in a position to expand on those past successes with a round of new airline-related businesses in the coming years.
“I think you will find very few places where not only do you have space available – property on the field with access to the runway – but you also have the commitment to education in aviation, from Guilford Technical Community College (GTCC) to Guilford County Schools,” Christensen said.
Though PTIA already owns a lot of land for development, it continues to add more. Baker said the airport is still acquiring property when it becomes available. The airport’s current capital plan funding includes just over $4 million for land acquisition.
The PTIA budget projects that revenue from terminal rental will be up by 1.3 percent in the new fiscal year and parking revenues will increase by 2.2 percent. And the rent for the airport apron – the area of the facility where airplanes park, load and unload – is expected to increase by 14 percent. That revenue jump is largely the result of American Airlines renting another gate from PTIA.
In other good news, the airport’s revenue from cargo operations is projected to increase 23 percent due to a lease for a Christian aid organization, Samaritan’s Purse, as well as an adjustment in the airport’s deal with FedEx. Some additional money is expected because of new leases with RSVP Communications and Highways & Skyways.
The airport has had a lot of financial help from its transportation partners. When the DOT or the Federal Aviation Administration comes in and does a project with grant money that will enhance the airport, PTIA must pay some of the cost – usually 10 percent. In recent years the airport has seen an infusion of money from those outside sources for a small percentage of matching funds.
“We have been very, very fortunate in that regard,” he said.
Grant money now on the books for projects in various states of completion total about $110 million. Those include a noise mitigation program that provides soundproofing in airport area homes – especially older ones, which often don’t have proper insulation and sound protection. It also includes the taxiway bridge construction, the large tower relocation, parking deck and road repairs, runway and terminal renovations and the development of a site on western area of airport land.
One key metric that airport officials keep close watch on is the number of passengers using the airport, and the prediction in the new budget is that those numbers will head up slightly after what’s been a lengthy decline. Over the last two decades, PTIA has lost a lot of traffic due to the consolidation of travel around hub airports. Baker said that planes serving PTIA are in some cases adding more capacity.
Baker said a slight increase in passenger traffic was the best guess of what would happen in fiscal 2016-2017, but he also said that no one knows for sure what will transpire in the new fiscal year.
“It’s more an art than a science,” Baker said of the forecasts for passenger use.
He said one positive factor playing into that prediction is the forecast for the industry overall, which calls for added airline traffic.
“We are likely to see the table scraps of that expansion,” Baker said.
Airport officials aren’t expecting a large increase in that number, but even a slight uptick is welcome considering the steady decline of flyers that PTIA has experienced in recent years.
In 2011, PTIA had 893,000 passengers, which dropped yearly and sank to 824,000 in 2015. That happened even though the number of passengers that have flown US airlines went from 731 million in 2011 to 799 million in 2015.
The number of charter passengers at PTIA has fallen by almost half in the last five years.
Airport officials say there are making multiple moves to make the airport more attractive to flyers, and a new Starbucks and more aggressive advertising of the airports valet service is part of that plan.
“People love it,” he said of the airports valets offerings.
Baker said that, after reviewing recent passenger numbers, 2015 appears to have hit bottom, and passenger use of PTIA seems finally be on the upswing after the lengthy decline.