Citizens‚ Group Urges Public Debate Of More Aid to NWA

The South Metro Airport Action Council (SMAAC) today said that the Metropolitan Airports Commission (MAC) may be acting presumptiously by scheduling a vote next month on plans to reduce airline fees and share airport revenue with incumbent airlines at MSP.

NWA VP Jim Greenwald advanced a plan, worked out with MAC staff, at the MAC meeting December 18, which was taken under advisement, and placed on the January 2007 agenda. The effect of the plan would be lower lease costs, off set by landing fees and concessions revenue. The devil is in the details, but SMAAC wonders if landing fees revenue, which varies with the number and weight of using airliners and is controlled by the airlines, is riskier for MAC.

If NWA reduced operations here, it would be quite awhile, if ever, before other carriers could replace them. In fact, by retaining gates and sub-letting them (or not), flight reductions can be temporary. Since airfield costs are theoretically recovered in full by using airlines, a reduction in use raises landing fees for all airlines. NWA proposes to use concession and parking revenue to reduce the cost basis.

Greenwald said that the cost per enplaned passenger is the parameter used by airlines to compare airport costs. Given the same number of operations and landed weight, he said a significant 93-cent reduction in this factor by the switch.

Some airport Commissioners see MAC as in the hub-airport business, partnering with Northwest Airlines. Other Commissioners expressed concerns about airline mergers, financial risks ofdealing with bankrupt airlines, and other airline industry uncertainties. The prospect of increased debt (or property tax levies), to fund capital improvements at MSP was another worry.

Greenwald said that MAC could afford aid to the airlines at MSP without losing its AA- bond ratings, and should do so because NWA wants to keep its main hub here.

Now in bankruptcy, NWA has been cutting costs drastically, partly by reducing service at MSP. NWA has sharply reduced labor here and contracted for airliner maintenance overseas. In these and other ways, Minnesota already lost much of the economic value of a major hub and airline base.

There are no new, low-cost airlines for tourists or family travel. SMAAC doubts that lower landing fees would be sufficient to attract them. Domestic fares remain 30 to 40% higher here based on effective miles traveled.

The new runway did not relieve congestion, but increased it. SMAAC asked for a local review ground safety/emergency procedures, as a supplement to the National Transportation Safety Board investigation of the May 2005 collision at MSP in June 2005 The NTSB report is still incomplete. As we said, how will the financial picture change if there were a serious accident at MSP?


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