TAA Board Approves Budget, Enhanced Air Service Incentive Program, Airport Use Agreement Extension
Tucson, Ariz. (Sept. 17, 2013)- The Tucson Airport Authority (TAA) Board of Directors today approved a $59.4 million operating and capital budget for Fiscal Year (FY) 2014, which begins Oct. 1, 2013. The Board also approved an enhanced Air Service Incentive Program to encourage new non-stop flight destinations from Tucson International Airport (TIA), as well as a three-year extension of the Airport Use Agreement with the airlines operating at TIA.
The FY 2014 budget of $59.4 million represents a decrease of $9 million in comparison to FY 2013, due primarily to a reduced Capital Improvement Program, which fluctuates each year based on needs and availability of grant funding.
Operating expenses are budgeted to decrease by .5%, after declining nearly 2% in the previous year.
"In view of persistently high jet fuel costs and subdued travel demand related to economic conditions and higher airfares, airlines continue to reduce flights at small and medium-sized airports throughout the country," said TAA President and CEO Bonnie Allin. "This budget reflects the necessary focus on cost controls in a challenging revenue environment, balanced with the need to ensure high levels of safety, security and customer service."
The budget also includes a reduction in the airline landing fee rate, from $1.31 to $1.21 per thousand pounds of landed weight.
"Keeping airline costs down encourages the lowest ticket prices possible for our customers and shows the airlines that Tucson International Airport is a good place for them to do business" Allin said.
The FY2014 Capital Improvement Program totals $28.1 million and includes a number of important projects at both TIA and Ryan Airfield that will also support local jobs and economic development efforts. Of this total, $26.5 million is expected to be funded through federal and state grants.
Like the previous air service incentive program implemented in 2011, TAA's new incentive program focuses on attracting service to new domestic and international non-stop destinations. Incentives vary depending on the type of new service proposed; Domestic Short Haul, Domestic Long Haul and International. Landing and other fees would be waived and TAA would provide marketing support for up to one year. Fee waivers and marketing support have been increased in the new program and qualifying new destinations have been greatly expanded.
"With this enhanced program, TAA looks to build upon the success of our first program, which played a key role in attracting Alaska Airlines' new nonstop route to Portland beginning November 1, 2013" said Ms. Allin. "This program mitigates risk for airlines on new routes, which has become much more important in the last several years as airlines evaluate more thoroughly than ever where to invest their limited resources."
The Airport Use Agreement between TAA and its signatory airlines establishes the terms and conditions under which the airlines operate at TIA, including the methods for calculating rates and charges. The three-year extension to the existing agreement will run through Sept. 30, 2016 and contains options for two additional one-year extension periods.