The Dane County Regional Airport plans to cut landing and parking fees next year in an effort to be more competitive and attract more passengers.

The cuts, which at first glance would appear to cost the airport nearly $1.3 million in revenue, are part of the airport's 2009 proposed budget, which requires approval by the Dane County Board and the county executive. The county budget usually is enacted by mid-
November.

The Madison airport, which expects to collect about $2.5 million in landing fees this year, is one of several around the nation to propose landing-fee reductions. Lower landing fees would reduce the Madison airport's revenue by about $480,000.

"It's a one-time recognition of the economic state of affairs in our industry," said airport director Brad Livingston. "We have long-term relationships with the carriers."

The airport's proposed budget also includes a $1-per-day cut in all airport parking fees. The cut, which is designed to attract more passengers, would cost about $786,600 next year.

 
No taxpayer money will offset the lost revenue, said Airport Commission Chairman Dennis O'Loughlin. The airport hasn't been funded by tax money for decades, he said, and the shortfall will be made up from airport reserves and higher revenue in other areas.

Trying to compete

O'Loughlin said he hopes the landing-fee reduction will help persuade the airlines to decrease fares. Airfares factor into passengers' decisions on which airport to use, and the Madison airport competes with those in Milwaukee and Chicago for customers from this area.
The landing-fee decrease could enhance the airport's status with the airlines, he said.

"If airlines are thinking about pulling out or downsizing seats, Madison has stepped up to the plate," he said. "It will show the airlines we are sensitive to their issues, we want them to be a player in our community and we're doing everything we can to help them through this crisis."

Even with the parking rate cut, the airport expects to collect about $8.2 million in parking revenue next year, up from $7.2 million in 2008, due to higher stall rent for rental-car companies and because more passengers are expected to park in a newly constructed ramp instead of using lower-cost surface parking. Parking in the existing ramp currently is $10 a day, surface parking is $8 and remote economy lot parking is $6.

The new 500,000-square-foot, three-level ramp, expected to be finished in November, will add 1,240 parking spaces and will be next to the existing 1,600-space ramp. The $30 million project will be funded by airport revenue over 10 years.

The airport also expects to receive about $6.5 million next year, up from $6.4 million in 2008, from terminal rents and commissions for shops, restaurants, airline ticket counters and rental-car booths.

Landing fees are assessed to commercial aircraft based on weight. For regularly scheduled airlines that usually sign leases, the airport charges $2.05 per 1,000 pounds and the proposal calls for reducing it to $1.84. For charter flights that often don't have leases, the airport currently charges $2.56 per 1,000 pounds; that would go down to $2.30.

Private aircraft pay a fuel surcharge instead of landing fees.

The Madison airport is the only one of the Wisconsin's eight commercial airports planning a landing-fee reduction. The Outagamie County Airport outside Appleton, which has the lowest landing fees in the state, has kept them low by applying other revenue to offset them, said airport director Marty Lenss.

The Rhinelander-Oneida County Airport raised landing fees by 5 percent this year and plans to increase parking rates by $1, to $6 a day, in 2009, said director Joseph Brauer.

Cutting flights

Airlines made deep cuts in seat capacity at many airports this fall. The Madison airport lost about 11 percent of its seat capacity, not as bad as a 15.2 percent cut that was forecast three months ago.

"These (landing-fee cuts) are like tie-breakers for the airlines," said Ron McNeill, a former airline executive and now an industry consultant with Mead & Hunt of Madison. "I don't think they're going to rush in and add a lot of service. But airports willing to share costs are looked upon favorably."

The reduction in available seats has been a factor in declining passenger numbers here. Through the first eight months of 2008, the number of departing passengers was down 6.4 percent from the previous year, while arrivals were down 6.6 percent.

People returning home from the recent Madison's World Dairy Expo or the Wisconsin-Ohio State football game boosted the number of passengers to 2,957 on Oct. 5 and 3,109 on Oct. 6, higher than the usual daily average of 2,300.

Northwest Airlines, the market leader here, sent a letter to airport officials thanking them for the proposal to lower landing fees, said airline spokeswoman Michelle Aguayo-Shannon.

"Obviously it helps in our budget," she said. "It's not going to change our relationship with the airport. This is a one-time fee reduction."

Landing fees aren't the only option to reduce costs for airlines, said airport spokeswoman Sharyn Wisniewski.
"An airport may share certain revenues with the airlines or it may make other budget cuts in airport operations to hold down rates charged to the airlines," she said. "Some increase nonairline revenues, defer capital projects or reduce terminal rentals."

Fees important

Tom Parsons of BestFares.com said that while cutting landing fees may not lead to lower fares, they are important to the airlines.

When Denver International Airport hiked landing fees to help pay for airport improvements, Southwest Airlines pulled out, although the airline since has returned, Parsons said.

"When you have lower landing fees, it does weigh into the decision," he said. "It almost becomes like a loss leader in a sense and helps your city."

Among other airports that have cut landing fees are Pittsburgh, which has been hit hard by capacity cuts, as well as the leisure destinations of Miami and Myrtle Beach, S.C.

Pittsburgh International Airport cut landing fees in March from $3.18 per 1,000 pounds to $2.49 after raising them in 2007. Miami International Airport recently announced a cut from $1.94 to $1.18. Myrtle Beach International Airport slashed landing fees on Sept. 1 from $1.97 to 50 cents.

Myrtle Beach officials hope to attract service to more East Coast cities, said Lisa Bourcier, Horry County public information officer. Like the Madison airport, the Myrtle Beach airport is operated by the county.

"Our main concern for doing this was to reward the airlines that currently are giving us great service and cut them a break as well as getting new service," Bourcier said.

LANDING FEES: ONE EXAMPLE

Aircraft: Embraer

ERJ 145 50-seat regional jet

Maximum gross landing weight: 42,549 pounds

Current landing fee: $87.22 ($2.05 per 1,000 pounds)

Proposed landing fee: $78.29 ($1.84 per 1,000 pounds)

Source: Dane County Regional Airport

AIR TRAFFIC

Airlines and their nonstop destinations from Dane County Regional Airport are:

Northwest: Detroit, Memphis, Minneapolis, New York LaGuardia, Washington, D.C.

United Express: Chicago O'Hare, Denver

American Eagle/American Connection: Chicago O'Hare, Dallas-Fort Worth, New York LaGuardia, St. Louis

Delta Connection: Atlanta, Cincinnati

Midwest Connect: Milwaukee

Continental Express: Cleveland, Newark

LANDING FEES AT WISCONSIN AIRPORTS

Most commercial airlines pay the lease fees, while charter flights often pay the nonlease fees. Here's how Madison's Dane County Regional Airport ranks with others around Wisconsin (price per 1,000 pounds):

Airport - City served - With lease - Nonlease

Outagamie County - Appleton - $0.97 - $1.21

Rhinelander-Oneida - Rhinelander - $1.04 - $1.04

Chippewa Valley - Eau Claire - $1.06 - $1.13

Austin Straubel - Green Bay - $1.09 - $1.34

La Crosse Municipal - La Crosse - $1.77 - $2.93

Central Wisconsin - Mosinee - $2.00 - $2.00

Dane County Regional - Madison - $2.05 - $2.56

Mitchell International - Milwaukee - $2.18 - $2.62

Source: State Journal research