MANATEE -- Sarasota-Bradenton International Airport must find ways to increase revenue in its upcoming budget to offset the loss of AirTran last year and reconfigured lease space.
Potential revenue increases include a modest bump for parking in SRQ's short-term lot and increased rental and landing fees for airlines.
The airport expects 53,400 fewer passengers next fiscal year due to AirTran's departure coupled with an $892,779 drop in revenue for terminal space rentals due to a reworked space contract.
The Sarasota-Manatee Airport Authority is proposing a mixture of ways to make up for the decreased revenue in its $21.6 million fiscal 2014 budget.
This is the airport's first year without revenue from AirTran, which left in August 2012. The airline continued to pay rental fees the remainder of the fiscal year, said Frederick "Rick" Piccolo, president and chief executive officer of SRQ airport
Overall, revenues are expected to decrease by $798,551, or 4.4 percent, according to the proposed budget prepared by Piccolo.
"We continue to have the lowest cost of our major competing airports," Piccolo said.
Airline rental rates will increase 5.1 percent, or up $3.43 per square foot, as total rented space decreased 18 percent for a total of $70.55 per square foot. In these rates, airlines pay for gate usage, ticket counters and common areas. The decrease in available rental space was caused by a change in how space is calculated in an agreement with the airlines, Piccolo said.
"Airline revenue decreasing here is a good thing because we're decreasing our costs to the airline," Piccolo said. Airport costs make up about 5 percent of operating costs for airlines, he said.
Landing fees will increase from 69 cents to 89 cents per 1,000 pounds, which remains the cheapest landing fees of nearby major airports. For comparison, Southwest Florida International in Fort Myers will charge $2.69 in fiscal 2014 and Tampa International will charge $1.512.
The airport is expected to receive a 25.8 percent bump in landing fee revenue from signatory airlines and a 33.7 percent bump for non-signatory airlines, in part due to United announcing Monday it's adding more holiday flights to Chicago, Piccolo said. The added flights might result in more flights added in the spring, or perhaps a new destination.
While the airport is making progress adding flights, it has a 12.92 percent reduction in total passengers through July compared with the same period in 2012, according to a new airport activity report. For July alone, the airport saw a 9.3 percent reduction in passengers.
"We hope to get it into the single digits," Piccolo said.
The maximum daily rate for the short-term parking lot will increase $1 to $14, putting it on par with the St. Petersburg-Clearwater International Airport, but still remaining the cheapest in the region. Punta Gorda Airport has the most expensive short-term maximum rate at $24.
SRQ anticipates parking revenue will decrease 10 percent. Long-term parking costs will be untouched.
The airport also reduced full-time workers and other operating expenses to help offset the losses. The airport is adding more part-time help, but it will keep strictly to 29 hours a week to avoid paying health care, Piccolo said. A new federal mandate will require employers to offer health care to employees working 30 hours or more.
The upcoming fiscal year also presents a new opportunity and challenge for the airport. The mortgage on the terminal will be paid off in August 2014, but airline agreements will also expire in 2014.
United's agreement is set to expire Sept. 30 because the airline did not extend the agreement when it took over Continental's contract, Piccolo said. United has not announced whether it will sign a new agreement or operate as an unsigned airline.
Airline agreements provide a discount to airlines that guarantee service through a number of years, Piccolo said. A carrier can remain unsigned, but fees are higher, he said. The downside to an unsigned carrier is the airport cannot continue to collect rent the carrier was obligated to pay if it leaves, he added.
The airport still can recapture lost passengers from AirTran if it can find another reliable carrier with nonstop service to key hubs, airline industry analyst Michael Boyd of Boyd Group International has said. Overall, the airport has better access now because the airlines are going to destinations more people connect with such as Chicago and New York.
Boyd's study showed the 360,000-plus passengers lost from AirTran did not go to Tampa for nonstop flights at the destinations SRQ previously served in Baltimore, Indianapolis and Milwaukee. People either drove, stopped flying or opted for another destination, he said.
The airport authority voted Monday to set a public hearing for the budget at its next meeting, 1 p.m. Sept. 16 at the Dan P. McClure Auditorium, 5900 Airport Auditorium Lane.
Authority buys building
In other business, the authority authorized the purchase of a building at 8371 N. Tamiami Trail that houses Phillips Plumbing.
The purchase is part of the airport plan to assemble six properties fronting Tamiami Trail for commercial development. The airport has no plans to redevelop the properties, but wants to have a revenue stream for rent and hold the land for businesses interested in access to the airfield.
The authority will pay $750,000 for the property, which was appraised by the Sarasota County Property Appraiser's Office at $390,000.
The tenants will pay $2,200 monthly rent through Dec. 31, 2017, which will not cover the additional cost of the property, Piccolo said.
The airport paid a premium because it was one of the final properties needed, he added.
So far, the airport has stakes in five of the six parcels. The airport holds rights of first refusal if the owners of two of the properties decide to sell, Piccolo said.
The properties will become more attractive if the Florida Department of Transportation approves a traffic light along its properties to serve the entrance at University of South Florida, Sarasota-Manatee, Piccolo said, which expects to expand to build dorms for its four-year programs.
But that area doesn't meet traffic or accident thresholds for FDOT to approve a light yet, said Jack Rynerson, airport authority member who also serves on the Sarasota/Manatee Metropolitan Planning Organization.
Charles Schelle, business reporter, can be reached at 941-745-7095. Follow him on Twitter @ImYourChuck.