Texarkana Regional Airport is expecting a budget deficit while Texarkana, Arkansas is asking to reduce its portion of expenses (i.e. cost share request).
Below, we have Mr. Steve Luebbert, Texarkana Airport Director, discussing the budget issues that the Airport is facing now.
Small regional airports’ cannot breakeven financially until they reach approximately 250,000 enplanements (passengers traveling out bound) per year. Shreveport is enplaning about 258,000.(update – According to the Shreveport Airport Authority in 2014 it was 320,163) number This airport is enplaning about 38,000 per year. The airlines may be making money, but that does not carry over to the airport. Like the military which cost billions without making a dime for the taxpayer, the payoff is a “service.” The military provides security. Likewise, the small airport provides a service to its community … access to the national air transportation system. Hence, to supplement our revenue, the owning entities, Texarkana, TX and Texarkana, AR must cost-share the deficit. The cost-share ratio is based on population and codified in the city statutes.
Currently, the Arkansas-side covers 45% of the deficit and the Texas-side covers 55%. Texarkana, AR is seeing its alcohol sales tax revenue drying up as the Texas-side has gone wet. For the first time in its history, the City of Texarkana, AR is asking the airport to reduce its cost-share request. With the loss of federal grants and business at Red River Army Depot, the airport’s revenue has decreased while expenses have increased. Perfect storm!
The airport has been hovering on the edge of financial extinction for years. There is just enough passenger traffic here to support one airline. American is making enough money to stay and the fares are low enough that we are actually attracting Shreveport business. So the airline is healthy. But not the airport. The cost to operate the airport has far out stripped its revenue.
The Arkansas-side would like us to reduce our cost-share request. They did not give us a specific target. The example I gave the Airport Board involved a $17,116 reduction to the Arkansas-side request. The Texas-side is on a fiscal year cycle and they approved our cost-share request last September. If I cut $17,116 for Arkansas, I must rebate approximately $20,920 to Texas. This comes at a time when I’m estimating a $47,000 loss in revenue 2015-2016 during a runway reconstruction project. To give the Arkansas-side $17,116 and rebate funds to the Texas-side, I have had to lay off one full time employee and one part-time when I am already on the FAA watch list for being under staffed. Adequate staffing is essential to meeting FAA standards. A regional Texas airport was recently fined $44,000 for not meeting FAA standards. If we go down this “cut-drill” path, the FAA could fine Texarkana Regional Airport or pull our license to operate a commercial airport. So long airline!
The $17K is a small cut that will have a disproportionately large impact. If we lose the airline, we will lose a significant revenue stream along with it (parking, rental cars, landing fees, fuel sales, etc.). To keep the airport eligible to bring in another carrier the cost to the cities would exceed $1M per year. If the cities choose to allow the airport to devolve to a general aviation airfield, it will constitute a default on federal grant assurances that could mean paying back millions of federal dollars that have been invested at the airport to meet commercial standards.
The airport is essential to Red River Army Depot, the timber industry, and aero medivac services. If we are going to attract new business to the area, a commercial airport is an important part of the “enticement package.”
I will meet with the two Cities in an effort to raise the airport’s priority. If after understanding the impact of underfunding the airport, the Cities hold to the current funding level, than the loss of the airport will at least be a conscious decision. Asking the airport to rebate the cost-share subsidy is akin to “asking a patient on life-support to donate blood.”
The financial situation has worsened due to a preferred option to reconstruct the primary runway now not being viable. The only alternative will cost the airport additional revenue in the 2015-2017 timeframe.