“Spartan” operating and capital improvements budgets for 2013 were approved Tuesday afternoon by Lehigh-Northampton Airport Authority, which faces declining business at its Lehigh Valley International Airport and multi-million-dollar legal settlement.
Eight airport employees already have been informed they will be losing their jobs on Jan. 2 because of impending budget cuts.
LVIA is reducing 12 of its 106 full-time positions, said Charles Everett, the airport’s executive director. But he said other jobs have been found for four people, so eight will be out of work in the new year.
So far this year, passenger traffic at LVIA is down more than 15 percent compared to this time in 2011. “That equates to an anticipated revenue shortfall of $1.5 million,” said Everett. “As a result of that, we are imposing austerity measures.”
He said the airport will be eliminating its valet parking service and shuttle service to the economy parking lot. Its travel agency also is being eliminated, its noise monitoring system is being deactivated, its legal budget is being cut by $50,000 and it no longer will have a state lobbyist or a contracted certified wildlife biologist.
Everett said Direct Air ceased operations at LVIA in March and Air Tran and Air Canada did so in August. He said United Airlines is ending flights to Washington, D.C., in 2013 and Frontier is ending its service to Orlando.
Everett explained that the people who have been working ticket counters, loading baggage and doing other work for low-cost carriers are LVIA employees, so those airlines don’t have to base their own people here. Fewer lower-cost carriers serving the airport means less work, so seven positions are being eliminated.
Also being eliminated are a customer service position, an operations manager, a construction manager, an administrative assistant and a coordinator for the airport’s travel agency, he said.
Everett said many other smaller airports are facing similar service cuts. He said 61 of the 457 airports across the United States have lost 50 percent or more of their air service in the last five years.
“Most airports our size are really getting hammered with airlines pulling out,” said board member Frank Kovacs during the meeting. “It’s industry wide. All these markets are good markets but they’re still pulling planes out.”
The airport manager said passenger service at LVIA is projected to be down by 20 percent by the end of 2012, compared to 2011. He said by the end of October, the airport had 612,000 passengers. At the end of October 2011, it had 730,000.
Everett said the 2013 operating budget projects $19.6 million in revenues and $12 million in expenses. That’s smaller than the 2012 budget, which projected $21.1 million in revenues and $13 million in expenses.
“It is a lean, Spartan budget,” said board member Ed Pawlowski, who is Allentown’s mayor and chairs the authority’s business & finance committee. “There is not much fluff in this budget.”
Board member Dean Browning noted the authority is only projecting a net income of $99,000 next year. Browning said achieving the projected revenue numbers in the 2013 budget will be “a huge stretch.”
Board member Robert Buesing said he understands losing Frontier Airlines will cost the airport about $150,000 in revenue in 2013 and questioned why that lost income has not been factored into next year’s budget.
“They pull out at the end of April and the loss of revenue is about $132,000,” said Everett.
Buesing said if losing Frontier will cost $132,000 and airport anticipates only $99,000 in income for the year, “the budget isn’t balanced.”
Everett said the airport’s management has been in conversations with another airline to replace Frontier, which flies to Orlando, and he is optimistic that will happen immediately after Frontier stops serving LVIA in April. He said that unidentified airline has not yet given LVIA a definite commitment because “they still haven’t confirmed aircraft and crew.”
Pawlowski said if that doesn’t materialize the authority will have to reopen the budget next year.
Everett said the airport also is looking at other growth opportunities.
“We need to come up with a real strategy here,” said Pawlowski. He warned the airport will drive itself out of the marketplace if it just keeps raising per passenger fees every year.
“We’ve got to reinvent ourselves to the best of our ability and find income,” said board chairman Anthony Iannelli. “We’re not looking for reasons to fail. We’re looking for reasons to success.”
Pawlowski, who also chairs the board’s capital planning committee, introduced the 2013 capital improvements budget for board approval
That budget totals $1,066,000. “We kept is very Spartan,” said Pawlowski.
He explained many needed capital improvements had to be eliminated for 2013 because of fiscal constraints, but warned those improvements are critical. He said the authority faces more than $50 million in potential capital costs over the next five years, but the authority keeps deferring them year after year. “We can’t keep deferring them forever.” He said several of those deferred items have to be addressed in the very near future.
Authority treasurer Michael Dowd reported that Queen City Airport and Braden Airpark continue to operate in the black for the authority.
But Dowd said current income from overall operations is below budget projections by $721,000. “The numbers continue in the same trend we’ve seen month-to-month for the past several months.”
Also during the meeting, Larry Sheridan was applauded for four years of service on the authority board. His term as an appointee from Northampton County is ending. Sheridan also is a former member of LVIA’s management team.