Airlines balk at cost of Sacramento airport expansion plan
By Tony Bizjak -
tbizjak@sacbee.com
Last Updated 7:57 am PDT Monday, April 28, 2008
Story appeared in METRO section, Page B1
With a major expansion at Sacramento International Airport mere months away, local officials are pitted against angry airline executives in a debate over costs.
Come June, the county will break ground for one of the biggest projects ever seen here. The Terminal B duplex and the old airport hotel will be replaced with a four-story, glass-and-steel terminal, connected by a people-mover tram to a 19-gate concourse building.
The county also plans to build a hotel tower and a second parking garage, similar to the one next to Terminal A.
Total cost: $1.27 billion.
That price tag has been controversial from the get-go.
Airlines, already stressed by high fuel prices and other financial woes, complain that airport officials are gouging them by designing an overly expensive terminal and ordering them to pay the biggest part of the bill – probably about half.
"You have to be financially prudent and have some sense of control over how much you can afford in Sacramento," said Southwest Airlines executive Greg Gillis, from his Dallas office.
U.S. Airways officials agree. Sacramento doesn't, for instance, need a costly tram and separate concourse, they say.
In a letter, U.S. Airways officials call Sacramento's timing "disconcerting." It is about to jack up airline fees while high fuel prices and the bankruptcy bugaboo hang over the industry.
U.S. Airways and Southwest officials say Sacramento fliers may end up taking the hit, either with higher fares or fewer flights.
Southwest's Gillis said his company believes the airport wants to hold too much money – $18 million by his counting – in reserve accounts. He argues that the airport, a nonprofit, should not be collecting money from the airlines without a specific intention to spend it.
"The magnitude of these reserve funds (for) a brand new facility … why?" he asks.
The airport's response to the airlines: Deal with it.
Sacramento airport executive Hardy Acree says the county is building the size airport it needs, and the airlines can afford it.
He said Southwest, the big carrier here, has by his accounting better profit margins in Sacramento than in all but three other airports it serves.
Next month, Acree will ask his bosses, the county Board of Supervisors, to OK a substantial increase in the fees that airlines pay to use Sacramento's airport.
He contends that the price is fair, in line with what many airports charge, and that airport fees in general represent only a small slice of air carriers' overall expenses, anyway.
"They probably (spend) more on peanuts and sodas than the costs airports charge," he said.
The airport has the leverage in the dispute. Federal rules allow airport officials to impose fees, as long as they are reasonable.
Behind the money fight is a philosophical split.
Southwest, in particular, sees itself as a low-fares flier and likes low-cost airports.
For years at cozy little Sacramento, airlines paid lower costs in exchange for agreeing to be a financial backstop if the airport had budget trouble.
Now, airport head Acree says, it's time for Sacramento to grow up and compete with Bay Area airports for big Northern California business.
For that, he says, airlines must pay a price.
http://www.sacbee.com/749/story/894545.html