Airport reversing revenue sources

Officials at Louis Armstrong International Airport are predicting a substantial revenue increase in 2013 due to the airport’s increased focus on bulking up its non-aviation revenue.

The New Orleans Aviation Board’s finance committee was presented the airport’s 2013 budget last week, and it predicts nearly $74.4 million in income, according to Chief Financial Officer Ray Anderson. In addition, Anderson told the board that with expenses expected to stay roughly flat, the airport could more than double its income, or profit, compared with what the facility cleared in 2009.

That growth is completely attributed to an expected $5.5 million increase in the airport’s non-aviation revenue.

Airport revenue is broken down into two categories: Aviation revenue and non-aviation revenue. Aviation revenue includes landing fees, airline rent and apron fees, while non-aviation revenue everything else, including parking revenue, concessions, advertising and rental car fees.

Anderson told the committee that for years, Armstrong airport has been too dependent on aviation revenue. The national goal is that about 60 to 70 percent of revenue should come from non-aviation sources, while 30 to 40 percent comes from aviation sources, he said. In New Orleans, the ratio is the opposite. Anderson said new Director of Aviation Iftikhar Ahmad is working to reverse that trend. The airport has seen substantial increases in food and beverage revenue, news and gifts concessions and ground transportation revenue since 2009.

“We’re working diligently to change that equation,” Anderson said. “The management team is turning its focus to non-aviation revenues.”

Non-aviation revenue is crucial for airports because as fuel prices have continued to climb, airlines have balked at paying higher fees. In addition, smaller airports are at danger of having airlines leave for greener pastures. Airports around the country have turned to creative revenue sources like casinos, farming and even mining.

Anderson told the committee that Armstrong is taking a more traditional approach and is planning to open a new parking lot that will operate solely using credit cards. The goal is to attract those business travelers who prefer not having to deal with a cashier, Ahmad said.

“The business community loves it; they don’t like to interact with people,” he said.

He reassured committee members that the new lot wouldn’t affect business at the existing airport parking lots because the facility expects to see an 8 percent increase in overall cars parked in 2013.

“In terms of the pie that’s being distributed, the pie is getting bigger.”

Ahmad said the airport also is attracting new businesses, like Dunkin Donuts, and officials are working to increase efficiency. One of those improvements was formalizing the contract process, which for years included handshake deals for contracts worth millions of dollars. Another change was eliminating the vast majority of take-home vehicles for employees and changing insurance coverage on the airport’s remaining fleet. Ahmad has already reduced airport expenses by about $6 million since he took over in 2009.

While Ahmad acknowledged that the airport still has plenty of improvements to make, he said aviation board members should ask themselves if the facility appears headed in the right direction.

“Our opinion is that it’s many times better that it was in 2009,” he said.

Ti Martin, the chairwoman of the finance committee, said it’s obvious that the Ahmad has made some innovative changes, and she said the proof is in the expected income growth.

“To go from $5 million to $13 million is extraordinary. It’s amazing,” she said.