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HomeMy WebLinkAbout2002-10-15 Council Packet - Work SessionKenai City Council Work Se~~ion With Kenai Airport Commission ERA Aviation October 15, 2002 INFORMATION FOR OCTOBER 15, 2002 KENAI CITY COUNCIL JOINT WORK SESSION WITH KENAI AIRPORT COMMISSION ERA AVIATION, INC. 7:00 P.M. KENAI CITY COUNCIL CHAMBERS Era Aviation, Inc. 6160 Carl Bra0v Dr~ve . Anchorage. Alaska 99502 September 20, 2002 Mayor John J. Williams Office of The City Clerk 210 Fidalgo Ave. Ste 200 Kenai, AK 99611 Dear Mayor Williams, In the ongoing discussion regarding airfares in the Kenai market, I would offer the following thoughts: 1) It is my understanding that Senator Murkowski and Senator Kerry are t .rying to gather momentum to eliminate the $3.00/ticket segment fee for "isolated" airports. Perhaps you might exercise some of your political influence towards exempting Kenai from this fee. 2) With respect to spending airport funds on a market study: I find it remarkable that there has been no mention from the Airport Commission or Airport Manager regarding AIR-21 and the various programs therein, specifically, the Small Community Air Service Grants that were widely available last year. Six Alaska communities shared $240,000 in grants in the 2002 pilot program. Where was Kenai? 3) And finally, we found the attached information on Kenai and Soldoma economic trends interesting. Era's passenger traffic dropped along with Kenai's quarterly and YTD Gross Sales, as well as the quarterly Construction Permit Values. I look forward to sitting down with the Council next month for further discussion. Sr. Vice President CC' Vice Mayor Swamer [ Council Member Bookey Council Member Bannock Council Member Moore Council Member Jackman Council Member Porter Enclosure 907-248-4422 fax 907-266-838- Kenai Economic Trends As Reported in the Kenai Peninsula Borough Quarterly Report of Economic Indicators For Fiscal Quarter Ending June 30, 2002 Gross Sales YTD 6/30 Gross Sales Construction 2"a Quarter Permit Values Construction YTD 6/30 Permit Values -11% -7.3% -40% +0.5% Soldotna Economic Trends As Reported in the Kenai Peninsula Borough Quarterly Report of Economic Indicators For Fiscal Quarter Ending June 30, 2002 Gross Sales YTD 6/30 Gross Sales Construction 2aa Quarter Permit Values Construction YTD 6/30 Permit Values +7.5% +5.7% +116% +31% Kenai Passenger Traffic Comparison YTD through 6/30/02 Passen_qers Prior Year Chan.qe January 2002 15,016 15,801 -5% February 2002 13,690 14,106 -3% March 2002 14,254 16,255 -12% April 2002 13,636 14,149 -4% May 2002 13,867 16,359 -15% June 2002 14~000 18~699 -25% Total YTD i 84,463 95,369 -11% ., Airlines lobby for more public aid The {atest from WALL STREET Airlines lnhhy nublic aid s[~et~ losses mount as traffic slides and fue Tc<9~[c4ic~ ~ By Manha Brmmigan I(¢~J~LCQ,tll, ~ THE WALL STREET JOURNAL Sept. 23 The nation's big airlines are preparing to ask the federal ~overnment for a new round of emergency financial help, as the industry deteriorates further amid weak passenger traffic and rising fuel costs. C' t Dex.-"-'; z Fir,~ _a I_oc~l Bu.;iness o, E-MAIL THIS .~"~ COMPLETE STORY ADVERTISING ON MSNBC Page 1 of 6 Advertisement Hewlett Packard LaserJet 41.00 Printer $~.,099.g9 Office Depot More Printers RESOUIICE GUIDE · Shop at B&N.com · Auctions at uBid · Yellow Pages · Personals Channel · Professional Tips · Shupping SPONSORS ~.:J ':~ L"..::i ittllL.Del- (-'~ NetBank. I~ E~ 6ER FDIC NO. 1 IN A SERIES Learn more about ~ The WaLl Street Journal Online. THE SPRING and summer travel seasons were a big disappointment for major carriers. Early signs that revenue was gradually recovenng in the months after last September's terrorist attacks stalled in March, as the fragile economy and airport-security hassies Airlines lobby for more public aid Advertisement ~ AT&TV~qretess Playing now: · Wal-Mart expects lower sales · Airlines lobby for more financial aid · Did Tyco board know about pay? deterred passengers. August revenue was the latest in a series of' let- downs' Unit revenue, a key measure of' ho,,',' much monev a career fetches per seat-mile flown, was down 17.2% from 2000. the last decent period for the industo', and down 6.6% from last year. when airlines were already in a funk. This month's traffic, hurt by nervousness surrounding the one-year anniversary of the attacks, is shaping up to be awful. Most of the stocks of' the big carriers have tumbled to levels far below the lows set after last year's terrorist attacks. Wall Street analysts in recent days widened their estimated loss for the industry, and many now predict that the 2002 outcome will eclipse last year's record $7.7 billion loss. Last year's figure includes a 25 billion cash infusion from the federal government to offse: losses stemming from shutdown of the nation's air space following Sept. 11. "Revenue is not coming back," says Leo F. Mullin. chairman and chief executive officer of Delta Air_Lines. "It's not a pretty picture." -"'-D ["-'""-Unlike the earlier bailout of direct cash paymen~ / airlin~ are lobbvin~g_~e government to assume more. _of the costs for ~viation security and~nsurance, and tot ~r-0vide tax relief. Such aid could run into the2~illi'0n~s o~dollars, industry executives say. ~ Industry officials, including Mr. Mullin and Donald Catty, CEO of American Airlines' parent AMR Corp., have made a round of visits to congressmen and senators in recent weeks to relate their rising concerns. The House subcommittee on aviation has scheduled a hearing for Tuesday on the airlines' financial health, and executives are expected to paint the gloomiest picture ever for the industry. "It's a dire situation," says Joe Leonard. chief executive of low-fare carrier AirTran Airways, who is scheduled to testif.v "I've never seen anything like it." The airline industry, is in some respects the architect of its own plight. Carriers have repeatedly failed to rein in labor demands for higher wages. The industry's confusing pricing models have sown resentment among many customers. Moreover. the Intemet is badly undermining the industry's price structure, letting travelers shop for bargain fares more efficiently. ~Man~, travelers, nervous about the weak economy I and wear~, of the ri~ing annovanCe-'s of flvin=, have-~t' pared~ba~k on trips, es-pecialiy when the~, c~n drive or_/ ~es such as teleconferencing. Companies-/ are still, clamping down On spending, encouraging / gmplo,~ ees to limit travel and to find cheap fares when \ ~ev must flv. Fuel orices have also climbed, adding t~ the careers' cost~. Airline executives ~:am that if w~-r breaks out with Iraq. oil prices could spike httv ://www.msnbc.corrunews/811709.asp .Page 2 ,of 6 O9/23/2O02 · &irlines lobby for more public aid ) hi_gher, and travel could plunge. It is early to gauge how Con~ess will respond to ) the latest pleas for help, especially since last year's relief led to complaints from other industries that airlines were getting special treatment. Con~ess's decision to create a $1 O-billion loan-guarantee fund has been a lightning rod for criticism. '"'""-Some expert~ believe the i~dustry .qhould_ restructure at the hands of a free market, with failures ~erving to reduce a glut of capacity and corporate rev~arnpings bringing cheaper, more flexible labor contracts. If the government News from the WSJ balks at providing additional aid, more Wall Street Journal stories on MSNBC careers are likely to · Click here to bookmark fold or end up filing for Chapter 11 bankruptcy-court protection, as US Airways Group Inc. did recently. Such a filing allows a company to continue operating, as it attempts to reduce debt and restructure operations. Airline industry officials are pushing for assistance from Con~ess on several fronts, including help covering insurance costs. After last year's terrorist attacks, the government stepped in '.'temporarily to provide excess war-risk insurance because the commercial market dried up. That emergency coverage is set to expire next month. The Senate Commerce Committee approved a proposal last week that would extend the government's war-risk coverage for the airline industry an additional nine months while a longer- term solution is hammered out. The committee added the provision to a second piece of legislation, sought by aimorts, which would delay implementation of new baggage-screening requirements. Both have considerable political muscle behind them and could end up being attached to the homeland security bill pending in the Senate. Local business news Despite the government help, · News from your back yam the Air Transport and local angles nationwide Association, the industry's main lobbying group, says insurance is costing the industry more than $900 million this,..zear, compared with $20 million previously.~he airlines must buy private policies for third-party, war-risk coverage of up to $50 million_ liability. Airlines pay the government $7.50 per airplane departure for coverage in excess of thai amount. Under terms of the g~)vemme~overage.~_J l'~t-.h,~.//,~,~r,,~r~,~, .,,.~,-,,.-,l-, .......... /0 I I "'/~ Paze 3 of 6 Airlines lobbv for more ~ublic aid "-I_ndustrx, officials also want the ~ovemment to eli~5"~ ~2.50 tax per passenger-~cket segmen~_~ that was meant to help. fund ai. rport security ~'esponsibilities turned over to the federal government a..~er the "Sept. 11 attacks. But airlines say tic.et price-s are so weak that thev can't pass alon~ the tax to passengers and musi absorb i~.}I'he ticket tax is ~ t-6 rais---~ $1.7 billio"----------tr~is year. The Air Transport Association also is pushing the government to suspend the tax airlines pay on fuel. especially if there is a war with Iraq. Mr. Mullin, the Delta CEO, says the industry isn't seeking a bailout for business-related problems. But he says aviation security should be regarded as a national security item and should be paid by the government. Although the government took over airport screening sen, ices after the terrorist attacks, "There are still a lot of security costs assumed by the airlines," Mr. Mullin says. Among these are airport-ramp security, checkpoint document screemng, monitonng catenng supplies and providing security equipment and training. Delta estimates that government security directives in the wake of Sept. 11 will cost the industry about $3.78 billion this year. Included in this price are restrictions on carr3.'ing freight and mail. and the cost of providing first-class seats to federal air .marshals, among other things. The industry is winning some support in Congress. "It would be disastrous to the economy if ~ve have the industry, fold," says Rep. John L. Mica. a Florida Repub~,an who is chairman of the aviation subcommittee~ Rep. Mica says he plans to introduce a  bill to address .qnme. hr-the industry's prot)lems, _ including help with war-risk insurance. He said lifting the fuel tax mieht make sense if the U.S. goes to war with Ira_q.~le ~ressed, however, that, "There won ~idirect bailout, period. That's not in the cards." As the airlines continue to rack up losses, they have increased borrowings against their jet fleets and tapped lines of credit to fund operations. Standard & Poor's Corp. says the industr3.' ratio of net debt to total revenue was at 125% as of June 30-even worse than the 111% in 1992, when airlines were wallowing in thei.~.r last major financial crisis. ! The fall season, a historically weak period for airt. m~, is spurring new fears. Many ~--arners na~ -~ announced nlans 1;0 ~round more jets and lay Off ~ore w~Orkers~. ~l~at incluc~s 7.000 jobs at No. 1 career Ameri~ alone. UAL C0rp.'s United Airlines has said it may follow US Airways into bankruptcy court if it can't quickly restructure itself. With other carriers in such a sorrv state, low-fare leader Southwest Airlines. which has staved http ://w~ax,.msnbc.convnews/811709.asp Page .4 of. 6 e ,cJhec' 09/23/2002 ' Airlines lobby for more public aid , marginally profitable amid the turmoil, has emerged as something of a Wall Street darling. Its market capitalization of $10.7 billion is twice as much as all the other major careers combined. Even Warren Buffett, the veteran investor xvho lost heavily on an investment in US Airways, is stumped on a solution for turning around its high-cost peers. "I really don't know what I would do," he said in an interview last week. "You cannot be the high- cost producer in a commodity business. Sometimes it's not even any good to be the low-cost producer." Copyright © 2002 Dow Jones & Company, Inc. All Rights Reserved. Page 5 of 6 TOP WSI STORIES ON MSNBC ,s'ro,¥1WorldCom seeks permanent CEO ~ Airlines lobby for more public aid ~ Lehman will likely trim staff ~ 'Wind rush' draws Texas prospectors ~ Enron examiner finds dubious sales ~ Qwest to restate $950 million ~ MSNBC Cover Paqe TOP BUSINESS NEWS ~ Stock market update ~ Leading indicators fall again ~ Did Tyco board know al)out pay? ~ Airlines lobby for more public aid (s,o,¥1 Wal-Mart expects lower sales ~ MSNBC Cover Paqe TECHNOLOGY & SCIENCE TOP STORIES ~ When porn permeates Web personals ~ Yahoo! launches broacll~and games ~ West Nile takes toll on U.S. birds ~ Weight Loss for Road Warriors ~ It's time for fall ~ MSNBC Cover Paqe r'~lSNBC READERS' TOP 10 Would you recommend this story to other readers? not atall ] - 2- 3- 4- 5- 6- 7 rligtlty YTD 6/30 Review- Gross Sales Conat..... TCPU Whole _'~ . _ Retnil- FIRE- Service Govt" Total Change Table 3.3 Kenai yTO 6/30 ,,,G,,ross Sales by Industry-. 1996-2002 - inS.. 1996 1997. 7,388,507 5,217,791' 26,652 4,448 5,775,691 4,123,193 4.832,008 14,048,721 9,934,311 10,625,,,9,74 4,509,327. 4,5.11'065 49.873,702 56,992,387 5,389,699 .. _5,188,108 5.549.531 15,557,738 1998 1999. 2000 200.1. -' . .. :.., -?:.~...::.. .. ~:..:i: i.:!::.i:)ii:.:. :::. '. 3,003,278 ..... 1,904'896 4,438.523 ..... 1,421,769 50,779- 101,890 2.847,277 1,174,244 8,294,148 6,51Z,210 6,209.612 7~68,766 3,573,411 3,421'280 4,759,225 .. 5,664,201 11,733,917 12,405,440 12.279,085 12,01..5,880 4,608,200-' 4,536,478 7,090,449 .. 10,311;~4' 74,001,436'"' 62,1111,618 63,412.564- , 4,995,772 .... .... 5,356,459 5,145,579 .... 6,0...82.~ 16,933.123 I4,527;384 15.552,159" '17,088;829 93 .223 256 .. ... 0 ] 83 3,778 2002 Chnnze Since _ ::'.::'~2001 '. .... · ~...~! ,! j ... 1,981,413 '"'- ........ 3'9.~4% 2,731,125. 132.6% . 7,942.2_~ 9.3% 4,422,538 - ..-21.~A 13,588,552 13.1% , ,~, . - 8,038,333 '. -22. ~A ................. 63,957.817 "' 17.3% 6,~02~- . . ...... 5.~A . -.:. ?. ....... 19,193.491 . 12,3% 0 NA 103.279.511 116,273,203 127,194,157 110,884,878 121,73~:720~,138335,125 128295,697 "-7 3% '12.6% 9.4% f12~8% ' "~ ''':' ' ' ' ' Kenai YTD 6/30 Gross Sales by Industry - 2000, 2001, 2002 Service FIRE Retail Whole TCPU Maria Const Min AFF $0 11'!2002 112001 'Il 2000 ', , $ 20,000,000 $ 40.000,000 $ 60.000.000 $ 80.000.000 Chart 3.5 Kenai YTD 6/30 Gross Sales 1992-2002 With Five Year Moving Average Trendline $160,000,000 $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000.000 $0 ! 992 1994 1996 1998 2000 2002 Chart 3.6 Kenai Peninsula Borough Page 65 Kenai Sales. June 2002 YTD 6/30 Permit Values ~ .Y~ 6/30 permit values during 2001 were exceptional as they nearly doubled values fi'om the prior seven years. However, 2002 YTD values exceeded that high by $40 with a total of $8,457,600 in assessed permit values. New commercial permits were the dominant factor,,.~ producing 59.8% of the value, $5,059,200, as the Kenai Youth Facility permit was issued. New residential permitting provided another 31.2%, $2,641,000 with the remaining 9% of value coming from alteration/addition permits. ~':;;' ::!:.i; ?;; RN - ' .... RA'~'.':' UN ""- .";~A~.; ;' .... TOTAj~' !..~21 1,335,000 82,0~_ 50,000 ."_..:~!6, .000.~. 1,783,000 ;1993 1,874,084 :/i62426~ji 7,565,300 ~5~(!':~'00.9,657,944 · 1995 2,213,000:176340. 284,900 =I-,211,7985' 3,886,225 1996] 2,597,600 242,900 1,289,825 -' 241,600 4,371,925 .1997. 2,800,500.374,800 1,462,000 "115.,000 4,752,300 1998l 4,093,000 56~,(300 7,000 .... 208,000 4,872,000 1999 1,573,000 309,600 75,500 304,000 2,262,100 2000[ 1,834,000 446,000 1,110,000 ' 235,900 3,62~,5.~flfl~_~ 2°°i' 3,s09,000 389,800 3,759,000 759,600(8,417,400 2002] 2,641,000 3S~,lOO s,os9200 .406,30~)8,457,600 Table 3.11 .. Kenai YTD 6/30 Percent of Pertnit Value by Type - 2002 CA 4.8% 59.8% 2hart 3.23 RN 1.2% RA 4.2% Kenai YTD 6/30 Permit Values 1992-2002 With Five Year Moving Avet'd~ Trendline $12,000,000 $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,O0O,000 $0 $8,000,000 $7,000,000 ~$6,000,000 Kenai YI'D 6/30 Permit Values by Type- 1992-2002 , ~ (23, $5,000,000 $4,000,000 I $3,000,000 ~ $2,000,o0o $1,0o0,00o $0 Chart 3.24 Chart 3.25 Kenai Peninsula Borough Page 73 Kenai Permitting, June 2002 __nnual Review- Gross Sales by Industrv .- 12_er, 199:5 1996 · Min "::' ?:"::'l 720,998 · Const... ~!i:i. 17,614,198 Manu t 3,613,715 TCPU 13,092,709 Whole '" ":"" ] 10,088,978 ' -..7,9:59,486: · -' : ' "::"..." '. -: -..-,,-..,... · ,..-.::::m:.,<.-,:.,:r:::..'- :...... · ':"'~'"' '" '."!:ii'72'7'~ ...... ::~.':'::' .... : i ...... "' ':~':':'~:?'"' ':' ':':" .... "'~'"": ' "' '"":: ...... ;..-~ .... '-'-,: '.:',,...-..:,.:, · Sold0tna Annual Gross Sales.by-Industry.-1995-2001 - in $ · ..... . 2,021,166' 16,8'/6,803 ,, , 52~.7,066 ..... 7,184254 13,630,924 13,396,265 1997 . 19982~..:. :-,:-}:::i.; 2,950,085-' ..... ~5,979 2,~9,541 16,328,836 20~95~40 3,192,979 14,308,591 1999 2000 ·. ... 9254,143 ...... 12;m8,6'i'2 306,689 "305,525 17,075,443'" !9,5,96,259 3 ¢210,218 ..... 4'324,778 17,466,708" 15,695,556 · percent:.. 8,892,156 .': !4,626,150 32,515,047 ~!!;:!i~32,627,471 Retail:.': .' .... 'i::27!"' 133,778,762-138A8i'i842 149,038,957 I5'777~3~' 166,898,488 ':'i-70~874,013 188,621,303-' "'::' ..... '" i'0.4% FIRE .. . ,.<: :i~:::5] 7,958,341 . .7,886,i4~ 7,572,317 .- ?~'.6.~,45.~. 8,486,050 ?.::~:...-9'422,!..64 8,980,040 . '~ ..... -4.7% Total Annual Change Table 6.5 2001 __Chan~e-Since _ ":~:~:k~:'( ..... 1,658,553 :" :.:~?!~'"7':!~i~1% ,, 305,091 . · -0.1% ......... 18,255,254 ' -6.8% 3,649,414 .. .'..'15.6% · . 17,725,006- 12.9% 23,654.178 "' 23,802,150.. 26,191,316 -"'2'~ji~;04~: 30,646,592 ?':5~287,651 34,704a30 '"'"::'"'7' .......... 7.5% · t 8,438 32,686 35,704 18,22.1 28,399 17,062 19,103 ... 12.0% .212,824,599 218,185,132 232,235,869. 250'793,664 277,587,777 ~86,879,091 305,48fi.8~6,60 6.5% 2.5% 6.4% 8.0% 10.7% . ·.. Soidotna Annual Gross Sales by Industry - 1999, 2000, 2001 ovt] Service Retail Whole TCPU Manu Const Mill AFF $0 i1 2001' ill 1999 , , S$0.000.000 $I00.000.000 $150,000.000 :$200.000.000 Chart 6.9 Soidotnn Annual Gross Sales by Industry- 1991-2001 $200,000,000 $180,000,000 $160,000,000 ~ AFF -- Mm - Const ~Manu = TCPU -.o---Whole ~ Retail - FIRE ----- Service Govt $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 , Chart 6.10 Kenai Peninsula Borough Page 109 Soldoma Sales, June 2002 _ YTD 6/30 Permit Values '\ 6/30 permit Values have gained each year since 1997 and 2002 was no exception as permits totaled $8,209,048, well above the 2001 YTD total of $6,282,408. New commercial projects led the way with $3,316,381 in permits for 40.4% of the total and the highest total since 1993 when the Fred Meyer complex was permitted. Commercial altemtiordaddition permits more than doubled the 2001 record high with $2.150,304 in permits. New residential permit values totaled slightly less the last year, and third highest since 1992 with a value of $2.316,142. Residential alteration/addition permitting also set a record high value of $426,221, nearly double the second highest set in 2001 at $256,199. S°idotna YTD 6/30 Permit Values by Type " 1992-2002-in $" .... .'" 1992. ] 415,000 7~,000 0 1993 255,000 189,000 10.213,000 1994il,850,000 80,900 1,929,380 1995 2,536,900 0 1,877,880 1996 !2,037,900 61,000 2,250,000 1997.2,231,205 100,900 237,500 1998 11,110,000 122,000 2,339,952 1999 1,453,674 235,361 2,723,818 CA. TOTAL 250,000 742,000 · . 168.500 10,825,500 13!,763 3,992,043 118,700 4,533,480 56,700 4,405,600 3,000 2,572,605 151,542 3,723,494 455,89.5. 4,868,748 2000 il,894,420 224,674 2,017,915 950,549~ 40.4% 2001 2,363,001 256,199 2.658.578 1,004,630~ 6,282,408 x..... 2002 !2,316,142 426,221 ~3,316,381 ~~8,209,~_.~~O~ __ Table 6.11 ~han 6.23 Soldotna YTD 6/30 Permit Values 1992-2002 With Five Year Moving Averag: lrendline $12,ooo,ooo $10,000,000 $8,000,000 $6,000,000 $4,000.000 $2,000,000 $0 Soidotna YTD 6/30 Percent of Permit Values by Type - 1992-2002 CA 26.2% RA 52% Soidotna YTD 6/30 Permit Values by Type-1992-2002 $12,000,000 $ ! 0,000,000 $8,000,000 $6.000,000 $4,000,000 $2,000.000 $0 RN 28.2% Chart 6.24 Chart 6.25 Kenai Peninsula Borough Page 115 Soidoma Permitting June 2002 10/08/02 TT. TE 11'0,3 FAX 907266838.1 ERA FBO ~002 INTRACOMPANY CORRESPONDENCE Placc: Anchora$c From: Paul Landis, Era Aviation Date: 8 October, 2002 TO' Carol Freas, Kcnai City Cl. erk Company: Era Aviation, Inc. Sub.i¢¢t: Joint Work Session To' Kenai City Council Kenai Airport Advisory Council Era Aviation has been asked by thc council 'to participate in a joint work session on October 15th, 2002, to discuss thc marketing and future development of the Kenai Municipal Airport. ~ would like to contribute the following thoughts on behalf of Era 'for discussion at the work session' About the Airline Industry .... Airline p~scnger traffic has not recovered since the events of September 11 t~,, and security and insurance related costs have skyrockctcd since the 'terrorist attack. Most markets h;~ve seen a dcclinc [n traffic since 9-11. The airline industry as a w.l.~ol¢ will likely post $8,000,000,000 in losses this yca.r. Many airlines havc rcsortcd to cutting services aboard flights and reducing flights in mas'kets to cut costs, with smaller conmaunities being especially vulnerable. About Era Aviation .... Era Aviation is a Part 121 Certificated air carrier meeting the same stringent operational, maintenance, safety m~d training standards ,as Alaska Airlines, United, Delta, and Northwest. Era has been serving the Kenai marlcet for over 19 years with safe, reliable, and quality service. Era Aviation is the largest rc~donal air carrier in the State of Alaska and is a codeshare partner of Alaska Airlines. As a codeshare partner, we, joiatly market "through h.res" providing convenient connections to and from Alaska. Airlines' destinations ,and participate in thc Alaska. Airlines Mileage Plan program. Era Aviation is a good coq)orate citizen, providing 45 jobs on the Kenai Pcnia~sula, 25 of which are directly employed at the Kenai airport. Era. Aviation supports many organizations such a.s Boys and Girls Club ol.' thc .I.<e~.~ai , . Peninsula Urtited Way, Kenai 'I~ eninsula, Kcnai .Potters Guild, Kcnai River Festival, Kcnai ' ' Convention m~d Visitors Bureau, Kenai Peninsula Tourism and Markctiug Council, Boy' Scouts, Girl Scouts, Americm Cancer Society, and. the Schrincrs t'Iospital. In 2002 year to date, over $60,000 of donations have been made in Ken'x[ alone. h't light of industry evcnts, Era Aviation has pm-sued product enhanccmcnts that add value for thc customer, such ~ electronic ticketing, web booking, the marketing of destinations -- like Kenai -- through Era. Aviation Vacations, and email and fax confirmations of reservations. About the Kenai M'arket .... Road improvements on the Sterling and Seward highways since 1995 have increased highway traltlc, on average, between 2 and 2.5% per year. Earlier check-in times and the, inconvenience due to additional security measures deter passenger travel (on Era Aviation local flights ,-md especially when connecting to downline ctu-riers). Decl. ines in air traffic e.t.~planemenrs in the K. enai mtu'kct, especially during high traffic voltmae periods such as holidays, spring break, and summer tourist season, are similar to those in many markets throughout Alaska. Frequency o£ flights [nto the K. enai airport, remain at prc-Scptetn'ber 11t}' levels, but capacity has 'been reduced. Federal tr,-msportation taxes and Federal. Segment Fees currently make up 11 °A of the Cost of a Kenai to Anchorage ticket. These taxes can go as high to 26% on a downline ticket including security fees, passenger facility charges, and other l'ccs that are beyond control of the airline. Sport fishing closures m~d restrictions, m~d subsequent media reports, affect enpl. anements at the Kenai airport. Era Aviation's position .... Era Aviation supports the econm.mc development of the City of Kenai, including the Kenai Municipal. Airport. Era Aviation 'believes that econoiuic factors, poor - ' . s¢.rv~ce, or lack of safety or reliability would drive the mm'ketplace's demand for additional air service. The .level of service provided by Era matches the cun'e~.~t marketplace demand. 'Era Aviation opposes m.~y local govermnent activity that would provide financial, i.ncentivcs, such as reduced landing fees or reduced rent, or guarantees blocks of tickets that would unfairly encourage competition, unless the sa.mc incentives m:e af~brded to incumbent can'ier(s). CITY OF KENAI "0il Capital of Alaska" 210 FIDALGO AVE., SUITE 200 KENAI, ALASKA 99611-7794 TELEPHONE: 907-283-7535 FAX: 907-283-3014 MEMORANDUM TO. FROM' Mayor and City Council Members Linda L. Snow, City Manager DATE' October 14, 2002 gEe Request for Information Attached please find information requested by Vice Mayor Swarner in response to the numbered items on a letter to Mayor Williams dated September 20th from Mr. Paul Landis, Sr. Vice President of Era Aviation, with copies to members of the City Council. nal Municipal Airport Airport Manager's Monthly Report July 11, 2002 Airport Marketing: Airport Manager has ordered a trial subscription of Airport Traffic Summary for the Kenai Airport from Sixel Consulting Group of Eugene, Oregon (letter from Sixel included under information items). The company specializes in air service development for small and medium size airports and this report is the first step in what could be a new direction for recruiting service to the Kena~ Airport. T~_ere is a _new grant program available through U:S.. Del~artment qf Transportation. aimed at improving air-~ervice to small communities (see DOT .press release under information items) where. se~ice does noteXist or t~ere are high'airfares compared with other'con~munities. 5ixel Consulting not only WOrks to fec~it air service for small airports, they submitted two successfUl grants applications under this new program to provide funds to assist in recruiting efforts. Given the recent increases in airfares and' the dramatic drop in enplanements since the last fare increase, it seems prudent to explore every possible avenue to attract competition to the Kenai market. This is a new idea and further information will be provided in future reports to Council and Commission. More Airport Marketing: The postcards were mailed in late Sune and early July. As of this writing there has been no public feedback. Airport Improvements: Construction of a new parking area at the PRISM Fire Training Building is nearing completion. Forestry Service: Airport Manager met with Forestry Deputy Director Dean Brown, Area Forester Jim Peterson, Region Forester Jim Eleazer, and Local Fire Management Officer Ric Plate to discuss progress on the Forestry lease development. Indications are that they plan to pursue funding and contracts to start pad work late this summer. ,They are very impressed with the new Airport Operations Facility and would gladly locate their operations in this facility if given the opportunity. They were encouraged to develop their own facility to the extent possible and assured of the City's desire to support their operation. Airport Fees: Airport Commission did not have a quorum at the June 13 meeting so review of fee information was postponed until the July 11 meeting. Commission comments and recommendations will be in documented in the minutes from the July meeting. Advertising: As recommended by Commission, the airport purchased a classified ad in the Anchorage paper to promote the floatplane and general aviation tie-downs. As there were no calls or response from this ad, it was suspended. It is our intent to run the ad again next spring to target potential floatplane overflow from the Anchorage market. Runway Painting: During this year's certification inspection the FAA recommended repainting of all the airport pavement markings. For the past two years, we have been painting different sections each summer. Airport Administrative Assistant Mary Bondurant has done an outstanding job negotiating a trade with State DOT where they paint all the airport surfaces if we provide the paint plus some extra paint for their use. There is a purchase order in this packet to buy $29,000 in runway paint and beads. This expenditure will provide repainting of all runways, taxiways and ramps at the airport. This is an excellent bargain and we appreciate DOT's willingness to work with us. Airport Security: During the last few years there have been periodic break-ins and vandalism occurrences on the airport and in the terminal. There is a purchase order in this packet to Guardian Security to provide an additional 625 hours of random security patrols in the terminal and on the airfield. This equates to approximately 12 additional hours per week. I have conferred with Chief I(opp and we believe that this is a fair price and will enhance the security presence significantly. Random patrols are an effective use of resources because potential violators have no way. of knowing when security will be present. · Secreta,ry Mineta Announces Grants To Improve Air Service to Small Communities :'tews :J.S. Department of T:ansporration DOT 62-02 Wednesday, June 26, 2002 Contact: Bill Mosley Tel.: (202) 366-5571 Secretary Mineta Announces Grants To Improve Air Service to SmaLl Communities U.S. Transpomtion Secretary Norman Y. Mineta today announced grants to 40 communities in 38 states under a new program to help smaller U.S. communities enhance their airline service. The grants, totaling $20 million, will help the communities address their local air service problems, such as high fo. rcs and inmfficicnt levels of service. In soliciting grant proposals, thc U.S. Department of Transportation (DOT) invited commtmitics to develop their own innovative solutions and scck federal financial assistance for their projects. Eligible projects included subsidies and financial incentives to air carriers, studies and mmkc~ programs. Thc d~ent received 179 proposals from 47 states, scckin~a a total of $142.5 million. "Thc goal of these grants is to help smaller commtmitics develop and improve their access to thc national air transportation system," Secretary Mincta said. "We will monitor these programs and usc thc results to better assist other commtmitics m thc future." Thc Small Community Air Service Development Pilot Program, authorized by thc Aviation Investment and Reform Act for thc 21st Century, allowed the department to award grants to up to 40 communities, no more than four of which could be from the same state. In considering the grant proposals, DOT gave priority, to those communities that: · have high airfarcs compared to other communities; · contribute financially to thc project from sources other than airport revenues; · have established or will establish a public/private partnership to improve their-air service; and · submitted proposals that will'-benefit a broad segment of thc public by providing greater access to thc national transpo~on system. The grants range in size from $1,557,500 to Bismarck, ND, to develop regional service linking North Dakota, South Dakota and Montana communities; to $85,010 to Abilcnc, TX, to hire a business development director to promote services at thc airport.. Grant recipients will provide a total of $14.8 million for their projects in addition to thc federal funds. Secretary Mincta also dcsisnatcd Augusta, GA, one of thc grant recipients, as an "Air Service Development Zone." As part of thc small- community program,, DOT, in coordination with other govermnent agencies, will assist Augusta in facilitating land use and economic development m thc area surrounding thc airport. Complete commullity proposals ~ the dcpnr~ent's final order are available on the Interact at http://dms.dot.gov, dookct number OST-2002- 11590. A list of recipient communities and funding totals follows. SMALL COMMU]qTY AIR SERVICE DEVELOPM~.. ~ HLOT PRO~~ GRA~ AWAImS 1. King Cove, Sand Point, Aku~ Cold Bay, False Pass, Nelson Lagoon, AK, $240,000 2. Mobile, AL, $456,137 3. Fort Smith, AR, $108,520 4. Lake Havasu City, AZ, $403,478 $. Santa Maria, CA, $217,530 6. Lamar, CO, $250,000 7. Daytona Beach, FL, $743,333 q. Augusta, GA/Aikcn, SC, $759,004 : :Mason City., IA, $600,000 t0. Halley, ID, $600,000 11. Marion, IL, $212,694 12. Fort Wayne, IN, $398,000* http://www, dot.gov/affairs/dot06202, htm 7~2/02 ne/ Municipal Airport 2002 Monthly Enplanements Era 1997-2001 Month 2002 2001 5 yr. Average Jan 7,829 8,300 -471 8,076 Feb 7,046 7,137 -91 7,350 , Mar 7,371 8,216 -845 8,247 ..... Apr 6,902 7,058 - 156 7,148 May 6,880 8,143 - 1,263 8,003 Jun 6,740 9,044 -2,304 9,582 Jul 9,979 12,093 -2,114 12,958 Aug 8,644 10,807 -2,163 11,196 ..... Sep 6,684 6,334 350 8,343 . Oct 7,582 8,356 Nov 7,345 8,004 Dec 7,494 8,067 Totals 68,075 99,553 . Kenai Municipal Airport Yearly Composite of Enplanements 1983-2000 January March ... May July September November Totals 1983 1984 1985 1986 1987 1988 1989 1990 1991 8,073 7,756 7,840 7,722 7,623 8,457 10,498 9,948 7,422 7,547 7,335 7,831 98,052 6,906 8,176 6,201 6,998 6,829 8,138 6,568 8,058 7,591 9,117 8,817 9,670 11,489 12,767 10,904 11,469 8,059 9,220 7,814 8,422 8,482 7,353 8,729 8,542 98,389 107,930 7,491 6,863 5,982 5,859 7,054 8,339 8,639 8,031 6,670 6,080 6,150 7,067 84,225 6,446 6,400 5,869 5,911 6,209 7,289 9,009 8,484 6,555 6,419 6,345 6,853 81,789 5,198 5,319 6,268 5,917 6,393 7,342 8,992 8,805 6,537 6,722 6,711 7,192 81,396 6,578 5,908 8,358 5,587 5,327 7,147 6,253 6,768 8,457 6'012 6,864 8,571 6,797 7,875 9,473 8,068 9,217 10,818 9,753 12,279 12,069 9,532 11,135 11,758 7,476 9,175 8,557 7,441 9,670 8,590 6,937 9,867 8,623 6,275 8,787 8,422 86,709 102,872 110,843 ~anuary , March · May July September Total~ 1992 1993 1994 1995 1996 1997 1998 1999 2000 7,958 7,797 9,463 8,627 8,009 9,394 11,684 11,315 8,565 7,813 7,913 8,252 106,790 7,645 6,851 7,637 7,097 7,781 9,402 11,654 11,375 9,513 ' 8,888' 9,083 9,078 106,004 8,211 7,023 9,012 7,386 8,626 10,600 12,294 12,375 10,653 110,389 10,585 10,535 117,689 9,570 9,348 11,350 9,610 10,028 11,268 14,498 12,979 10,844 11,026 11,580 8,254 130,355 11 8,263 7,776 8,419 7,786 8,507 0,204 3,545 1,888 8,963 9,263 8,471 8,026 1,111 7,937 7,286 · 7,838 7,483 8,386 10,577 14,958 12,465 9,916 9,581 9,009 9,299 114,735 8,423 7,520 8,625 7,930 8,600 10,114 13,070 10,777 8,172 7,884 7,816 7,743 106,674 7,862 7,859 6,994 7,815 8,901 7,657 6,862 6,409 7,354 7,531 9,091 9,086 11,934 12,736 10,882 11,049 8,301 8,994 8,267 8,464 8,237 7,612 7,832 7,968 102,517 103,180 Yearly Composite of Enplanements 110,000- 100,000~ I !~ Series 1 90,000. 80,000 70,000 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 19'97 1998 1999 2000 Year Municipal Airport ENPLANEMENTS BY INDIVIDUAL CARRIER Nonscheduled/On-Demand Air Carriem Bielefeld, Robert T. Executive Flight, Inc. Gmat Northern Airlines John W. Clark Kenai Air Lake Clark Air, Inc. Osolnik, Micael J.. Ulmer, Inc. Total *not reported Commuters or Small Certified Air Carriers Alaska Central Express Era F S Air ~ ~ier I-,,.eeland Aviations Services Iliamna Air Taxi Jim Air, Inc. Peninsula Air SouthCentral Air Spernak Airways Wright Air Services, Inc. Yute Air Alaska, Inc. Total Large Certified route Air Carriers Slick Total Total Grand Total 1999 Scheduled 0 0 0 0 0 0 0 0 0 2000 Non- Scheduled Scheduled 3,000 3 25 0 1,280 0 0 8 4,316 *NR 0 0 0 0 0 0 0 0 2001 Non- Scheduled Scheduled *NR 3 0 21 0 65 0 0 89 0 0 0 0 0 0 0 0 Non- Scheduled 5,224 0 0 0 0 60 30 0 5,314 0 96,688 0 0 0 0 0 136 0 0 0 0 96,824 96,824 0 157 19 206 0 41 1 513 508 0 0 3,945 5,390 5,390 1061530 0 99,703 0 0 0 0 0 99 0 0 0 0 99,802 99,802 2 84 39 601 0 60 0 286 0 2 0 0 1~072 1,074 1001965 , 0 99,394 0 0 0 0 0 15 0 0 0 0 99~409 99,409 106,669 0 22 62 1401 9 63 0 257 0 0 27 19 1~860 86 7,260 c ¥ o o o 0 CO 04 ~-- 0 1.0 . -0') CO 0 0 ~ o o o o 0 0 0 0 0 ~'R~ o