Tom in NO
Topic Author
Posts: 6725
Joined: Thu Nov 11, 1999 10:10 am

Northwest Delays Rent/landing Fee Payments To MSP

Sat Sep 29, 2001 12:28 am

Northwest is delaying a $5.5 million payment to the Minneapolis/St. Paul Airport that is due this month. It is also considering delays in payments to other airports. If NW doesn't pay MSP for the remainder of the year, MSP is out $43 million of its $155 million annual operating budget.

I ran this topic the week of the WTC tragedies: the airlines getting bailout money doesn't do a thing if the airports don't get paid, or some sort of financial assistance. To put it another way, if the airport operator doesn't get his money, the airport can't be safely, consequently legally, operated, and, bingo, no more airline service. It's the "trickle-down" theory put into practice.

Tom in NO (at MSY)

PS: For those unfamiliar with airport finance, an airport receives all of its operating income from airlines landing fees, space rental, concessions, parking lots, etc. Airports, by law, cannot receive taxpayer money. In other words, as the airlines, etc, go, so do we.
"The criminal ineptitude makes you furious"-Bruce Springsteen, after seeing firsthand the damage from Hurricane Katrina
 
flashmeister
Posts: 2671
Joined: Fri Apr 28, 2000 4:32 am

RE: Northwest Delays Rent/landing Fee Payments To MSP

Sat Sep 29, 2001 2:29 am

Tom, is this a universal rule nationwide? I know that many municipalities restrict airport monies, but I didn't realize that this was a federal regulation.
 
Tom in NO
Topic Author
Posts: 6725
Joined: Thu Nov 11, 1999 10:10 am

RE: Northwest Delays Rent/landing Fee Payments To MSP

Sat Sep 29, 2001 3:47 am

I can't quote the exact law, but, yes, federal statute says that airports must be self-supporting, and not from local taxes. I believe some language to this effect is written into various FAA Grant Assurances that the airports give the FAA (when being issued grants).

Likewise, airports can not divert revenue they make into a general municipal or local government operating fund. Airports make and keep their own money.

Every once in a while, LAX is a recent example, airports/government agencies get questioned, and sometimes sued, over allegations of "revenue diversion", that is, using surplus airport revenue to make up shortfalls elsewhere within a government agency.

As an example, within the City of New Orleans (who owns and operates MSY), there are two departments who make up most of the revenues and profits within the City: they are the airport and the Sewer and Water Board. SWB can help out the City, but our revenues and profits stay at the airport.

Tom in NO (at MSY)
"The criminal ineptitude makes you furious"-Bruce Springsteen, after seeing firsthand the damage from Hurricane Katrina
 
Tango-Bravo
Posts: 2887
Joined: Sun Jun 17, 2001 1:04 am

RE: Northwest Delays Rent/landing Fee Payments To MSP

Sat Sep 29, 2001 8:24 am

Seems only logical and right that fees owed to airports that are in arrears should come "off the top" of any funds received by airlines from government (i.e., taxpayers). Moreover, estimated fees to be owed over the next 12 months plus 10% should be placed into escrow accounts to ensure the airport authorities receive payments due -- also before the airlines receive any of their "bailout" money.
 
LoneStarMike
Posts: 2802
Joined: Sat Jul 01, 2000 1:02 pm

RE: Northwest Delays Rent/landing Fee Payments To MSP

Sun Sep 30, 2001 8:49 pm

Looks like NW has gone ahead and paid the fees at MSP, according to this article from the Minneapolis Star-Tribune.

Northwest pays 9.9 million in airport fees
09/29/2001

http://www.startribune.com/stories/1576/721717.html

I wonder if the other airports have also been paid?

LoneStarMike

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