Northwest Airlines today filed a complaint in Ramsey County, Minnesota, District Court, against the Minneapolis/St. Paul Metropolitan Airports Commission (MAC) for violating its statutory obligation to set charges for users at six regional reliever airports at levels high enough to cover the costs of those airports. At present, the reliever airports are subsidized by users of Minneapolis/St. Paul International Airport.
The Twin Cities’ area reliever airports are St. Paul, Flying Cloud, Anoka County, Crystal, Airlake and Lake Elmo. Northwest Airlines and other major carriers provide service to more than 30 million passengers who use the Minneapolis/St. Paul International Airport each year. The relievers provide service primarily to corporate and general aviation users.
The MAC currently subsidizes the reliever airports with more than $11 million annually in revenues generated by Minneapolis/St. Paul International Airport passengers. In recent months, Northwest has asserted that rates and fees charged to the relievers by the MAC are set at a level that does not cover basic operating, maintenance and depreciation costs of the facilities.
Money that could be used either to fund critical projects or to lower rates the MAC charges Minneapolis/St. Paul International Airport tenants, including Northwest and 15 other airlines, instead subsidizes basic operating costs of the relievers. This is contrary to common practice at many other reliever airports around the country.
“There is no good reason why rates should be kept at bargain basement levels for MAC relievers at the expense of carriers who serve the broadest cross section of the public and are trying to return to profitability,” said Jim Greenwald, Northwest’s vice president of facilities and airport affairs.
Greenwald pointed to the airline industry’s cuts of tens of thousands of jobs since Sept. 11 and Northwest Airlines’ aggressive budget-cutting efforts.
“Northwest has trimmed more than $1 billion in permanent annualized costs over the past 18 months,” Greenwald said. “We expect our suppliers, including the MAC, to also reduce the costs incurred by the major airlines and our passengers.”
A new study conducted for Northwest by airline consultants GCW Consulting underscores the poor financial performance of the Minneapolis/St. Paul area reliever airports. The study points to the “deliberate decision to charge low rates at these airports, and to refrain from developing the revenue potential of these airports” as sources of the substantial deficit.
“The reliever airports serve an important role in general and business aviation, but shouldn’t be subsidized with revenue from the average Minneapolis/St. Paul International Airport traveler,” Greenwald added.
According to statistics from the Federal Aviation Administration (FAA) cited in the study, reliever airports nationally are able to recover 88.5 percent of their total expenses with revenue from their users. In sharp contrast, the MAC reliever airports recover only 20-25 percent of expenses from their users. The study also found that the rates charged by the MAC for the relievers are significantly lower than the rates charged by other comparable reliever airports. For example, fuel flowage fees could be doubled and still be consistent with comparable airports.
To reduce the overall operating deficit of the MAC relievers, the study recommends increasing rates to the relievers, imposing charges that other reliever airports typically charge (e.g. concessions and aircraft parking fees) and exploring other traditional ways to generate additional revenue.
Northwest Airlines is the world`s fourth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,500 daily departures. With its travel partners, Northwest serves nearly 750 cities in almost 120 countries on six continents. In 2002, consumers from throughout the world recognized Northwest`s efforts to make travel easier. A J.D. Power report rated airports at Detroit and Minneapolis/St. Paul, home to Northwest`s two largest hubs, tied for second place among domestic airports in overall customer satisfaction. Subscribers of the Official Airline Guide rated nwa.com as the best airline Web site. Readers of TTG Asia and TTG China named Northwest “Best North American airline”.