EAST WENATCHEE — The Chelan Douglas Regional Port Authority is taking a hard look at Pangborn Memorial Airport’s financial health.
The airport’s terminal is projected to run a $70,500 deficit this year. Port CEO Jim Kuntz says the airport’s current approach to rental rates is a big factor.
The airport will collect $27,000 in rent this year from Horizon Air — a fraction of the $127,800 the airport expects in expenses. An additional $30,000 in income will come from rents from car rental companies, TSA, a cafe and advertising spaces.
“We’re in a big hole,” Kuntz said during a port meeting Tuesday. “Let’s not subsidize the terminal building $70,0000 a year. That’s not what we should be doing; it’s unsustainable.”
He added that ideally a terminal building should make money so that reserves are available for emergencies and equipment replacements.
Most airports have two types of spaces in their terminals: exclusive space and non-exclusive space. Exclusive space is leased to a single airline, including ticketing areas and offices. Non-exclusive space is shared between airlines, and includes things such as baggage claim and passenger screening areas.
Currently Pangborn only charges Horizon rent on exclusive space. “That is not what airports do; that is not a standard operating procedure,” Kuntz said. “And we need to change that.”
The port is considering three different approaches to rent. In two options, 20% of rent it charges airlines for non-exclusive space would be a base fee and 80% would be calculated based on their number of passengers. A third option would charge a flat rate for non-exclusive space.
The airport could see an increase in rent revenue ranging from $44,000 to $183,700 depending on which of the three options port board members decide on next month. The changes would go into effect in January.
Kuntz said increasing rent rates would likely mean average daily fares would also rise — but that could help attract new airlines. The No. 1 complaint he’s heard from potential airlines is how low fares are from Wenatchee.
“It has caused airlines to have a huge pause about serving this market because they don’t think there’s any pricing room in the market,” he said. “The face of the airlines we’re recruiting just kind of goes numb.”
Kuntz also doesn’t believe increasing rates will impact the airlines’ willingness to service Pangborn. He pointed to Tri-Cities Airport in Pasco, which charges significantly higher rates than other Eastern Washington airports, as an example. The airport is serviced by Alaska, Allegiant, Avelo, United and Delta airlines. It is the only airport in the region that has service from low-cost airlines.
Pangborn is only serviced by Horizon Air, a subsidiary of Alaska Air.
Kuntz said the Port had been given away space for free and hypothesized that Alaska would be unhappy with the rent increases. The change seems inevitable, though.
“We can’t operate the way that we’ve been operating,” Kuntz said. “And we’re not going to.”