Saturday, September 24, 2016

Rent at Alaska's international airports is about to get more expensive

After more than a decade without a rate increase, the cost of leasing land from the Alaska International Airport System is rising.

Come Jan. 1, land lease rates at Ted Stevens Anchorage International Airport and Fairbanks International Airport — which together constitute the Alaska International Airport System — will increase, with some as much as doubling.


Marc Luiken, commissioner of the Alaska Department of Transportation and Public Facilities, approved the hikes last month.


At the Anchorage airport, the annual rate will go from 9 cents per square foot to 18 cents for aeronautical uses, and in Fairbanks it will go up to 12 cents. At Lake Hood Seaplane Base, managed by the Anchorage airport, leases will also go from 9 to 12 cents.


That's a notable uptick for a market where rates haven't budged since about 2003, said John Parrott, manager of the Anchorage airport.


"There is no arguing that's a significant increase," he said, adding that the airport system attempted back in 2009 to implement an incremental increase in land rent, "but there was a great concern about the state of the economy at that point," when the nation was feeling the brunt of a major recession.


Alaska's economic state isn't stable right now either, but Parrott said that "many Alaskans, such as those in the tourism industry, are doing well. The current situation is not as universal as the 2009 situation."


But that's not much comfort for some leaseholders, especially those operating primarily in Alaska.


In public comments submitted to the Alaska International Airport System earlier this year, a handful of people protested the increase.


"The proposed land rent increases are excessive and unreasonable," wrote Matt Atkinson and Jane Dale, the president and executive director, respectively, of the Alaska Air Carriers Association.


"In a slowing economy there is no way for commercial aviation to absorb such huge cost increases," they wrote, asking for a smaller hike of 10 percent.


Chris Webb, vice president of medical flight company Guardian Flight, wrote that while some increase might be warranted, such a large increase at one time "is not appropriate."


Between the Anchorage airport, the Fairbanks airport and Lake Hood, the airport system has about 270 land leases, Parrott said. Some of those spaces are for less than an acre on the Lake Hood side, where private airplanes and mechanics operate, to as much as 10 or 20 acres on the commercial side where larger companies like Alaska Airlines and FedEx do business.


Parrott said the change could have happened much more quickly, but the airports wanted to give people time to prepare. The system is trying to "balance (its) funding sources," he said, adding that pretty much every other airport fee has gone up over the years, from concessions to landing fees.


"One of the things we're considering doing in the future is having much smaller changes but more often," he said. "It was a poor plan to wait 13 years without changing the rent."


The airport system is also increasing rent on land used for non-aeronautical purposes, like parking, warehousing, maintenance and anything else that doesn't deal directly with operating the aircraft, to bring it up to fair market value.


Parrott said the Anchorage airport alone has probably "a couple thousand acres" of leasable land space, much of it already rented. That airport has a total of about 4,800 acres, including runways and taxiways.


Source: http://www.adn.com

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