Wednesday, February 15, 2017

Yakima Air Terminal (KYKM) manager keeping focus on growth

Rob Peterson, airport manager


More than two months of snow and ice storms has meant long work days for Yakima Air Terminal manager Rob Peterson.

He’s been focused on coordinating efforts to ensure Yakima Air Terminal runways get cleared as quickly as possible to keep closures and cancelled flights to a minimum.

“When it snows, all my time (is) with the maintenance guys,” he said.

Peterson, who arrived to Yakima in 2011 to serve as Yakima Air Terminal’s assistant airport manager, has been a jack-of-all-trades in an effort help the airport save money amid years of legal and financial struggles.

Peterson estimates he spends about 70 percent of his time on operations and maintenance at the airport, which limits his ability to focus on other aspects of his job — namely, boosting business activity at the 800-acre airport.

“That should be completely reversed in the airport manager role,” he said.

And that could change this year as the city of Yakima — which took sole ownership of the airport four years ago — made room in its budget to hire an assistant airport manager who would focus on airport operations.

As the Yakima Air Terminal emerges from legal and financial troubles, Peterson, who assumed the top job in 2012, and others at the city of Yakima believe the facility is finally in a position to grow.

“There’s been a huge change in the culture and the organization,” Peterson said.



Turnaround

That’s a welcome change after years of legal issues, financial woes and a revolving door of airport management.

For three decades, the airport operated under the joint ownership of the city of Yakima and Yakima County with an independent governing airport board made up of members appointed by the two municipalities. That structure was called into question by the end of 2012 after the air terminal endured several years of six-digit budget deficits that led to continued deterioration of its reserves. And, a seven-year legal dispute with former tenant M.A. West Rockies over late rent was settled late last year.

In February 2013, the city took over sole ownership and operation of the airport.

Peterson said the previous governing structure created confusion because every decision required approval from Yakima County commissioners and the Yakima City Council. At the same time, the city and the county weren’t always aware of airport operations unless there was a major issue, such as the M.A. West Rockies case. “It was a distant relationship,” Peterson said about city and county interaction with the airport.

Four years later, that has changed.



By design, the city is far more aware of the airport’s operations and efforts — Peterson informs top city directors of developments once a week.

“The city views the airport as an asset to the community,” he said.

For Peterson, that support is shown through improvements in a number of areas including recovering financial reserves, upgrading aging equipment, restoring lost air service and finishing a master plan, a blueprint for the airport’s future.

The most notable improvement was in the airport operations fund.

According to the city’s 2017 budget, the ending balance for Yakima airport’s operating fund, which covers the airport’s day-to-day operations, is expected to be more than $147,000.

That balance, which serves as a reserve, is a far cry from the $750,000 the airport once had a decade ago, but a positive change from several years of withdrawing those funds to cover budget shortfalls.

As for the airport’s legal issues, settlement of the M.A. Rockies’ wrongful eviction case, which likely will be paid mostly by insurance companies, will cost the city hundreds of thousands of dollars, rather than the millions feared. That money includes legal fees incurred over the last seven years.

Peterson said the legal issue was a cloud over the airport’s progress and resolution of the case clears the way for officials to fully focus on development.



Expanding horizon

That’s a welcome development for Ola Vestad, co-owner and manager of Yakima Air Park, a hangar facility located on the airport’s south side.

“I’m feeling more confident than I did five years ago,” he said. “Now they’re recognizing for the airport to break even financially, development needs to happen.”

The airport is working toward such progress through a $789,000 expansion of two roads — Airport Lane and 21st Avenue — that will open up nearly 10 additional acres of property on the facility’s south side for development, including new hangers and space for aviation-relation businesses.

The airport also is participating in the Aviation Conference & Trade Show in Puyallup later this month. The show is an opportunity for airport officials to network with and recruit aviation-related businesses.

Jim Richmond, owner of CubCrafters, an aircraft manufacturer based at the airport, said he’s happy to hear the airport is increasing promotion and marketing efforts.

Richmond promotes the merits of having an aviation business — the central location and the weather — at the Yakima airport whenever he gets the chance but believes a more centralized and intentional effort is necessary, especially as other airports do the same. For example, the Grant County International Airport in Moses Lake recently secured a facility for Japanese manufacturer Mitsubishi Aircraft to build its regional jets.

“The effort is going on right in our backyard,” he said. “Lots of money is being spent on aerospace design and engineering.”

The Yakima airport also looks to continue improving its air service offerings, which was one of the city’s top priorities when it took ownership.

The city secured a $290,000 grant from the Federal Aviation Administration back in 2014. That grant, along with a local match of the same amount, has paid for a marketing campaign to encourage more residents to fly out of Yakima and boost the number of passengers on flights from Alaska Airlines, the sole commercial airline flying out of Yakima.

Improving passenger numbers helped persuade Alaska Airlines to restore a fourth daily flight the airport lost a few years ago. In 2009, planes flying from Yakima were just 59 percent full, well below desired benchmarks. By the end of 2014, that figure increased to 72 percent, meeting Alaska Airlines’ standard.

Alaska continued to see success after adding that flight: In 2016, more than 72,000 passengers flew on Alaska Airlines flights from Yakima, more than the number of passengers in 2007 and 2008. That’s when the airport was served by two airlines, Alaska and Delta Air Lines, which offered flights to Salt Lake City for a little over a year.

Those grant funds run out next year but the effort to increase flights out of Yakima will continue, said Yakima’s economic development manager Sean Hawkins.

“We have to put resources (toward air service efforts) if we want to (keep seeing) some of the improvements,” Hawkins said. “Our airport efforts have shown some great results, but when that grant funding goes away — what’s the source of funds to continue to promote?”



Eye on revenue

While the airport’s expenses are under control, more focus needs to be put on increasing revenue, which has remained relatively flat. Revenue, which is expected to be nearly $1.2 million this year, is generated from a number of sources including land and building rentals to tenants such as CubCrafters and JR Helicopter and landing fees from Alaska Airlines.

But other airports, such as Tri-Cities Airport in Pasco and Grant County International Airport, not only get revenue from fees and rents but also from funds generated by a port or public authority district authorized to collect taxes to cover operation costs.

City officials say airports operated by a port district have an additional funding advantage when pursing new airline service or recruiting potential companies.

For example, the Tri-Cities Airport, which is operated by the Port of Pasco, secured more than $1 million in federal grants and local matching funds to pursue a direct flight to Los Angeles. The airport also recently unveiled a $41.9 million terminal renovation officials that officials believe will help boost prospects. Work on a renovation or replacement of Yakima’s aging terminal, at best, is still a few years away.

There have been numerous attempts in Yakima County to create a port district, most recently in 2002, but voters have rejected the idea.

The city of Yakima is in the preliminary stages of revisiting that topic as part of its economic development plan, which includes a provision for either a port or a public authority district. Both would provide a taxing mechanism to generate funds for a wide variety of city projects and departments, including the Yakima Air Terminal.

“What we identified (is that) we need to learn from some of the other districts and we need to know what these tools can do,” Hawkins said.

But past failures have Hawkins and other city official treading carefully. “There has to be a clear reason (for a port district),” he said.



Positive momentum at Yakima Air Terminal

Since the city of Yakima took sole ownership of the facility in February 2013:

■ The airport has made nearly $15.3 million in renovations, equipment replacements and upgrades to the main airport terminal and airfield. Those include an $11.2 million rehabilitation to the taxiway and $2.5 million in new snow removal equipment.

■ The Fly YKM marketing campaign, which encourages Yakima Valley residents to fly out of Yakima rather than drive to neighboring airports, was launched. The number of commercial airline passengers flying out of Yakima Air Terminal was more than 72,000 in 2016, an increase of 12.8 percent from a year ago and a 30.2 percent increase from 2012, prior to the city taking ownership.

■ Alaska Airlines restored a fourth flight (third flight on Saturdays) to Seattle it cut in 2010.

■ Expansion of 21st Avenue and Airport Lane, which will open up airport property for future development, was started.

■ The Airport Master Plan, which provides a blueprint for airport development through 2030, was adopted.
Ongoing challenges

■ Funding: The city of Yakima, through streamlining administrative functions and enacting a number of other cuts was able to get expenses under control but revenues have remained flat — in the $1.1 million to $1.2 million range. The city wants to work on business development to find additional sources of revenue and is in the preliminary stages of looking into a taxing authority, such as port district, that would bring new funding.

■ Business development: This has been a discussion topic for the airport for more than decade.

■ Aging terminal: The terminal building at 2300 W. Washington Ave. was constructed in 1950. A concourse addition was done in 1968 and a series of expansions and renovations were done between 1997 and 2000. The airport’s master plan states a renovation or replacement is needed by 2020, but based on available funds from the Federal Aviation Administration, the earliest this could occur is around 2023. In the meanwhile, the airport has received some minor renovations totaling $75,000 recently.

■ Air service: While progress has been made, the desire for more flights continues. Sean Hawkins, the city of Yakima’s economic development manager, said there will be a need to make a major investment in this effort, especially after an Federal Aviation Administration grant expires next year. That effort could include guaranteeing a prospective airline a certain amount of ticket sales prior to starting new air service.

Story and photo gallery:  http://www.yakimaherald.com

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