US Airways is the biggest tenant by far at Charlotte Douglas International Airport, accounting for about 90 percent of the airport’s 700 daily flights. Air service in Charlotte has expanded in large part because aviation director Jerry Orr keeps costs down, making the airport a cheap place for US Airways to operate.
Charlotte Douglas’ low-cost philosophy is ingrained in its mission statement: “Charlotte Douglas International will be the preferred airport and airline hub by providing the highest quality product for the lowest possible cost.”
The airport, like all major commercial airports in the U.S., is funded with fees from the airlines, concessions revenue from the terminal, parking revenue and federal grants.
But US Airways also benefits from a profit-sharing arrangement with Charlotte Douglas that’s written into the airline’s lease.
Under the terms of the lease, US Airways and other airlines receive 40 percent of the airport’s profits on parking and concessions, known as “non-airline terminal revenue.” The amount is pro-rated based on the amount of space the airlines lease.
That helps offset US Airways’ costs to use the airport, and keeps Charlotte Douglas a cheap place for US Airways to operate from. Last year, US Airways received $10.4 million from the airport – largely offsetting the $17.6 million worth of fees the company paid Charlotte Douglas. In 2011, US Airways got $14 million in shared revenue from Charlotte Douglas, and in 2010 the airline got $12 million.
“This revenue sharing reduces the airline’s total cost of operating at the airport, and enhances its cost competitiveness,” said US Airways spokeswoman Michelle Mohr. “The success of US Airways’ Charlotte hub is heavily influenced by the airport’s low cost operating environment.”
Mohr also said that the lease requires US Airways to make up any shortfalls if revenues don’t cover expenses at Charlotte Douglas. US Airways’ leases on gates and other airport facilities run through 2016, officials at Charlotte Douglas said.
Matt Cornelius, senior director of air policy for Airports Council International, said the arrangement between US Airways and Charlotte Douglas isn’t unique. Many airports have some form of revenue sharing, often reflective of the amount of financial risk the airlines assume for the airport.
He said a 60-40 percent revenue split is “probably slightly better than average” for the airlines, but stressed that airports’ financial arrangements are highly variable.
Charlotte Douglas is, by some measures, the most efficient airport in North America. A recent study by the Air Transport Research Society found Charlotte Douglas was the most cost-competitive large airport. In 2011, the ATRS found Charlotte Douglas had the lowest landing charges for a Boeing 767 out of any major airport in the world.
In fiscal 2012, Charlotte Douglas took in more than $216 million worth of revenues. Landing fees paid by airlines were one of the smallest sources of funds for the airport. Concessions revenue to the airport totaled $42.2 million, and parking revenue brought in $38.5 million. Passenger facility charges, a fee the airport tacks on to each passenger enplaned at the airport, brought in $53 million.
Portillo: 704-358-5041 On Twitter @ESPortillo
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