Airport parking would stay profitable even without rate hike
02/16/2014 6:30 PM
02/17/2014 9:05 AM
Some types of parking at Charlotte Douglas International Airport will cost you nearly 50 percent more starting Monday – an increase the airport’s former leader says shouldn’t happen. And the airport’s own projections show parking would have stayed profitable even without rate increases.
Charlotte Douglas shares parking profits with airlines, one way it helps lower the airlines’ cost of flying out of Charlotte.
Airport officials say the parking rate increases are necessary to cover higher costs, a consequence of funding construction projects and new shuttle buses.
But projections show that even without the increased parking rates, Charlotte Douglas would reap profits of $7.4 million in fiscal 2014 and $6.8 million the following year.
With the rate increases, the airport’s projected parking profits will rise to $10.6 million in fiscal 2014 and $14.2 million in fiscal 2015.
Charlotte’s airport is undergoing a surge of construction projects totaling almost $1 billion, including new hourly and business valet parking decks, a planned new international terminal and large-scale renovations to the passenger concourses.
Those projects are being funded mostly through airport revenue bonds, which Charlotte Douglas repays with its revenues. Under federal law, airport revenues, including parking, can only be used for airport projects.
Airport officials said the higher revenue will let them better serve travelers and increase staff at the valet services. The airport will go from having among the lowest parking rates of any major hub airport to the median rates for similar airports, city officials said.
Profits shared with airlines
Charlotte Douglas splits 40 percent of the profits from airport parking and terminal concessions with the airlines that operate there, helping to lower airlines’ cost of flying from Charlotte. The lion’s share of that goes to American Airlines, which owns US Airways and operates more than 90 percent of daily flights at Charlotte Douglas.
American’s executives have cited the low cost of flying from Charlotte as a primary reason the city has grown into a major hub and kept its status after US Airways merged with American in December. Charlotte is America’s second-largest hub, after Dallas/Fort Worth.
The airport paid the airlines almost $18 million worth of such profit-sharing in fiscal 2013, according to the city’s annual financial report.
Charlotte Interim Aviation Director Brent Cagle, who is empowered to set the parking rates, was not available Friday, a spokeswoman said.
Cagle previously told the Observer that staffing the valet service was difficult under the current rates, which have been in place since 2008, and the airport “struggled to maintain our high quality, given the demand.”
The airport raised daily, long-term and hourly parking rates by $1 in 2012, the most recent parking rate increase. Curbside and business valet rates remained unchanged.
Parking revenue is forecast to dip in fiscal 2014, as the airport has fewer spaces available since it knocked down the old hourly garages last year to build a new, larger parking deck in their place. Charlotte Douglas has about 22,000 parking spaces, down from 26,000. The airport plans to have about 28,000 when the $120 million new hourly deck opens in November.
And the expenses associated with the airport’s parking program are projected to increase from $28.6 million in fiscal 2013 to $33.8 million in fiscal 2015.
“The decision to change parking rates is first and foremost due to the increase in operating and capital expenses associated with the parking program and the projected decline in parking revenues,” said airport spokeswoman Lee Davis, in an email.
Orr: Keep rates low
Former Aviation Director Jerry Orr disagreed with that assessment.
“In any organization, particularly a government organization, there are people that always say, ‘Just raise the rates,’ and if you say ‘Let’s get to be more efficient,’ or, ‘Let’s work harder,’ that’s not the most popular idea,” Orr told the Observer.
Orr said raising the parking rates clashes with his low-cost management philosophy.
“Any organization ought to keep the rates as low as they can,” he said. “That’s the measure of success in the free market. That’s a balancing act. That doesn’t mean you’re just cheap, cheap, cheap on everything. You spend what you need to to provide a quality service.”
Orr lost his city job during the fight over whether Charlotte or a new, independent commission should run the airport. Orr favored the commission, which he was named to head. However, after a judge blocked the commission from actually running Charlotte Douglas, Orr eventually retired in December.
The airport remains an independently funded city department.
Asked if he would have considered raising the parking rates, Orr said simply, “No.”
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