Since its formation in 2004, the Coos County Airport District has enjoyed mostly good news. The number of plane landings and passengers through the airport has doubled in 10 years. Funding for a new terminal was obtained, with a grand opening in July of 2008. A new traffic control tower was built. Sky West Airlines commenced service to San Francisco in July 2008.

Then there followed a lot of bad news in 2008 and 2009. Passengers and landings declined as fuel prices shot up. Horizon Air announced they were ending service to Portland.

So, many are led to wonder if the airport commissioners are as smart as they looked  from  2004 to 2007 or as dumb as they looked in 2008 and 2009. The answer is probably somewhere in the middle. My guess is that had the board in 2004 known that fuel prices would double, the economy would go into a recession and Horizon would opt out of this market, they would have considered other options for the new terminal. But those decisions were made when the demand on the airport was increasing dramatically.

Where does that leave us now?

First, of an annual operating budget of approximately $3.5 million, only about $800,000 is from local property tax dollars. The bulk comes from airport usage fees, as well as grants and special federal contracts. The Airport Board has had as a goal eliminating the local property tax as a revenue source and to rely on user fees. This has been the reason we have opted to charge for parking.

Second, virtually no local tax dollars were used in the construction of the new terminal or tower. Of the $ 19.4 million spent on the new terminal, $3 million came from an FAA grant, $10.6 million from Oregon Lottery Dollars and $5.9 from a loan that will be paid back with money received from the FAA. The point is that local taxpayers have benefited from bringing these state and federal dollars back to the Bay Area.

Third, the new terminal and new tower had little, if anything, to do with Horizon leaving the Bay Area. In meeting with the CEO of Horizon last spring, he was clear that fuel prices and the fact they were switching to larger aircraft were the motivating reasons for pulling out of this market.

Where are we going?

Air service still remains a concern. We have committed a guarantee of $650,000 for flights to San Francisco. The first $400,000 is a federal grant and the rest is airport funds. So far, we have spent a total of $62,000 and are very optimistic we will not exceed the $400,000 grant. So, none of our local money should be at risk.

Service to Portland is a bigger problem. We have guaranteed $700,000 with the Airport District being on the hook for the first $400,000 and the remainder being guaranteed by the city of Portland and local businesses. We paid $14,000 in October and expect to pay the maximums of $58,000 in November and December. 

On a positive note, Sky West has dropped fares on flights to Portland and the district implemented a program to spur interest in the flight.

It is important to note that we will receive about $370,000 per year from Sky West for landing fees, space rental and passenger fees. In large part we are taking the money we receive from Sky West and using it to pay the subsidy.

The positive news is that we still have air service to Portland and, for the first time in over 25 years, we have service south to San Francisco. The bad news is that if we do not see an increase in passengers we may not have service to Portland next year.

From a financial standpoint the district is still solid. With revenue from parking, rents from the old terminal, tenants and landing fees we can cover these costs this year. At the same time, we realize we cannot sustain these kinds of costs forever, so we have reduced staff costs, cut noncritical purchases and are continually looking for way to cut costs and/or increase revenues.

These are difficult times and our goal is to end 2009 with north and south air service, a new terminal fully utilized, a functioning traffic control tower and one step closer to being a self supporting entity not relying on property tax dollars.

We appreciate the support the community has given us, as well as the thoughtful criticism. We will need an abundance of both to get us through 2009.

Mike Lehman is chairman of the Coos County Airport District Board of Directors.