Lambert Airport awaiting approval on new agreement with airlines | St. Louis Public Radio

Lambert Airport awaiting approval on new agreement with airlines

May 9, 2016

Lambert Airport could end up with a plan to bring in more money and another to fund capital improvements by the end of the week. Officials are waiting for final approval from the St. Louis Board of Aldermen on an agreement with the airlines that use the airport. The airlines have already approved a five-year, capital improvement plan.

"About 100 different projects are in that $170 million," Airport Director Rhonda Hamm-Niebruegge tells St. Louis Public Radio.

Hamm-Niebruegge has been airport director since 2010. Before that, she was managing director of the St. Louis Hub for American Airlines.
Credit Provided by St. Louis Lambert International Airport

"You'll see things such as new, you know, snow brooms and vehicles that are used on the airfield. So, you'll see capital equipment in terms of purchases like that. So, it's a broad base."

She plans to provide more specifics after aldermen sign off on the initiative. The airlines need to give their approval because the value of the improvements goes back into their rate base.

The airline pre-approval is part of a new, five-year use and lease agreement with Lambert. It includes a plan to increase a revenue stream over the life of the deal.

The terms allow the airport to keep more of the revenue generated by on-site stores, restaurants and parking.

"We, the airport, have worked very hard on growing those revenues and bringing in more restaurants, bringing new shops, adding parking facilities," said Hamm-Niebruegge.

"We felt we should get a higher percentage of those non-aeronautical revenues going forward."

The airlines agreed.

Currently, Lambert receives 6 percent of those revenues. Under the five-year plan, that will grow to 11 percent. That money goes into Lambert’s airport development fund for items not funded by airlines.

"Which allows us flexibility to do things that we want to do at the airport that are not charged back to the airlines,” said Hamm-Niebruegge.

The overall contract, which is still in the approval process, comes as Lambert has high landing fees for the industry because of a hub downsizing a few years ago.

Terminal rental rates are also vital to airline-airport relationships. Hamm-Niebruegge says St. Louis is “very competitive” when compared to the rest of the industry.

Lambert-St. Louis International Airport is owned and operated by the City of St. Louis. It covers approximately 3970 acres.
Credit File photo | St. Louis Public Radio

Both make up what the airline industry calls the CPE, or cost per enplaned passenger.

That has been higher at Lambert than the industry average of the past few years, but that could be changing thanks to paying down debt and cutting some non-safety related costs. The growth in revenue is also helping bring down the airport’s CPE over the next five years.

“We anticipated that our cost per enplaned passenger will be well below where it is today,” says Hamm-Niebruegge.

“Instead of being ranked in the higher tier, we’ll be ranked in probably the lower third tier of what it costs to operate out of here.”

A lower CPE can help airports become more competitive for new flights and other business.