Branson Airport passenger volume falls short

When construction started on Branson Airport in 2002 on 922 acres atop an Ozarks mountain, it made history as a privately funded airport, rare in the United States.
 
The airport opened May 11, 2009, with lofty goals and high expectations.

During the airport’s first year, there has been some smooth flying and some turbulence.

About $115 million in bonds were purchased in 2007 and $40 million in private equity was put up by 50 owners, the largest of which was airport CEO Steve Peet.

In previous Springfield Business Journal reports, Branson Airport Executive Director Jeff Bourk said 250,000 enplanements – total number of passengers on a flight – were possible by the end of 2009 and 1 million enplanements annually is an attainable 10-year goal.

However, statistics from the city’s agreement to pay Branson Airport Transportation Development District for each inbound passenger indicate passenger numbers fell short of original goals.

The city will pay $152,364 – $8.24 per inbound passenger, according to the agreement – to the airport for inbound passengers from outside southwest Missouri during May–September 2009, said Jerry Adams, Branson’s public information director. That figure represents just 18,491 inbound passengers for the five-month period.

For the first 11 months of airport operations, July 2009 boasted the most passengers at 6,136, according to the Bureau of Transportation Statistics, the statistical agency of the U.S. Department of Transportation. During the airport’s first 11 months through March, 48,575 passengers have flown into and out of Branson Airport, also according to the BTS.

“There’s no question the start last year was a bit slower than we would have wanted,” Bourk said. “We’re just getting started. Looking at last year’s numbers, especially May through September, is not an indication of how the airport’s doing. … I will tell you that our load factors are very high and above average for the airline industry.”

Even with the passenger shortfall, Bourk said he is pleased with the airport’s first year.

“Our model is developing very much like we’ve envisioned for years,” Bourk said. “I arrived about three years ago now, and the air service development effort that we envisioned at that time is progressing very nicely.”

The economic crunch facing the travel industry is the biggest reason for any shortcoming at the airport, said Dean Kruithof, Branson city administrator.

“It reflects reality,” Kruithof said, pointing to a downturn at other airports.

Midair adjustments
The airport and the city of Branson signed a contract April 10, 2006, under which the city pays $8.24 per inbound passenger at the airport on scheduled and charter flights. The city’s payment obligations, the contract states, shall not exceed $2 million annually or $500,000 a quarter other than the fourth quarter of any applicable 12-month period.

The Branson Board of Aldermen approved an addendum to the contract at its June 22 meeting, stating that payments will be made to the Branson Airport Transportation Development District to avoid payments to a private business.

“There was a concern that the original contract could be challenged because it paid taxpayer money directly to a business, Branson Airport LLC,” Adams said.

Adams said Springfield attorney John C. Holstein of Polsinelli Shughart PC told the city the payment plan could face a constitutional challenge.

“The contract was amended by both parties to where the pay for performance would be paid directly to a transportation development district that was set up when the Branson Airport was under construction,” Adams said. “They would specifically earmark those funds to be used for bond repayment of airport expenses, not the operation of the airport.”

Kruithof said the original agreement had two flaws: the legality issue and payment for certain types of passengers made it difficult to audit. The amendment, he said, corrected both of those issues.

City and airport officials also agreed to use U.S. Department of Transportation figures, calculated every six months, to determine the amount paid to the airport TDD.

Adams said as a result of the agreement changes, the city will pay $152,364 to the airport for 18,491 enplanements May–September last year, a figure Bourk disputes and believes to be higher.

That amount will be paid by the city but no funds have been appropriated for fiscal 2010 because the city had to approve its budget in December, before the amendment was finalized.

According to Adams, the board has the right to decide whether it wants to include the money to pay the contractual obligations to the airport TDD on a year-to-year basis, enabling it to ensure that other city needs are met.

Bourk said he believes the city-airport contract remains legal and expects to be paid, but legal action hasn’t been ruled out if that doesn’t happen.

“We believe that the city will pay under the agreement, and if they don’t, we’ll take appropriate action,” Bourk said.

New flights added
In the meantime, the airport is adding to its flight roster of three airlines and 10 destinations.

The airport announced June 23 the additions of Indianapolis International Airport and Chicago Midway on Branson AirExpress beginning Sept. 10.

Already in flight are AirTran Airways, nonstop to Atlanta and Orlando; Frontier Airlines, nonstop to Denver and Milwaukee, Wis.; and Branson AirExpress, nonstop to Nashville, Tenn., Gulfport/Biloxi, Miss., Shreveport, La., Des Moines, Iowa, and Austin and Houston, Texas.

AirTran and Sun Country Airlines were the original carriers to fly out of the airport, with Branson AirExpress, a charter service, and Frontier adding flights earlier this year.

Sun Country ended flights between Branson and Minneapolis in December 2009, although Bourk said that decision was planned early on.

Daniel Shurz, vice president of strategy and planning for Frontier Airlines, said his company is pleased with the decision to enter the Branson market.

“It’s been a very good choice to get into without question,” Shurz said, declining to provide enplanement numbers. “We go into routes and expect them to be profitable. We tend to expect flights these days to be at least 80 percent full. We are comfortably exceeding traffic levels. Because we’re running healthy traffic levels, we’re exceeding our expectations of the average fare.”[[In-content Ad]]