While the skies are far from clear for competitors Branson Airport and Springfield-Branson National Airport, it appears travelers are doing much to bolster the local jobs landscape.
Amid threats of foreclosure since 2011 for fledgling Branson Airport LLC, Executive Director Jeff Bourk had maintained the arrival of Southwest Airlines would offer the revenue boost the for-profit airport has desperately needed. Eight months after Dallas-based discount airline Southwest (NYSE: LUV) began flying out of BKG, the turnaround Bourk forecasted is beginning to take shape.
Through 2012, the company posted $21 million in operating losses, not counting depreciation and interest expenses. This year, Branson Airport has reported $2.2 million in operating income, after results moved third-quarter financials into the black, according to filings with the Municipal Securities Rulemaking Board.
The news comes on the heels of a Missouri Department of Transportation study that found Branson Airport produced a local economic impact of $91 million in 2012. The same study calculated Springfield-Branson National Airport’s impact at roughly $402 million last year. According to the study, which reviewed airports across the state, BKG helps support 1,460 jobs in the area with a payroll of more than $35 million while Springfield-Branson National props up 4,454 jobs with a payroll of more than $154 million.
Southwest effectIn the quarter ended Sept. 30, Branson Airport reported a net income of $1.54 million, a vast improvement from its $1.7 million net loss in the same quarter last year, according to a financial report posted to EMMA.MSRB.org. The net income figures do not include depreciation or interest expenses.
Passenger activity was up 29 percent during the third quarter, compared to the same quarter last year.
Southwest Airlines, which purchased Orlando, Fla.-based AirTran Airways in May 2011 for $1 billion, began flying out of Branson in March, a presence airport leader Bourk credits for the turnaround. He said the airline is increasing its seating capacity.
Southwest is scheduled to offer 18,999 departing seats Jan. 1–Feb. 12 from BKG – nearly triple the 6,789 seats AirTran had in the market during the same period this year, according to seat tracker Aviation DataMiner.
The airport had a rough takeoff after it opened in the heart of the recession in May 2009. Following an early 2011 default on roughly $115 million in revenue bonds used to construct the airport, BKG officials asked investors in late 2012 for up to $23 million to support operations. In exchange, lenders would receive priority over bondholders with regard to first right of foreclosure.
Bond trustee UMB Bank said in a summer report filed with MSRB it determined not to make the semiannual interest payment of roughly $3.4 million scheduled for July 1, based on factors including the airport’s history of financial losses. The trustee also stated in the report it withheld a $2.1 million sinking-fund payment in July. Securities that have a sinking fund call provision provide higher yields to make up for the additional risk associated with holding them, according to Investopedia.com, but if the bonds are called, the call price is usually paid at a premium.
According to the trustee report, the missed payments mean interest would continue to accumulate on the money borrowed.
Branson Economic Development Director Garrett Anderson said the airport’s role is critical to the economic development of the city, but he cautioned against reading too much into the impact identified in the MoDOT study.
“It quotes the number of jobs at more than 1,000, but the actual number of jobs at the airport is around 140. This is what economic impact studies do,” Anderson said, noting another indirect impact quantified was the money travelers brought with them to spend.
“The report doesn’t address the question of how many of those passengers are new passengers versus your typical Branson fans that are coming anyway. But I do believe there is a lot of new visitation,” he said. “The good year that a lot of people are having is likely, in part, a result of Southwest being here.”
Flying flatSpringfield-Branson Director of Aviation Brian Weiler, unlike Bourk, said he was surprised to see the airport’s economic output tally.
“I’ve worked with a number of these types of studies in the past. We are basically a small city out here with so many people who work here on a daily basis and the 40 or so companies that are here, but I have to admit I was surprised,” Weiler said.
According to the study, Missouri’s 108 airports generated $11.1 billion in economic output in 2012. At $402 million, Weiler said SGF’s impact represents 2.5 percent of the total economic output of the city of Springfield.
However, economic impact does not necessarily translate to passenger growth. From January through October, total passengers at the airport were 633,325, up 0.4 percent from 630,929 during the same period last year, according to airport officials.
Weiler said many airports statewide depend on subsidies from the communities they serve, but Springfield gets the economic benefit of the airport from user fees and revenue it generates on its own.
“We are self-sufficient, but I think MoDOT doing this kind of study helps all local airports be able to demonstrate their value to a community,” Weiler said. “To me, you can’t say airport without saying economic development in the same breath.”
