XNA to increase rates for low-cost carrier Allegiant, cut them for United as succession planning continues

Northwest Arkansas Regional Airport is planning to change its operating rates for some airlines and add a shuttle service, while the search for a new CEO begins. The change would increase rates for low-cost carrier Allegiant and decrease them for United Airlines.

On Friday (Feb. 9), members of the Northwest Arkansas Regional Airport Authority recommended to the full board to change the rates for airlines who are operating from the B gates, and for a third taxi business to operate at the airport after one went out of business in December.

The rate change would allow the airport to charge carriers based on aircraft size. A widebody would cost $157.43 per turn, which is a landing or takeoff; a narrow body, which Allegiant uses, would cost $78.72 per turn; and a regional jet, which United uses, would cost $39.36. The rate change would increase Allegiant’s rate by $34.83 per turn and decrease United’s rate by $4.53.

On Dec. 13, the board approved its 2018 budget to include a 22% rate decrease for carriers, based on enplanements, as a result of a nearly $550,000 decrease in interest on debt owed. The rate decrease cut the terminal rental rate by 20.3% to $55.71, landing fee by 14.5% to $2.42 and the per turn use fee for the ticket counter and bag makeup by 20.3% to $21.98. However, the per turn use fee for the B gate increased 16.4% to $52.48, more than offsetting the decrease for airlines operating from the B gate.

On Dec. 19, airport staff agreed to look at changing its rates in a meeting with American Airlines and United, Airlines 4 America and their attorneys. After the meeting, staff met with Delta and Allegiant for feedback on the change, and they accepted it. Delta and American Airlines as well as United use the A gates, and are not charged the per turn fees from those gates.

If the change to calculate the per turn rate based on aircraft size is approved, it would decrease the airport’s cost per enplanement to $5.90, from $7.57 in 2017, according to XNA. The rate change will come before the board on Wednesday (Feb. 14), and if approved, it would go into effect March 1.

SHUTTLE SERVICE
Also, new proposals from shuttle service companies will come before the board Wednesday. In January, the airport asked for proposals from the companies in order to fill a vacancy. It received five proposals, and staff would like to negotiate contracts with Pinnacle Car Services, Jim’s Express Shuttle and JCB Executive Car Service. Existing shuttle service company Pinnacle Car Services bid the highest minimum guarantee and will receive the first choice at the booths in the terminal. Second was existing shuttle service company Jim’s Express Shuttle. JCB Executive Car Service is new to the airport and has five cars.

Airport Director Kelly Johnson said their bids were lower than in previous years, and the shuttle companies said the ridesharing or transportation network companies, such as Uber or Lyft, have hurt their business. In the bids from shuttle companies, monthly minimum guarantees have declined 71.4% to $1,050, and 4.7% to $875, from existing contracts. The new shuttle company proposed a monthly minimum guarantee of $396, down 38.9% from the previous company that went out of business. The airport will receive either the minimum guarantee per month or a percentage of their gross income, whichever is greater.

While the amounts are lower than previously, the revenue from the ridesharing companies more than fill the gap as the airport is receiving between $4,800 and $5,000 monthly from them, Johnson said. Ridesharing company drivers are charged a $2 per trip pickup fee, which would mean these drivers are making 2,400 to 2,500 trips per month to the airport to pickup passengers.

CEO SEARCH
In the board’s personnel committee meeting, CEO Scott Van Laningham reviewed the executive search process and schedule.

On Dec. 13, the board approved spending up to $200,000 to hire executive consultant Russell Reynolds Associates to review the airport’s organizational structure and recruit a CEO. The structural review would comprise of $75,000 of the contract, with the remaining $125,000 for the search.

When asked why XNA is completing the executive search rather than simply appoint Johnson as CEO, personnel committee chairman Phil Phillips Jr. said “the board felt we owed it to our stakeholders who use the airport to do as thorough a job as possible as we move the airport toward the next 25 years. The executive personnel that we have on board today have done an unbelievably great job of positioning XNA for the future. As Scott Van Laningham, our CEO, positions himself for retirement, we look forward to reviewing the prospects that are out there for leadership as well as receiving the search firm’s review of each of our existing personnel.”

Johnson previously said she’s interested in the CEO position and has had the opportunity to work for XNA since nearly the beginning. The airport opened for business nearly 20 years ago.

Before the board selected an executive consultant, it had previously narrowed the number of consultants to two, from four. Of the two, the other was ADK Consulting & Executive Search, and while it was not selected to help find the next CEO and review its staff, Doug Kuelpman, president and CEO, had said that less than 20% of internal candidates are selected by ADK. But it doesn’t treat internal candidates differently than external candidates. Amy Hayes of Russell Reynolds previously said the process should feel the same for internal candidates as it does for external ones. If the internal candidate isn’t selected, Hayes said the candidate would receive feedback on the gaps to be a successful candidate.

Russell Reynolds is expected to complete the executive search and staff review in six months, Van Laningham said.

In other business, the board’s nominating committee will recommend to the full board the appointment of Art Formanek as chairman and Blake Woolsey as vice chair. Chairman Mike Johnson has completed a two-year appointment, and historically, the vice chair would be appointed chair. But vice chair Sara Lilygren is planning to move from the area and wouldn’t be able to fulfill the term. Also, the nominating committee will recommend Phillips be reappointed secretary and Stan Green to be reappointed treasurer for one-year terms.