XNA enplanements fall 52% in March; airport officials approve relief for airlines, rental car companies

Northwest Arkansas National Airport (XNA) reported enplanements declined 52% in March as the Highfill airport was awarded federal relief aid in the wake of the COVID-19 (coronavirus) pandemic.

Enplanements, or passengers flying out, fell to 33,792 in March, from 70,463 in the same month in 2019. Through the first quarter this year, enplanements have declined 9.3% to 168,242, from 185,478 in the same period in 2019.

Before the pandemic started to affect air travel, enplanements rose 15% to 67,144 in February, from 58,400 in the same month in 2019. Enplanements increased 17% to 922,533 in 2019, from 2018, and passenger traffic rose nearly 26% over the past two years.

United Airlines was the first air carrier to notify XNA it would suspend a flight at the airport as a result of the pandemic. The carrier’s nonstop flights between XNA and San Francisco International Airport were suspended from April 1 to Oct. 1.

United Airlines has also reduced its flight frequency and suspended flights between XNA and Newark Liberty International Airport from April 1 to June 3. Other temporary flight suspensions include Delta and American Airlines flights to LaGuardia Airport in New York and American Airlines flights to Los Angeles International Airport.

Low-cost carriers Frontier Airlines and Allegiant have suspended all flights at XNA. Frontier had nonstop flights to Denver, while Allegiant offered nonstop flights to Destin, Fla.; Nashville, Tenn.; Los Angeles; Las Vegas and Phoenix. XNA has yet to be notified how long the suspensions will last, said Alex English, public relations and marketing specialist.

U.S. airlines reported passenger traffic increased 6.7% in February, from the same month in 2019, according to the most recent data from the Bureau of Transportation Statistics. February was the 29th consecutive month the airlines reported passenger traffic increased from the previous month. Since October 2017, only the 8.8% rise in December 2019 was larger than the 6.7% increase in February.

Like at XNA, enplanements in March also fell more than 50% at other commercial airports in the state, including Clinton National Airport in Little Rock and Fort Smith Regional Airport. Enplanements declined by 54.5% to 41,841 and by 53.5% to 3,521, respectively, in March from the same month in 2019. February enplanements rose by 3.5% to 75,625 and by 9.4% to 6,675, respectively, from the same month in 2019. In the first quarter, enplanements have fallen by 18.7% to 196,691 and by 15.4% to 17,084, respectively, from the same period in 2019.

Meanwhile, XNA, as the second-largest commercial airport in the state, was one of several Arkansas airports to receive money from the Federal Aviation Administration as a result of the $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act that included $10 billion for U.S. airports.

The act increased funding for the Airport Improvement Program and eliminated the need for grant recipients to contribute a matching percentage of project costs. The CARES Act also created a new funding stream allocating money based on formulas that include the number of annual boardings and the amount of debt and money in reserve for each airport. Out of the $51 million dedicated for Arkansas airports, XNA received $8.21 million.

XNA plans to use the money for airport operations, including employee payroll, routine operating costs, utilities, maintenance and debt service. Staff has informed the board of directors of the money but do not need board approval for its planned use, English said. The airport plans to keep at least 90% of its staff during this time as the act requires. XNA has not laid off or furloughed any employee, she said. XNA has 59 full-time and seven part-time employees.

Tim O’Donnell, chief financial officer for XNA, recently provided financial projections for the airport amid the pandemic. One projection showed a 50% impact on the airport’s budget as a result of COVID-19 could negatively affect it by $10.8 million. O’Donnell recently said the impact of the pandemic could be $2 million monthly that the airport won’t collect.

Before the health crisis, the airport had projected revenue to be about $21.8 million for 2020. XNA has a “cash flow cushion” but would soon start to tap it, he said previously.

AIRLINE, VENDOR AID
In a special meeting via conference call Friday (April 24), XNA’s board of directors approved giving some relief to rental car companies, food vendors and airlines operating at the airport.

XNA officials previously discussed providing relief to those companies operating at the airport amid the pandemic but did not want to provide any abatements.

Andrew Branch, chief business development officer, said XNA will provide a fee waiver for airlines in April, May and June and recoup the cost in the first quarter of 2020. Branch said that this is not a deferment.

Eric Smith, attorney for Kaplan Kirsch Rockwell and representing XNA, said the airport could recoup the cost in a base rate charge for the next year, either charging it at the first of the year or spreading out through the year.

Branch noted that American Airlines, Delta and United Airlines have agreed to the proposal. XNA has yet to hear from Allegiant Air, and Frontier Airlines is already not paying rent based on an existing waiver. O’Donnell said the airlines comprise more than $6 million in revenue for the airport.

XNA will allow rental car companies to use customer charges that were being set aside for the rental car parking deck to meet its financial obligations to the airport. It will be required to meet the obligations until monthly deplaning passengers reach 85% of the corresponding month in 2013. Once it falls below 85% for three consecutive months, XNA must reduce the rental car company’s obligations to the airport.

Branch said the airport’s traffic is down about 95%, and he expects the obligations will be reduced. The estimate is this would reduce the customer charges account by nearly $1.1 million through Sept. 30. The account has more than $4 million, O’Donnell said.

The agreement is set up to allow either XNA or the rental car companies to begin paying the customer charges as previously proposed if business returns to levels allowing them to make the payments, Branch said, adding that it will be reviewed monthly.

Concerning the airport’s food vendor Paradies Lagardere, XNA board members agreed to change the terms of the contract to end in 2023 with options to extend up to 2025. The proposed agreement would eliminate the financial obligations, known as minimum annual guarantees, for this year and reduce the amount for capital improvements from $1.2 million. Existing terms, which expire April 30, 2028, require a minimum payment of $51,000 monthly to XNA.

The idea to reduce the term length was one to see the vendor add new establishments as Branch said there’s no motivation to do so with a term so far out. He also said this is not a move to push out Paradies but would like to see them put in national chains such as Starbucks or Chili’s.

Paradies has laid off or furloughed more than 70 of its 78 employees at XNA, Branch said. Its sales are about $100 to $200 per day.