Denis Leger, Commissioner Transportation, Facilities and Emergency Services. SUBJECT: Airport Aeronautical and Public Parking Fees,

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1 CITY OF KINGSTON REPORT TO COUNCIL Report No.: TO: FROM: RESOURCE STAFF: Mayor and Members of Council Denis Leger, Commissioner Transportation, Facilities and Emergency Services Sheila Kidd, Director Transportation Services David Snow, Airport Manager DATE OF MEETING: SUBJECT: Airport Aeronautical and Public Parking Fees, EXECUTIVE SUMMARY: The proposed fee structure in this report establishes the aeronautical and public parking fees and charges for Kingston Airport for the upcoming 5-year period ( ). The last fee review was conducted in 2009 for the period 2009 through 2013, and formed the basis for annual fees and charges adjustments that were approved annually by Council. RECOMMENDATION: THAT Council approve the proposed 2014 Fees and Charges for Kingston Airport, as outlined in Exhibit A of Report #13-321, and receive the remainder of the proposed fee schedule as the basis of future changes for the period. Council Meeting 21 8

2 - Page 2 - AUTHORIZING SIGNATURES: Denis Leger, Commissioner, Transportation, Facilities & Emergency Services Gerard Hunt, Chief Administrative Officer CONSULTATION WITH THE FOLLOWING COMMISSIONERS: Cynthia Beach, Corporate & Strategic Initiatives Lanie Hurdle, Community Services Jim Keech, President and CEO, Utilities Kingston N/R N/R N/R (N/R indicates consultation not required) Council Meeting 21 9

3 - Page 3 - OPTIONS/DISCUSSION: BACKGROUND The 2013 fees and charges for Kingston Airport represent the final year of a 5-year fee schedule, approved by Council in 2009 (Report #09-156). This fee schedule was established by comparing Kingston s rates to 5 similar airports in Ontario, including Sudbury, Sault Ste. Marie, North Bay, Waterloo, and Windsor. These airports were selected as comparators because, at that time, they were similar in operations, airline service, and fee structure. The objective at that time was to establish comparator rates and phase-in adjustments over a 5-year timeframe, recognizing that this approach would still place Kingston in a catch-up situation, as the other airports adjust their fees. To establish fees and charges for the upcoming 5-year period ( ), staff conducted a similar review. The comparator airports were reviewed based on the same criteria, to ensure they were still similar to Kingston. It was determined that Sudbury, North Bay, Sault Ste. Marie and Waterloo were still appropriate comparators, however Windsor is not comparable as they have 4 different carriers and very competitive with neighbouring Detroit. Unfortunately, staff were unable to obtain information for Sault Ste. Marie and accordingly the list was updated to include Timmins and Thunder Bay in lieu of Sault Ste. Marie and Windsor. This report provides a brief description of the various aeronautical fees and the vehicle parking charges for Kingston Airport, and proposes fee adjustments for the period 2014 through 2018 to maintain market comparability. Exhibit A is a summary of the fees and charges referenced in this report. Airport fees are designed to offset the cost of airport operations and it should be noted that most fees are directly or indirectly borne by the passenger. In considering fee recommendations, staff has attempted to balance the City s fiscal needs, our objective to develop air services and the overall impact to the customer. KINGSTON AIRPORT FEE DESCRIPTIONS AND RECOMMENDATIONS Kingston Airport aeronautical charges and parking fees, as represented in the City of Kingston Fees and Charges By-law, include the fee categories identified below. Airport Landing Charges These are fees that are charged to the carrier for landing aircraft based on aircraft weight. In Kingston, escalating fees are charged per 1,000 KG for aircraft in excess of 2,270 KG (5,000 lbs), based on Maximum Gross Take-Off Weight and whether the flight is domestic or international. Discussion - In most weight categories, Kingston is slightly below the average of the comparable airports, however Kingston s minimum charge is slightly higher than the average. Kingston revenue generated from domestic landings in 2012 was $195,280 and international landings were $8,948 for total revenue of $204,228. Due to the type of aircraft and the nature of passenger air service in Kingston, the landing revenue was primarily generated by lighter aircraft such as the B1900 and the DH for domestic landings, and small corporate aircraft such as the King Air or Citation for international landings. Overall revenue will be best enhanced by continuing the efforts at attracting larger and thus heavier commercial passenger aircraft and by promoting YGK as a good alternative for corporate aviation. Council Meeting 21 10

4 - Page 4 - Recommendation - No adjustment is being proposed for aircraft landing charges beyond the annual adjustment, in accordance with Council s direction with regard to annual increases to fees and charges. Terminal Fees These are fees that are charged to the carrier for incoming flights based on the number of passenger seats and whether the flight is domestic or international. Discussion: Kingston s current terminal fee schedule is divided into two categories - Under 19 Seats (e.g. B1900 aircraft) and Over 20 Seats (e.g. Dash-8s, including Q400 aircraft). The other airports all of which have Q400 service and some with B737 service have a fee structure that increases based on seat increments such as 1-9 seats, seats, seats, etc., as outlined in the proposed fee structure for Kingston Airport (Exhibit A). This structure provides a better allocation of terminal costs based on aircraft capacity. In addition to a terminal fee, North Bay charges an Airport Facility Charge whereas Kingston does not. The fees charged at Kingston Airport are significantly below the comparators. For example, the fee Kingston charges for a B1900 is currently $28.01, whereas Thunder Bay charges $41.83, Sudbury $43.18, North Bay $68.50 and Timmins $ A direct comparison could not be made with Waterloo, as it does not charge a terminal fee. Although there are currently no international flights that are subject to a terminal fee, the revised fee structure will continue to include a charge that would be levied against future international scheduled passenger landings. In 2012, the passenger fee generated $91,865 of revenue. Recommendation: The 2014 proposal would change the terminal fee structure to reflect best practices in the industry by establishing terminal fees for a broader range of aircraft seating capacity. Over the subsequent 3 years, the fee structure proposes phase-in rate increases to more closely align with comparator airports. The revised seat classifications are shown in Exhibit A. By the final year 2018, the proposed terminal fee is projected to increase in accordance with Council s direction with regard to annual increases to fees and charges. Based on the 2012 activity levels, the 2014 proposed fee would generate approximately $20,000 in additional revenues, In addition, should the terminal fee structure be approved, a Q400 terminal fee in 2014 would be $96.33 per incoming domestic flight versus the current fee of $ The average terminal fee per incoming flight for a Q400 among the comparable airports is $ The overall proposed terminal fees for Kingston are still below the comparator airports average. Passenger Fees These are fees that are charged to the carrier and passed on through airfare ticket pricing as a surcharge to the passenger. This fee is quoted in airfares as a surcharge to the ticket price. Council Meeting 21 11

5 - Page 5 - Discussion: Timmins and North Bay charge a $10 passenger fee, however North Bay charges an additional $75-$450 as an airport facility charge per aircraft, including those not carrying passengers. Waterloo charges $15 and Sudbury s passenger fee is $25. Thunder Bay airport has no passenger fee, however their landing and terminal fees are among the highest of the comparator airports. In 2012, the passenger fee generated $327,505 of revenue. Recommendation: The proposal would increase the passenger fee from $11.10 to $15 (representing the lower end of the range of our comparator airports) effective January 1, 2014.For the period , the fee would increase in accordance with Council s direction with regard to annual increases to fees and charges. Based on the 2012 activity levels, the 2014 proposed fee would generate approximately $122,500 in additional revenues. Aircraft Parking Fees These are fees that are charged to aircraft owners for parking aircraft for more than 6 hours, based on the weight of the aircraft. Discussion: The fees charged at Kingston Airport are comparable to the other airports. In 2012, the aircraft parking fees generated $17,529 of revenue. Recommendation: It is being proposed that adjustments for aircraft parking fees be made in accordance with Council s direction with regard to annual increases to fees and charges. Other Aeronautical Fees These fee categories include ground power/heating starts, aviation gasoline (AvGas) fuel surcharge, turbine fuel surcharge, flying surcharge, and hangar storage fees. Discussion: The other aeronautical fees for Kingston Airport represent miscellaneous charges based on the various services offered. Kingston s fees and fee categories do not align to the miscellaneous fees charged by the comparator airports therefore it is not possible to compare fees. As an example, not all airports own hangars which are rented to individual aircraft owners, and not all airports provide ground power. Similarly, airports that do not charge a fuel surcharge have concession agreements with refuellers that would encompass a percentage of gross sales. In 2012, the total revenues generated by all these sources amounted to $90,847. Recommendation: It is being proposed that adjustment for fees categorized as Other Aeronautical Fees, be made in accordance with Council s direction with regard to annual increases to fees and charges. Vehicle Parking Fees These are fees that are charged to automobile owners for parking at the airport, based on an hourly, daily, weekly, or monthly rate. Council Meeting 21 12

6 - Page 6 - Discussion: Generally, passengers have various options and cost implications when considering ground transportation to Kingston Airport. These include the cost of private transportation (family/friends to drop off/pick up), commercial public transportation (taxi/limousine) or airport parking. The vehicle parking fees or rates have traditionally been, and are still considered, relative to local transportation alternatives, rather than comparator municipalities. In 2012, the vehicle parking revenue generated $108,240 of revenue. Recommendation: No adjustment is being proposed for vehicle parking fees for Subsequent years may be adjusted depending on the costs of local alternatives, or in accordance with Council s direction with regard to annual increases to fees and charges. EXISTING POLICY/BY LAW: By-Law No Fees and Charges, as amended. NOTICE PROVISIONS: N/A ACCESSIBILITY CONSIDERATIONS: N/A FINANCIAL CONSIDERATIONS: The amounts budgeted in 2013 (based on 2012 activity levels) for aeronautical and parking charges total $883,955 in revenue. Assuming no change to the passenger activity levels, the proposed fee adjustments in this report would increase the 2014 revenue by approximately $167,500. Of this amount, approximately $122,500 will be generated from the passenger fee increase. This specific adjustment is being proposed to bring Kingston s passenger fees in line with our comparator airports. CONTACTS: Sheila Kidd, Director Transportation Services , Ext David Snow, Airport Manager , Ext OTHER CITY OF KINGSTON STAFF CONSULTED: N/A EXHIBITS ATTACHED: Exhibit A Schedule of Proposed Aeronautical and Public Parking Fees and Charges Council Meeting 21 13

7 Schedule of Proposed Aeronautical and Public Parking Fees and Charges Exhibit A - Report FEES 2014 FEES Dom Intl Dom Intl Dom Intl Dom Intl Dom Intl Dom Intl Min. for jet and turbine aircraft Min. for commercial rotary wing not more than 21,000 kg ,000 to 45,000 kg more than 45,000 kg Per 1,000 kg or fraction for turbo/ piston powered aircraft not more than 21,000 kg ,000 to 45,000 kg more than 45,000 kg AIR TERMINAL FACILITY FEES, ETC. (PER INCOMING FLIGHT) 2015 FEES 2016 FEES 2017 FEES 2018 FEES Sched Passgr Aircraft 1-9 seats Sched Passgr Aircraft seats Sched Passgr Aircraft seats Sched Passgr Aircraft seats Sched Passgr Aircraft seats Sched Passgr Aircraft seats Sched Passgr Aircraft seats Sched Passgr Aircraft seats Sched Passgr Aircraft >125 seats Per Departing Passenger Aircraft Ground Power & Heating/Start SURCHARGES TYPE OF FEE LANDING OF AIRCRAFT IN EXCESS OF 2,270 KG (5,000 LBS) (Note 1) PASSENGER FACILITY FEE AIRCRAFT GROUND POWER PER USE Avgas fuel surcharge (per litre) Turbine fuel surcharge (per litre) Flying surcharge (per revenue hour) Council Meeting 21 14

8 HANGAR STORAGE TYPE OF FEE Per Day Per Mon Per Day Per Mon Per Day Per Mon Per Day Per Mon Per Day Per Mon Per Day Per Mon Aircraft Storage Airside or Apron Storage per m 2 N/A N/A N/A N/A N/A N/A AIRCRAFT PARKING (Note 2) Aircraft of less than 2,000 kg Aircraft from 2,000 to 5,000 kg Aircraft from 5,000 to 10,000 kg Aircraft from 10,000 to 30,000 kg Aircraft from 30,000 to 60,000 kg , , , , , , Aircraft of 60,000 kg or more , , , , , , AIRCRAFT PARKING - ANNUAL 2013 FEES 2014 FEES 2015 FEES 2016 FEES 2017 FEES 2018 FEES Aircraft of less than 2,000 kg Aircraft from 2,000 to 5,000 kg MOTOR VEHICLE PARKING FEES (HST Included) (Note 3) Short term - Max 2 hours (taxes incl) Per day (taxes incl) Per 7 days (taxes incl) Per 14 days (taxes incl) Per 21 days (taxes incl) Per 35 days (taxes incl) Note 1: Exemptions to Landing Fees 1) Where any Canadian air carrier licensed pursuant to Part II of the National Transportation Act, 1987, of an aircraft on a flight conducted exclusively for the purpose of improving the skill and knowledge of the aircrew personnel of the air carrier, and where arrangements are made in advance with the Airport Manager, the landing charge for each such landing is 20% of the applicable charge prescribed. 2) All Military Aircraft and any aircraft used in Search & Rescue missions will be exempt. Note 2: Aircraft Parking 1) Parking fees will apply for any 6-hour period, per calendar day. 2) Double billing for overnight (2 calendar days) will not apply if the aircraft departs prior to 0900 hours. 3) For aircraft requiring tie-downs for more than 7 days and up to 1 month, monthly rate will apply. Note 3: Vehicle parking in years 2015 through 2018 may be adjusted based on local transportation costs. **All fees are listed exclusive of applicable taxes unless otherwise noted FEES 2014 FEES 2015 FEES 2016 FEES 2017 FEES 2018 FEES Council Meeting 21 15