VIRGIN ISLANDS PORT AUTHORITY (VIPA) 2016 PUBLIC HEARING ON PROPOSED TARIFF INCREASE. ! July

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1 VIRGIN ISLANDS PORT! July AUTHORITY (VIPA) PUBLIC HEARING ON PROPOSED TARIFF INCREASE

2 FINANCIAL OPERATIONS VIPA AVIATION DIVISION VIRGIN ISLANDS PORT AUTHORITY 2

3 5-YEAR INCOME STATEMENT SNAPSHOT- AVIATION DIVISION Opera&ng Revenue Terminal 14,943,275 14,460,575 15,356,787 15,222,365 16,077,957 16,140,936 Terminal Use Fee 9,222,255 8,942,407 9,399,123 9,394,496 9,922,525 9,963,541 CEKA 7,193,359 6,975,078 7,331,316 7,327,707 7,739,570 7,771,562 HERA 2,028,896 1,967,330 2,067,807 2,066,789 2,182,956 2,191,979 Airline Counter 559, , , , , ,348 Airline Office 1,264,862 1,256,363 1,302,312 1,288,485 1,360,906 1,360,906 Rental & Concessions (Non Airline) 3,896,320 3,698,483 4,090,912 3,969,090 4,192,178 4,214,142 Airfield 6,137,920 6,007,509 6,022,119 6,038,635 6,378,043 6,522,466 Rental & Concessions 1,669,220 1,742,699 1,788,823 1,700,395 1,795,968 1,992,307 Parking & Ramp Fees 179, , , , , ,428 Landing Fee 3,307,026 2,975,707 2,911,720 3,368,790 3,558,137 3,337,543 CEKA 2,627,656 2,775,347 2,603,284 HERA 741, , ,259 Other Fee 982,467 1,091,506 1,112, , ,123 1,029,188 Total Opera&ng Revenue 21,081,195 20,468,084 21,378,906 21,261,000 22,456,000 22,663,402 Opera&ng Expenses Salaries, Wages, Payroll Ext 6,467,567 4,535,609 5,269,059 5,446,000 5,894,000 5,330,110 Maintenance & Repairs 2,131,115 1,909,563 1,927,635 1,939,000 2,233,000 1,438,668 Materials & Supplies 584, , ,528 2,399,000 2,382, ,602 UYliYes 4,280,757 4,418,103 4,531, ,255,038 Professional & Other 815, , , ,609 Insurance 1,606,468 1,511,894 1,662,193 1,796,000 1,711,000 1,293,516 DepreciaYon Expense 12,499,020 12,499,020 12,499,020 12,499,000 11,074,000 10,469,992 Financial Expenses (Marine Loan) Financial Expenses Pay Back 47,090 Other Expenses 371, , ,861 5,251,000 5,061, ,512 Direct 28,756,359 26,594,905 27,880,530 29,330,000 28,355,000 25,395,138 Admin & General Alloca&on 6,376,000 6,430,000 7,119,000 8,081,000 9,286,000 7,543,131 Total 35,132,359 33,024,905 34,999,530 37,411,000 37,641,000 32,938,269 Total Less Deprecia&on 22,633,339 20,525,885 22,500,510 24,912,000 26,567,000 22,468,277 Net Opera&ng Income (14,051,164) (12,556,821) (13,620,624) (16,150,000) (15,185,000) (10,274,867) Net Opera&ng Income (Less Deprecia&on) (1,552,144) (57,801) (1,121,604) (3,651,000) (4,111,000) 195,125 In USD FY 2013/2014 data presented consistent with audit VIRGIN ISLANDS PORT AUTHORITY 3

4 AVIATION DIVISION FINANCIAL POSITION Aviation Division losses before Depreciation in the years 2011, 2013 and 2014 were $9.0 million. At the end of FY 2015 Aviation Division cash reserves were $1 million. Between 10/24/2014 and 01/30/2016 the Aviation Division will have borrowed $4.2 million from the Marine Division to fund OPEX and essential CAPEX projects for HERA and CEKA. VIRGIN ISLANDS PORT AUTHORITY 4

5 TARIFF STRUCTURE EFFECTIVE AS BELOW NOTED VIRGIN ISLANDS PORT AUTHORITY 5

6 2015 EXISTING AVIATION DIVISION AIRLINE TARIFF STRUCTURE Landing Fee - $2.50 per 1,000 pounds Pre-Clearance Departure - $7.95 per passenger Domestic Departure - $7.21 per passenger Foreign Arrival - $8.15 per passenger Domestic Arrival $2.59 per passenger CEKA Ticket Counter - $96.00 per sq. ft. CEKA Office Space - $43.00 per sq. ft. HERA Ticket Counter - $45.00 per sq. ft. HERA Office Space - $30.00 per sq. ft. Certain Other Fees Apply VIRGIN ISLANDS PORT AUTHORITY 6

7 2016 PROPOSED AVIATION DIVISION SIMPLIFIED AIRLINE TARIFF STRUCTURE Common airline charges for both CEKA and HERA. One Landing Fee Rate. One per Passenger Charge for Common-Use Space. One per Square Foot Charge for Airline Exclusive Space. Airline tariff charges (landing, common-use and space) will be adjusted annually based on Aviation Division operating and capital expenses calculated consistent with the 2016 Airport Lease and Use Agreement. VIRGIN ISLANDS PORT AUTHORITY 7

8 RATIONALE BEHIND THE 2016 TARIFF CHANGE Tariff has not changed in 10 years. Inflation accounts for a 21.6 % increase in prices between 2005 and Increased cost of aviation-related security. Need to achieve annual break-even financial operations. Pay off the Marine Division loan. Fund CIP- Terminal Enhancements. VIRGIN ISLANDS PORT AUTHORITY 8

9 AVIATION TARIFF GOALS Achieve operating expense coverage Build six-month operating expense cash reserve Pay back Marine Division loan Realize fair value for airfield and, terminal space FY 2017 begin funding CIPterminal enhancements VIRGIN ISLANDS PORT AUTHORITY 9

10 SCHEDULE FOR IMPLEMENTATION Tariff change related to airline operations, which address Aviation Division operating expenses, is effective May 1, Tariff change related to airline operations, which address capital project cost, is effective October 1, All Miscellaneous tariff changes are effective August 1, All tariffs are subject to annual adjustment and are applicable until otherwise modified. VIRGIN ISLANDS PORT AUTHORITY 10

11 AIRLINE TARIFF COMPUTATION Airfield Terminal All Airfield operating, and other expense All Terminal operating, and other expense Less: All non-signatory landing fees Less: All exclusive space rent Less: All other airfield revenue (FBO, cargo, land, etc.) Less: All other terminal revenue (concession, parking, rental car, etc.) Equals: Net Airfield Cost Requirement Equals: Net Terminal Cost Requirement Divided by: Signatory Landed Weight Equals: Airline Landing Fee Rate (Amount per 1,000 pounds of maximum aircraft landing weight) Divided by: All enplaned commercial passengers Equals: Common Use Space Charge (Amount per enplaned passenger covers both arriving and departing terminal space) OPEX Coverage Required OPEX Coverage Terminal 7,244,952 9,093,667 9,479,255 9,880,153 10,296,944 Required Fee Terminal OPEX (per Pax.) $ $ 9.79 $ $ $ Required OPEX Coverage Airfield 5,654,032 6,808,704 7,099,353 7,401,393 7,715,257 Required Fee Airfield OPEX (per 1000lbs.) $ 5.72 $ 5.26 $ 5.43 $ 5.60 $ 5.78 VIRGIN ISLANDS PORT AUTHORITY 11

12 CASH RESERVE TO COVER SIX MONTHS OF OPERATING EXPENSES Build up of the reserve over a 5-year period. Current cash balance accretive to total. Total dollar requirement: $9,667, Month OPEX Cash Reserve (5-yr. build-up) Cash Required 1,933,445 1,933,445 1,933,445 1,933,445 1,933,445 Terminal Tariff $ 1.77 $ 1.35 $ 1.34 $ 1.33 $ 1.31 Airfield Tariff $ 0.69 $ 0.52 $ 0.52 $ 0.51 $ 0.51 Note-65% of the fee attributed to Terminal. Numbers rounded. VIRGIN ISLANDS PORT AUTHORITY 12

13 MARINE DIVISION LOAN PAYBACK FY 2015 and 2016 Aviation borrows $4.2 million from Marine Division to fund Aviation Division OPEX and CAPEX expenses. Marine Loan is repaid from tariff receipts over fiscal years 2016 through Marine Payback Total $ 1,064,637 $ 1,064,637 $ 1,064,637 $ 1,064,637 $ - Terminal Fee (Marine Repayment) $ 0.98 $ 0.75 $ 0.74 $ 0.73 $ - Airfield Fee (Marine Repayment) $ 0.38 $ 0.29 $ 0.28 $ 0.28 $ - Note-65% of the fee attributed to Terminal VIRGIN ISLANDS PORT AUTHORITY 13

14 FAIR VALUE RENTAL RATE Airlines are assessed a fair value for dedicated lease space calculated by dividing total terminal operating expenses/ total area square feet Fair Rate Fee (OPEX / Exclusive Space Sq. Ft.) OPEX/Exclusive Space Sq. Ft. $ $ $ $ $ VIRGIN ISLANDS PORT AUTHORITY 14

15 TARIFF EXPENSE PROPOSED CIP- TERMINAL ENHANCEMENTS Tariff revenue accumulation to start in FY 2017 (1/3). CIP will be bond financed in FY CIP bond finance is sized at $36.1* million plus fees and reserves, amortized over 25 years at a 6% taxexempt interest rate. CEKA operations finances the entire capital expense program. Note- 85% CIP fee attributed to Terminal v * CIP* Total $ 36,152,554 Payment - 3,153,327 3,153,327 3,153,327 Terminal - 2,680,328 2,680,328 2,680,328 Airfield - 472, , ,999 Terminal Fee (CIP) $ 1.21 $ 3.63 $ 3.59 $ 3.55 Airfield Fee (CIP) $ 0.15 $ 0.46 $ 0.45 $ 0.45 Subject to further refining VIRGIN ISLANDS PORT AUTHORITY 15

16 2016/2017 AVIATION DIVISION TARIFF ITEM CHANGES Aircraft Parking Fees- subject to space availability and rules and regulations of the airport. Parking in excess of 30 minutes for aircraft weighing up to 12,500 lbs. in excess of one (1) hour or fraction thereof-- 1/3 landing fee amount per day. Overnight monthly parking is increased 20%. 34 seats or less $ seats $ seats and up $5, General Aviation Ramp. Daily parking in excess of eight (8) hours and for each successive calendar days or fraction over eight (8) hours 15% of landing fee amount (minimum rate $25/ day). VIRGIN ISLANDS PORT AUTHORITY 16

17 2016/2017 AVIATION DIVISION TARIFF ITEM CHANGES Overnight monthly parking- US VI residents with locally based aircraft may elect to pay, in advance, a monthly parking fee. Aircraft weighing up to 12,500 lbs., monthly amount per engine per space $ Aircraft weighing over 12,500 lbs. monthly amount per engine per space-- $ Other charges. Cargo warehouse space, per square foot per year market value. Improved or unimproved land, per square foot per year market value. Fuel flow fee*- fuel sold on airport, per gallon-- $0.05. *Non-commercial airline (carriers who sign use agreement are excluded from fuel fees VIRGIN ISLANDS PORT AUTHORITY 17

18 2016/2017 AVIATION DIVISION TARIFF ITEM CHANGES Special Services. Foaming runway, replacing foaming agent at cost. Assisting removal of disabled aircraft, reimbursement of outside cost as quoted. Other services (security, electricity, trash removal, etc.) as quoted. Interest fee of 11/2 percent per month of any amount over 30 days. VIRGIN ISLANDS PORT AUTHORITY 18

19 DEFINITIONS 1. Landing Fee: A charge for the use of the runways, taxiways and ramp areas computed to the nearest thousand pounds of the maximum allowable landing weight (M.A.L.W.). A touch and go, search and rescue mission and/or emergency return flight is not charged a landing fee. Search and rescue flights must be non-commercial and in response to a declared emergency, that has been approved by the Airport Manager's office prior to departure. 2. Parking Fee: DESCRIBED BELOW (Does not exempt landing fee) a. Terminal Ramp Parking Fee: A charge for occupying the passenger ramp parking area. Commences after 30 minutes on aircraft weighing up to 12,500 lbs. M.A.L.W. and after one hour, on aircraft weighing more than 12,500 lbs. M.A.L.W. The charge made will be for each hour of time, or part thereof, after the permitted time expires. Scheduled aircraft with minor mechanical delays may have this charge excused by the Airport Manager. Major mechanical delays may necessitate relocation of aircraft should the Airport Manager so require. Locally based charter aircraft may be assigned a ready position by the Airport Manger on the ramp (space permitting), in which the ramp parking fee will not apply. b. Daily Parking Fee: A charge for occupying parking space designated as a continuous public parking area, away from the passenger terminal ramps. Not applicable to tenant's aircraft(s) parked solely on property leased to tenant for aeronautical use. Locally based aircraft on which a monthly parking fee is paid are exempt form the daily parking fee. Charges commence after eight hours and are per 24-hour period, or part thereof, after eight hours. c. Monthly Parking Fee: A charge for occupying parking space designated as a continuous public parking area, away from passenger terminal ramps. VIRGIN ISLANDS PORT AUTHORITY 19

20 DEFINITIONS 3. Counter Space: A charge for prime space in a terminal building for serving passengers and their baggage. All utilities are the responsibility of the tenant. A minimum charge may be established. 4. Office Space/ Air Conditioned: A charge for space in an enclosed room. Air conditioning is provided by the Authority. All utilities are for the account of the tenant. A minimum charge is established. 5. Office Space/ Non-Air Conditioned: A charge for space in an enclosed area. Air conditioning is not provided by the Authority. All utilities are for the account of the tenant. 6. Baggage Space/ Air Conditioned: A charge computed on the square foot area leased for baggage room or makeup area, or whether the area is air conditioned or not. No minimum charge is established. 7. Cargo Warehouse Space: A space computed on the square foot area of space leased for storing, receiving or delivering air cargo. A minimum charge is established. 8. Unimproved Land Area: A charge computed on the square foot area of bare open space lease for use in conducting permitted business. Fair Market Value as determined by an appraisal shall mandate fee to be charged. 9. Baggage Delivery Facility: A charge assessed the aircraft operator on the total number of occupants on an aircraft including non-revenue passengers (flight crew not counted) for the use of the baggage claim facility for delivering baggage to passengers, or from aircraft via baggage cart or other means. VIRGIN ISLANDS PORT AUTHORITY 20

VIRGI ISLA DS PORT AUTHORITY

VIRGI ISLA DS PORT AUTHORITY AVIATIO DIVISIO RATES Effective 10/01/05-1 - AVIATIO RATE SCHEDULE By virtue of authority granted under Title 29, Section 543 (12) of the Virgin Islands Code, the Virgin Islands