Airport Adjusts 2009 Budget to Meet Lower Passenger Forecasts

At their most recent regular monthly meetings held this past Thursday, August 28, 2009, the GIAA Board approved the budget after consultation with all of the signatory airline partners operating at the A. B. Won Pat International Airport.

Globally, Guam's airport is no exception.  It faces the same daunting challenges that airports worldwide are facing wherein airlines are continually reducing flights to lower expenses and attain operating cost levels that allow flights to be profitable. With the high cost of fuel crippling airlines and subsequent airfare increases, all destinations are impacted with reduced passenger traffic. GIAA's Board and Management developed a business plan within its new budget to mitigate airlines' financial woes and promote a "win-win" financial model that is palatable to the airlines serving Guam.

The main highlights of the GIAA Fiscal Year 2009 Operating Budget includes 4% less in passenger growth from 1.5 million in FY'08 to 1.446 million in FY'09 from all signatory carriers operating at the Guam Airport. The FY'09 passenger forecast takes into account the suspended route(s) by All Nippon Airways, effective January 2009, recent cancelled Continental flights to Hong Kong and Bali, and forecasted passenger activity by the newest signatory carrier Cape Air. Cape Air serves as Continental Airlines' connection to the Northern Mariana Islands.

On a favorable note the board approved the continuation of incentives to the airlines in an effort to spur additional flights or new air services to Guam. Under the incentives, the airlines can take advantage of reduced airport fees and realize savings if new flights are implemented and more passengers are flown to Guam.

Additionally, even under such tight financial outlook for 2009 the airport set the final cost per enplaned passenger at a low rate of only $14.78. This fee, which is assessed to each airline for every passenger carried, was greatly reduced from the initial cost recovery rate of $18.73. The lowered rate was the result of the airport's steadfast reduction of operational expenditures by 5% and implementation of new initiatives to generate additional revenue from activities other than the airlines, such as concessions and land lease rentals. With stringent fiscal measures in place for 2009, the airport is optimistic of maintaining an industry standard of 1.54 debt service coverage ratio over the basic 1.25 minimum with respect to repayment of its outstanding revenue bonds.

Board Chairman Martin Gerber stated that, "The budgetary process began in April and concluded after receiving and incorporating input from airlines and other non-airline tenants of their needs. We have to factor in mandated requirements by the FAA, TSA and also the mandates of the Airport's enabling legislation. Our Board and Management team's main concern is maintaining the highest standards of customer service, while meeting the maintenance requirements within the forecasted revenues. Management is always held to task on continually ensuring the airport's expenditures are within the approved budgetary amounts." 

Fiscal Year 2009 appears to be a year of fiscal challenges for the Airport Authority amidst an ever-challenging business climate and remain an economic catalyst for Guam. "In 2006, we contributed $1.7B to the economy, and are expending resources to attract new businesses, build new industry to Guam with the US authorization to expand our air cargo business, develop a regional distribution center, and pursue visa waiver modifications for Guam and our CNMI neighbors" continued Chairman Gerber. "We intend to reap economic benefits from these new and wonderful opportunities while countering the impact of reduced passenger arrivals. Our goal is to make 2009 another successful year for Guam."