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In The New Fiscal Year, ILM Budgets For COVID Impacts

By Christina Haley O'Neal, posted Jul 2, 2020
The Wilmington International Airport has started a new budget year with a more conservative budget to brace for the impacts of the COVID-19 pandemic. (File photo).
The Wilmington International Airport will be operating this fiscal year on a more conservative budget, because of the role the COVID-19 pandemic has played in the uncertain future of the aviation industry and traveling public nationwide.

ILM has a $38.4 million budget for the 2020-21 fiscal year, down 15% from the $45.1 million budget approved for the 2019-20 fiscal year. The new budget year for the airport began Wednesday.

“For fiscal year 2021, we modified our revenue and our expense sides of the budget, predicting that our passenger traffic will be down compared to calendar year 2019 or fiscal year 2020. Staff made adjustments in all areas of our spending plan to accommodate for the recovery,” said Julie Wilsey, ILM’s airport director said.

On the revenue side, parking at the airport, which has been down recently due to the pandemic, is the airport’s largest source, making up about 40%.

The airport on average receives $400,000 a month in parking revenue, depending on the time of year, she said.

“Currently, the revenue is around 10% of our normal amount,” Wilsey said. “Talking with other airports, we projected a slow recovery of parking revenue to 50% by year-end and 75% by the end of the fiscal year. That represents over $2 million less than normal.”

“Our passenger activity is improving each week along with a growing flight schedule in July and August. We are optimistic we will meet the projections,” she added.

On the expense side, ILM has worked to reduce some operating expenditures for this fiscal year, although the budget was slightly higher than the previous fiscal year. There was $8.6 million in the operating plan, up from $8.5 million last fiscal year.

Capital spending, however, decreased in this fiscal year’s budget from $29.8 million, down from the $36.6 million capital spending last fiscal year. 

ILM’s largest reduction on the operations side involved ending ILM’s 24-hour employee shuttle, a service that started last year for a cost of about $240,000 a year, Wilsey said. Employee parking has now moved closer to the airport.

Another big cut this year is in the airport's overtime budget.

“There’s less activity in the building. We still have certain positions that we have to staff all the time, but we’re trying to be a little more careful about authorizing overtime employees,” she said.

On the capital spending side, Wilsey said the majority of the funds are going toward ILM’s ongoing terminal expansion project. The second phase of that project is slated to wrap up this month and the third and final leg of the expansion is ongoing, with completion expected in late 2022 or early 2023.

“We, like many airports across the country, looked at our capital expenses … and when all this hit, we were very selective [with the projects]. And we are continuing the terminal expansion,” Wilsey said. “So that is the bulk of our capital budget.”

Also included in ILM's capital plan this year was a drainage project – a need found following the aftermath of Hurricane Florence, which hit the region in September 2018 – and some other minor capital expenses.

A major project pushed off, previously anticipated to roll out this year, was the plan for additional parking lots, Wilsey said.

“We thought that we were going to construct additional paid parking lots for the terminal. We thought we would be underway. Obviously, we don’t need that parking capacity right now. And we thought it was smart to go ahead and defer those projects until we see how the market responds,” Wilsey said. “We don’t think we will need them for the holiday of 2020. We will have to gauge toward the end of this year and early in 2021 to see if we will need additional parking lots for the holidays of 2021.”

Parking, before the COVID-19 pandemic, was strategically being looked at by ILM officials to support the growing number of travelers seen in the past few years, she said.

Just this year, ILM announced a major milestone: hitting the 1 million passenger mark. A new seasonal nonstop flight to Boston was also announced at that time; however, due to the pandemic, it was canceled by the airline.

“Overall, we feel pretty good about the conservative budget that we put together and we will continue to monitor that on a month-to-month basis,” Wilsey said. “We are in unprecedented times. It is challenging to know when recovery will occur in the aviation sector, so we plan to watch it closely and make adjustments on a quarter-to-quarter basis as things become a little more clear.

“We also have our CARES funding from the federal government to be used as needed to supplement the reduced revenue to pay our employees, their benefits, and debt payments,” she said.

CARES Act aid

To aid in recovery, the Federal Aviation Administration has made available $19.8 million to ILM through federal CARES Act funding in the spring. ILM was one of many airports across the nation to receive federal funding support.

The CARES Act funding ILM received “is to be used consistently with the FAA policy on eligible airport expenses, basically for any expense required to operating the aeronautical side of the airport,” Wilsey said.

The airport has some flexibility in the FAA guidance, however, its primary objective was to use it for airport employee wages and benefits, she said.

“It makes a lot of sense for ILM since employee wages and benefits are a larger expense in the operating budget,” Wilsey added. “If there is a shortfall in revenue, then we will use the CARES funding to make sure we can pay our employees and operating expenses.”

The $19.8 million can be used over the next four years, or until April 2024, and the airport has set up a reimbursement program for ILM’s actual expenses, Wilsey said.

Since February to date, ILM has used just over $1 million of its available $19.8 million to reimburse its payroll expenses, she said.

Passenger figures show improvement

ILM’s passenger numbers, although still well below what’s normal in an average year, showed a slight uptick from April to May.

In April, airport activity plummeted to just over 3,800 total inbound and outbound passengers. There was a slight recovery in May, however, up 276% from April to a total of more than 14,300 passengers through the airport, according to ILM’s latest passenger figures.

That’s still below the traffic ILM saw last spring, with nearly 89,500 total inbound and outbound passengers in April 2019 and just over 99,700 total passengers in May 2019.

Airports across the country, however, are starting to see an increase in aircraft carrier services as major commercial airlines add capacity and resume destinations. More travelers are also flying too.

On Thursday, ILM officials said they have taken extra safety measures to further protect airport passengers and employees from the spread of the coronavirus, including features like social distancing floor markers, 19 hand sanitizer stations, seating changes and plexiglass. ILM and TSA also opened a third security lane and additional throughput capacity on Thursday, ILM officials said in a news release. 

Due to the pandemic, ILM’s three commercial carriers, American Airlines, Delta Air Lines and United Airlines, reduced service and capacity locally, nationwide and globally this spring.

Services, however, are starting to return this summer, Wilsey said. 

“Things are improving. And that’s a great sign for us. Of course, American’s schedule … one of the great notes is American is serving all of the same markets they served last year in July from ILM. So we’re back to all of our nonstop," Wilsey said. "They may be of lower frequency or a smaller aircraft but we’re back to … all of our American markets.”

In August, flight schedules are also slated to increase for both American and Delta, she said.

“Certainly, the capacity will be in our market July and August,” Wilsey said, “and we’re hoping that the travelers continue to return like they are doing right now.”
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