Airlines Face Higher Costs at Hopkins

The airlines serving Cleveland Hopkins Airport are about to face a double squeeze.

Airport authorities said this week that the airlines will pay higher fees so the airport can make up for lost revenue from parking, food service, retail operations and other non-aeronautical functions due to the COVID-19 pandemic.

The airport also is expecting the airlines to underwrite much of the cost of a new terminal being planning although that project is still years away from launching.

Hopkins already has some of the highest airline fees in the country, in part because of its high debt levels.

Speaking to the Cleveland City Council’s Finance Committee, airport director Robert Kennedy acknowledged that the higher airline fees come at a bad time.

Commercial air traffic at Hopkins hit 10 million in 2019 but plunged to 4.1 million last year as the pandemic decimated the air travel market.

Hopkins expects to handle 5.2 million passengers in 2021, a figure that is 48 percent of the 2019 total.

Kennedy said the airport’s 2021 budget of $151.5 million must be balanced by increasing airline fees because the airport is not allowed to dip into city tax dollars.

Whereas airline fees funded 46 percent of the airport’s costs in 2019, this year that is expected to increase by $21 million and to account for 66 percent of the airport’s revenue.

Last year the airlines paid an average cost per passenger of $32, a figure expected to go even higher in 2021.

By contrast per passenger costs at airports in Columbus, Pittsburgh and Cincinnati are expected to range from $10 to $15.

“We are damaging our competitiveness,” Kennedy said. “This is what drives airlines elsewhere.”

At $645 million Hopkins has a higher debt load than Columbus ($172 million) and Pittsburgh ($43 million).

Cleveland’s debt stems largely from building a new runway two decades ago.

Debt service this year at Hopkins is expected to be more than $65 million or 43 percent of the airport’s budget.

As for the new terminal, airport officials are still working on a plan but envision it being largely a modification of the existing terminal with construction occurring in stages.

The more than $1 billion new terminal is expected to have wider concourses; an expanded ticketing area; a relocated rental car facility; centralized Transportation Security Administration screening; a new, centrally-located Customs facility; and redesigned entry roads.

Airline fees are expected to pay the bulk of the cost and Kennedy acknowledged negotiations with the carriers over fees will be tough.

“The financing of this is going to be a difficult lift in a post-COVID environment,” Kennedy said.

Airport officials have not released a timeline for when construction will begin and how long it will last but the start of work is several years away.

In the past, most airline passengers at Hopkins were passing through, making flight connections when the airport was a hub for Continental Airlines and, later, United Airlines.

Since United closed the Cleveland hub in June 2014 travel patterns at Hopkins have transformed into the majority of travelers beginning or ending their trips there.

That resulted pre-pandemic in parking shortages and overcrowding in some areas of the airport.

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