The Colorado Springs Airport paid off and refinanced much of its nearly $40 million in debt on Thursday, a move that will allow it to cut its annual payments and reduce what it charges airlines by 30 percent from last year.
"This will improve the profitability of carriers operating in Colorado Springs, and if they are more profitable it will make it easier to retain and grow air service," said Dan Gallagher, the airport's interim director. "It's not the only part of the equation for the cost of a flight, but it is important."
The airport used reserves to pay off $16 million in bonds and issued another $11.2 million in 10-year bonds to pay off bonds that carried a higher interest rate. It's part of a larger plan to restructure the airport's debt that will cut annual payments by nearly three-fourths - from $5.4 million to $1.4 million, Gallagher said.
The restructuring also includes $9.2 million in grants and loans from the Colorado Department of Transportation that will be completed later this year, he said.
The bonds were originally issued in 1994 to finance construction of the airport's passenger terminal, but have been refinanced since then.
When completed, the restructuring will lower the rent and fees that airlines pay per departing passenger by 16.3 percent to $6.26 - below the national median of $7. Airlines were slated to pay nearly $9 per passenger in rent and fees last year under the airport's budget, but the final total is subject to an annual audit.
The five airlines serving Colorado Springs pay the cost of operating the airport and passenger terminal through rent, landing and fuel fees.
The refinancing is one in a series of moves officials are making to improve the airport's finances and make it more attractive for carriers to keep or expand flights as well as attract new carriers in the wake of Frontier Airlines' exit from the Colorado Springs market last spring.
Airport officials eliminated 26 vacant positions and completed a series of other cost-cutting moves to reduce the airport's budget, also helping reduce rent and fees, Gallagher said.
Without the budget cuts and financial restructuring, the cost per departing passenger in rents and fees would have surged by 47 percent to $13.20 to make up for $3.5 million in annual revenue Frontier had paid to the airport.
The airport also hopes to boost revenue by leasing its unused east passenger concourse to the U.S. Transportation Security Administration and other tenants. Officials hope to seek bids in March to renovate part of the concourse into office space for the TSA and complete the project by the end of July. The agency, which leases space in a building near Powers Boulevard and Galley Road, has agreed to lease space in the east concourse for 10 years. The lease payments would repay the remodeling costs within three years.
Airport officials also want to build a business center and lounge near Gate 6 in the terminal's main passenger concourse to serve business travelers and other frequent fliers - a move requested by airlines to help them better attract and retain business travelers. The lounge would be packaged with valet parking and access to a premium security screening line for a per-use fee or free to first-class passengers. The construction project is in the design phase, but airport officials hope to open the lounge by this summer.
A makeover also is planned for the food court in the passenger terminal's main concourse, Gallagher said. SSP America, which operates the restaurants in the terminal, has agreed to renovate the food court sometime next year, but company officials are still studying alternatives, he said.
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