February 12, 2008

Corrections To Nemeth Article

Let me take a moment to explain the airport budget and some of the terms that were bantered about in the Sunday column, based on the following assumptions:


  • $2,000,000 dollar loss
  • $600,000 of debt service

The $2,000,000 loss is broken down into two types:

  1. Debt Service: $600,000 that is paid 100% by the City of Worcester, no MassPort subsidy
  2. Operational Deficit or loss: $1,400,000 which equates to the overall loss (2,000,000) less the debt service (600,000). This is the loss that MassPort pays a subsidy.
  3. Total Loss: debt service plus operational loss or, in this example, $2,000,000.

Everyone understand, now for the discrepencies in Mr Nemeth's column:

  1. "MassPort currently picking up 68% of the 2 million-plus operating deficit." This is just plain incorrect. MassPort pays 68% of the operating deficit, which was approximately 900,000 last fiscal year.
  2. "City has budgeted for a 100% subsidy for fiscal year 2008, expecting a retroactive payment." Just so we are all clear this is 100% subsidy of the operational deficit and does not include the debt service, which is 100% the City of Worcester.
  3. "the operating agreement, which expires on June 30th, at a higher rate of subsidy". Again plain incorrect. The subisdy was 68% of the operational deficit before June 30th and remains at 68%.
  4. "Massport, which has invested more then $10 million in the airport." Don't get me wrong we owe a big THANK YOU to MassPort, but I hate it when numbers are not accurate. My guesstimate looking at the numbers is more in 7.5-8 million dollar range.

I may be over-critical here, but it is important that we all have a clear understanding of the numbers and they need to be accurate!

2 comments:

Anonymous said...

The numbers really don't matter. What matters is the consideration of WRA's fundamental problem: it's market.

Things have changed since the new terminal was built. Providence and Manchester now have Southwest. They are taking our markets in the north and south. Logan has always done the same from the east. Now Westover has Western Mass in its clutches. The GA airports have made great strides in capturing weekend fliers from WRA. ILS is coming online at more and more of these airports, plus there is JetBlue being a hit with vacation travellers.

What is left? Almost nothing. We are boxed in by the competition. We are too close to airports that got their crap together earlier. They have the first-mover advantage.

I submit that WRA is only useful to the city of Worcester and immediately surrounding communities. It has no leverage to attact airlines or funding. The airlines see the terrible track record of other carriers at WRA and then see the great track record at other airports.

We need to accept that WRA had a brief heyday in the 80s and early 90s, but those days are gone. It is a rather new airport by history's standards but has never really been a hit. It is "secondary" in every way -- and out of the way.

Sadly, as someone who went to FL every winter on Continental or United from WRA until they left, I must conclude that we should shut it down and put in a shopping mall. Maybe it can be given to developers for an industrial park. Perhaps the runways can stay there and it can be an airpark. Whatever works. THAT is the key. The site needs to be used for something that WORKS. Anything that is subsidized like WRA is today clearly does not work.

Airline travel from there is a dream, but alas it won't happen for many years. Either we need to shut it down and mothball the place until demand picks up or it's time to explore radical alternatives. We can't have everything we want and at some point we need to face facts and take appropriate, if painful, measures to stem the losses.

Bill Randell said...

Anoymous:

Sadly I am leaning toward your opinion and that of others who have been demanding the closure of ORH.

There is nothing worse then mismanagement.

Bill