Erie airport will use reserve funds to cover anticipated operating deficits

Airline departures are taking a toll on Erie International Airport finances.

The airport has been operating at a deficit in recent months due to a decline in airline and passenger fees.

There's still a year-to-date surplus in the airport's current budget. But monthly deficits, including a $23,917 loss in August, are eating it away, to $25,624 at the end of August.

The Erie Regional Airport Authority on Wednesday amended its bylaws to allow it to use reserve funds to offset future deficits. Authority bylaws previously required annual budgets that balanced operating revenues with operating expenses. The reserve fund is a non-operating source of cash.

The fund currently totals about $11 million and so far this year has earned $245,000 in interest, airport Executive Director Derek Martin said.

"We've (previously) restricted our opportunity to use the funds we have to be successful going forward," Martin said.

Operating deficits are expected to continue with only one airline paying rent and other fees — and that airline is paying less to the airport than in the past, solicitor Jennifer Gornall told authority members Wednesday.

"We're going into 2024 knowing there will be lower rent from the airlines and (lower rent) to keep the airline we have," Gornall said. Eliminating the requirement for a balanced budget will allow the airport to cover operating deficits, she said.

"It couldn't do that unless it presented a deficit budget," Gornall said.

American Airlines is the only airline now serving Erie. United Airlines ended Erie operations June 1. Delta's last Erie flight was in July 2020.

According to a new two-year lease agreement approved by the Airport Authority on Wednesday, American will pay $434,125 annually in facilities rent, landing fees, terminal fees and other charges to operate two flights to and from Erie daily, or $537,122 if it continues to operate a third daily Erie-Charlotte flight launched in September. That's down 54% from previous charges to the airline, Martin said.

The bylaws change was approved following consultations with legal advisors and auditors and is in line with budgeting procedures at other airports, Martin said.

The authority is expected to adopt the airport's 2024 budget in November.

Erie International Airport isn't alone in facing financial challenges due to airline departures and declining revenues.

"People think that Erie airport is on an island," Martin said. "Williamsport lost all air service. State College lost Delta and Allegiant and is now only served by American and United."

Pittsburgh and Philadelphia also have lost airlines and flights, he said.

Like airport revenues, expenses, including employee salary and benefit costs, are also declining. Erie airport currently employs 15 people, down from 27 in 2019. But lower expenses generally have not offset reduced revenues.

Airport officials and community leaders are continuing efforts to maintain and add air service. A meeting with American Airlines earlier this week was "positive," Martin and authority President Dan Giannelli said.

"They sounded very invested in Erie," Giannelli said.

The Erie Regional Chamber and Growth Partnership is leading a campaign to raise money to subsidize Erie flights as an incentive for airlines to operate here. The goal for the Fly Erie Fund is to raise $6.5 million over three years from government entities, the private sector and airport reserve funds.

Martin's leadership through difficult economic times and his efforts to promote the airport and serve customers were praised by authority members and members of the public during the authority's monthly meeting Wednesday.

Christian Siembieda, of the California development firm that recently bought the Renaissance Center in Erie, described Martin's help in getting him aboard a flight to Charlotte in August. In an email to authority member Brian Slawin, Siembieda said the airline's check-in area was closed when he got to the airport about 45 minutes before departure time and he couldn't find anyone to help him until a man came out of an office and took charge.

"... he goes through security, comes back with a boarding pass, tells me to get my bags out of the rental car which is parked outside at the curb, and then tells me to go through security. I told him I need to return my car and he says, 'give me your keys, I will do it,'" Siembieda said.

Asked his name, the man replied, "Derek Martin."

"He is a pro and a gentleman. He also might have saved a marriage," Siembieda said.

The Fly Erie Fund: What is it and how will it help increase flights to and from the airport?

Contact Valerie Myers at vmyers@timesnews.com.

This article originally appeared on Erie Times-News: Erie airport revenues are declining. Reserve fund to cover deficits.