Airport costs sky high
Pandemic business hurdles HTA, Min wage, Airport fees
You will hear many company
executives say that they understand
the needs of the workers
with a higher salary and more
benefits. However they say that
the implementation of all of these
three increases will have a terrible
impact on their continuing business,
and have no choice but to
pass along to their customer, the
airlines. They are asking for relief
now while the passenger count is
below profitability and are seeking
some phased in or delayed increases
across the board.
One employer of cleaning and
maintenance people at the airports
has recently sent a letter to
his customers explaining the new
increases and informing them of
additional pass-along charges.
Another security company has
expressed fear of continuing his
business and has had push back
from airlines when he asks if they
will accept the increase. When
some airline s were asked if they
would accept the increase a couple
said that it would depend on
the individual contracts they hold
with different vendors. The response
was less than positive
from all accounts.
This leaves a great deal of uncertainty
and concern for all the
vendors having to deal with one,
two, and all three increases.
TFAC and Kaamco wrote a
letter to the Port Authority in April
30 AIRPORT VOICE, JULY 2021
requesting consideration for postponing
the $ 17hr. September
2021 PA minimum wage increase.
Reasons given that the airport
stakeholders need to regain a foothold
with increasing passenger
traffic. They said that the airlines,
international carriers in particular,
are taking extreme measures
to conserve cash to weather the
Covid storm and bring back furloughed
employees, However, it
is no secret that the Port Authority
projects a $3 billon deficit for
the two fiscal years into 2021. So,
they too are in the company of reduced
profits, reduced labor and
curtailed expenses. Where does
the buck really stop one company
person asked?
On another expense front, the
same groups have been shocked
by the increase of airline landing
fees that went up and just were
increased on July 1st incorporating
a percentage increase that
was from a deferral of some fees
in 2020.
For the same reasons, TFAC
and Kaamco were seeking relief
through the Port’s use of funds to
use some to actually reduce the
2021 fees.
However in both cases the
Port Authority decline3d to grant
these requests.
It is no surprise that this occurred
since the Port itself is projecting
a $3 billion two year deficit
and is seeking its own ways to
generate cash. To date, the Port
Authority of NY and NJ is considered
a bi-state agency, as has
not been identified in Congress
nor Presidential areas, as part of
state and local entities and therefore
not eligible to receive funds.
Executive Director Rick Cotton
has repeatedly asked members
of Congress and now to the
Biden Administration to provide
relief for the agency that has infrastructure
programs ready to
go but need federal funds to
make it happen.
The HTA is a major increase.
Consider an additional $4.54
per hour for each qualifying individual.
Say that company has
2000 employees. Do the math. It
is a staggering increase for this
alone. There were two meeting
with the sponsor of the HTA, both
of which the airport stakeholders
expressed their concerns. It
was a bit of a surprise when the
sponsor was not totally aware of
the impact to the airport companies,
being more concerned with
the workers. A second meeting
was held following up on the
first but many questions were not
able to be answered since there
were many involved with the legislation
and confusion over details,
which was signed into law
by Governor Cuomo back in December.
It was not clear then, and still
not clear on so many different aspects
of this legislation, on how
this will exactly work. As the critics
say, the Devil is in the details,
and this is devilish since much
is still unclear to the companies
affected. There was some talk
about consulting with lawyers to
discuss ways in which to companies
could have their voice
heard. And legislation possibly
amended. At this time, there has
not been any legal action taken.
It is believed that it would either
be a losing proposition or it
is better to try to negotiate with
all parties and unions for some
workable solution.
All these increases are
mostly on the passenger side,
but the cargo side also seems
to be affected. Again, “seems”
since the legislation language
is unclear to airport companies.
For cargo companies, there will
also be on increase by the necessity
of reaching 100% cargo
security screening which is a
new TSA mandate. New equipment,
more people hours and
the use of K9s will add to the
cost of handling goods. Again,
these costs will eventually likely
end up back in the airline’s budget.
With the Port looking to redevelop
the cargo area at JFK,
there will be additional fees, and
costs, which will drive up the
pricing of doing business with
JFK. Will this scare off freight
forwarders and brokers from
using JFK and seeking less expensive
operations elsewhere
or simply chose to deal with the
high cost of doing business at
JFK, LGA, EWR and SWF airports?
Ultimately the real cost of
all these matters will fall on the
consumers’ shoulders. Perhaps
the increased competition that
will ensue will drive prices down
to some degree, or will all these
changes put more money into
the pockets of workers so they
can pay more for the goods they
desire?
So, the need for delays, forgiveness,
deferrals of many fees
are extremely important to both
the stakeholders of the Port and
the Port itself. The slightly good
news is that airline travel in increasing.
But not enough at the
moment to have a full 2019 flight
schedule, nor to have all employees
back at work, nor to have
enough cash from improved operations
to cover additional costs
and to pay back the loans that
many incurred to weather the Covid
storm.
According to many airport veterans
these costs will change the
nature of doing business here.
Most are pessimistic about the
future of their businesses at this
time facing these costs. Some
say that change is inevitable and
others simply subscribe to the
Darwinian theory of “survival of
the fittest.”
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LaGuardia FSD Robert Duffy wth TSA officers Lydia Carrasquillo and Thierry Jean at a recent "Summertime TSA
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