Airport Budget Example – Mobile Regional Airport

Abstract

Airport budget is a culmination of the process that not only evaluates the needs and obligations of the airport but also its effect on operations and capital budgets. Additionally, it also takes into account the necessities governing the outstanding airport revenue bonds and its obligations as guided by the state and federal laws. The main aim of developing airport budgets is to help accomplish the strategic goals of the airport.

An airport budget constitutes various sections some of which include management budgets, airport maintenance budget and operations budget among other things. Under the management budget the areas of concern are the directorate, the executive, legal, government affairs and departmental affairs. Airport maintenance budget constitutes expenses to do with airport renovation, advancement of existing structures and maintenance of existing structures.

Mobile Regional Airport budget overview

Airport improvement program

Mobile Regional Airport plans to undertake various improvement programs which may include construction of fourth runway, capital improvement program, construction of a new terminal, completion of cargo facility among other things. Capital improvement program is expected to take $6.1billion. This includes all the aspects of airport operations which is inclusive of operations on the terminal, cargo facility and the runway. The fourth runway construction which is set for completion is expected to take $2.5billion of the total fiscal year’s airport budget. This structure will sustain growth by reducing the cost impacts brought about by delays by airline and passengers.

The cargo facility and the new terminal are expected to increase the airport’s sustainability by increasing the number of operations and reducing cost impacts resulting from in sufficient facilities. The maintenance of these facilities is expected to take $60million.

The budget also encompasses operating revenues such as aviation revenues, rental revenues, other revenues, concessions, and management revenues. The following table shows the breakdown of the operations budget alongside budget comparison with the previous fiscal year.

Operating Revenue

Actual Expenditure

FY 2015 ($)

Adopted Expenditure

FY 2016 ($)

Cash carryover4350000056892614
Aviation revenues275145000280150000
Rental revenues101225140115265154
Other revenues12080452145879300
Management revenues1102568951125486002
Concessions1658240001702564336
Improvement funds transfer950264831875622136
Total operating revenues678, 152,500765, 145,980
   

 

The table depicts an expected increase in spending from what was spent in 2015 in comparison to the expected expenditure in 2016. These revenues will be sourced from the airport through rates and fees charged on customers for using the airport’s assets. Aviation revenues include landing fees, equipment and parking fees, and charges based on Airline Use Agreement.

Rental revenues include passenger terminal charges, ground rents, utilities reimbursements, cargo charges, and fees for maintenance and aircraft support facilities. Management revenues are derived from companies that operate under contract with Mobile Regional Airport. These companies operate various facilities such as parking and hotels within the airport. Revenues are thus obtained from these facilities.

 

In addition to the operating expenses there are non-operating expenses that Mobile Regional Airport has to budget for. These include among other things, salaries, fringes, outside contractual services, utilities, general and administrative expenses, insurance expenses. Non- operating expenses include expenses on transfers. The table below shows the breakdown summary of the expenses for 2015 and 2016 fiscal years.

Expenditure

Actual FY 2015

Adopted FY2016

Executive Group

Salary/ fringes5,145,0005,251,000
Outside contract

Services

3,154,0004,260,000
MOU645,000725,000
G & A Expenses94,00081,000
Total  

Finance and Strategy group

Salary6,890,0007,625,000
Outside Contract Services2,561,0001,980,000
MOU256,000356,000
G & A Expenses78,00082,000
Total  
Administrative GroupSalary2,259,0002,545,000
Outside contract services1,956,0002,145,000
MOU112,00082,000
G & A Expenses54,00062,000
Total  

 

Salary includes overtime, sick, annual, holiday leave, regular wages etc. There is an overall increase in salaries and this is due to the net effect of calculation for merit as well the Coast of Living Adjustment in the fiscal year 2015. There is also an increase in personnel

Fringes encompass the airport’s contribution to the social fund, retirement, health insurance, life insurance, workers’ compensation, and long-term disability insurance among other things. The decrease in expenditure in 2016 is due to the decrease in the retirement rate which has direct impact on the Airport’s expenditure on not only retirement funds but also health and insurance funds.

Outside contractual services- these are expenses for services sourced from outside the airport. There is a significant increase in the expenses in 2016 as compared to 2015. This increase is due to the new repair and maintenance of the Mobile Regional Airport mover. Additional increases were for consulting services, appraisal services, bond rating services, etc.

General and Administrative – These are expenses that meant to support the various administrative departments within the airport. They also take care of operational functions of various departmental divisions. The General and Administrative expenses are expected to increase in 2016. The increases are meant for marketing fees, credit card charges, and sales tax. Additional charges that increase these expenses are seminar funding, travel fees, training expenses etc.

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