Massport's budget up 4.6 percent

Agency aims to avoid boosting airline fees

Massport is looking to cut costs to avoid charging higher landing fees to airlines at Logan International Airport. (Dominic Chavez/Globe Staff/File 2002)

The Massachusetts Port Authority expects to spend 4.6 percent more in the fiscal year starting July 1 operating airports, seaports, and bridges. But its staff will spend the summer looking for ways to trim expenses by 5 percent so the agency won't have to pass rising costs on to beleaguered airlines in September.

Massport's board yesterday adopted a $377.7 million spending plan for fiscal 2009, pushing it $16.7 million higher than the current fiscal year's budget. The increase largely reflects Massport's plans to hire six more electricians and five state police officers for the bustling maritime business, bring on energy-management consultants, support new information technology systems, and account for inflation and rising healthcare costs.

The board also gave Massport chief executive Thomas J. Kinton Jr. a raise of $20,451.53 - or 7.4 percent - bringing his annual salary to $295,596.67. The raise included a 3.8 percent merit increase, which is equivalent to the average merit raise awarded to the agency's administrative employees. The remainder of the raise is to make Kinton's compensation "more competitive with that of other chief executive officers at comparable airports and port authorities," according to a Massport document.

The agency that runs Logan International Airport said it's too early to tell which expenses might be cut so it won't have to charge airlines higher fees to land planes and rent terminal space. Massport sets its landing fees and terminal rents in September. Federal law prohibits airports from profiting from landing fees or terminal rents, so airports only raise fees enough to cover their rising costs.

Any change that doesn't compromise Logan's safety might be on the table, from postponing capital improvements to renegotiating building cleaning contracts to making do with fewer workers.

"We might look at a hiring chill so when a vacancy occurs, we don't fill it right away - or at all," Kinton said after the board meeting. "We're going to look hard."

Massport hopes to eke some savings out of its debt service. The board approved a resolution to refinance all $102 million of Massport's auction-rate securities and sell $22 million in variable-rate debt to pay its Central Artery obligations to the state. And if market conditions allow, Massport will refinance $80 million in fixed-rate bonds this month, reducing payments on existing debt by up to $300,000 annually over the life of the bonds.

Massport is already shaving its electricity bill a bit by turning off moving walkways that connect the parking garage with the airport terminals between midnight and 3:30 a.m. It started this measure in late April as an Earth Day initiative. However, Kinton said, Massport won't cut the walkways around the clock.

Kinton also said there's only so much the airport can do to trim expenses. It has a fixed cost for operating the airfield, so landing fees are determined by the amount and types of arriving aircraft. As airlines cut their costs by flying smaller planes and flying less frequently, the airfield costs gets divvied up among fewer flights and in turn the landing fees increase.

Yet airline executives say even as they battle higher fuel bills by trimming flights and eliminating routes, airports can help the airlines run profitably by becoming more efficient - which enables an aircraft to fly more trips in a day.

Nicole C. Wong can be reached at nwong@globe.com.