Impact of New Landing Fees on SMO Operations

Following authorization at the April 30, 2013 City Council meeting, on August 1, 2013, the City imposed a new landing fee schedule at Santa Monica Airport (SMO). Landing fees were increased from $2.07 per 1,000 lbs to $5.48 per 1,000 lbs. More importantly, landing fees now apply to all airport users including those based at SMO. Previously, SMO-based aircraft paid no landing fees whatsoever which contributed significantly to financial losses at the airport. CASMAT’s earlier analysis of landing fees conducted in December 2012 showed that 66% of users paid no fees, and that only 30% of all potentially billable operations at SMO were actually billed by the City, so contributing approximately $0.5 million to total annual airport losses. This is why the City introduced the new fees.

Although only one complete month has elapsed since the fees went into effect, the impact has apparently been dramatic. However, we must wait for many more months to pass before we can be sure the effects described are permanent. In summary the following changes have apparently occurred:

Total operations dropped 18% from July to August (25% compared to last August).
Local operations (i.e., pattern flying) dropped 15% during August to 20%. Pattern flying is now at a historically low level. Average for the last 3 years is 35%. This means that the drop in other usage types has been negligible (below 2% which is within normal monthly fluctuations). Apparently other types of airport users largely ignored the fee increase, despite proclamations of doom prior to fee changes.
At the same time we project that annual City revenue from landing fees will increase by approximately $420,000. While this is a step in the right direction, it serves only to reduce annual City losses at the airport from $1.2 million to around $0.75 million. Landing fee changes have not stopped the airport hemorrhaging money for the City.
Of SMO’s six flight schools, half apparently chose to move most pattern work to other locations. The remaining three (Santa Monica Aviation, Santa Monica Flyers, and Proteus Air Services) continue to pattern fly at SMO. These three schools together historically make up just 10% of the flight school and training flights. In other words the larger schools have moved pattern operations elsewhere, but smaller schools continue pattern work at SMO.
Flight school and training activity has historically accounted for 61% of SMO flight activity. This percentage has now dropped to 38%.

A full PDF copy of the detailed report (25 pages) containing all the backup data involved in this CASMAT study can be found here.

The bottom line is that although the landing fee changes were designed to reduce City financial losses at the airport, they have also resulted in a significant reduction of local pattern flying which has a measurable positive impact on the quality of life for those under the pattern loop.

The City Council and staff are to be commended for their decisive actions at the April 30, 2013 meeting. Their actions have actually helped. We hope that the other measure (the muffler offset program) authorized at that same meeting will be finally approved at this Tuesday’s City Council meeting (Item 3-A).

To be clear, pattern flying is just one component of SMO’s negative impacts on the community. The others still remain to be addressed. Clearly lots remains to be done, however, this is the first step in the right direction for the surrounding community in many years. Hopefully the second step (mufflers) will go into effect in the next few weeks.

Update May-04-2015: The drop in pattern flying has been sustained now for about a year and a half. Here is the situation as of Feb-2015: