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that Mr. Noble would discuss why Eugene operated an airport, performance and policy issues <br />related to the airport function, the current operating environment, and the current status of the <br />airline industry. Mr. Corey indicated he would conclude by discussing policy options for <br />governance. <br /> <br />Ms. Solomon arrived. <br /> <br />Mr. Noble provided a history of the Eugene Airport, which was established in 1941 at its present <br />location. Commercial air service commenced in 1943 through a collaborative effort of the City and <br />the Eugene Area Chamber of Commerce. In '1962, Eugene voters passed a bond measure for <br />airport improvements, which helped construct a new terminal in 1964, at approximately the same <br />time that jet service to the community began. <br /> <br />Mr. Noble reported that in 1967, the City and Lane County discussed the issue of transferring <br />governance of the airport from the City to the County, but the County had no interest due to the <br />debt remaining from the bond. A discussion occurred in '1969 with similar results. In '1989, voters <br />passed a bond measure to construct the present terminal. Discussions leading up to the vote <br />included a discussion of whether other Lane County citizens could participate in supporting the <br />airport, but ultimately the City went forward with the bond measure. In 2002, the bond debt was <br />moved from the tax rolls to the airport. <br /> <br />Mr. Noble called the council's attention to the airport's service profile, including in the meeting <br />packet as Attachment E. He reviewed the objectives included in the profile, emphasizing the <br />importance of the air service component to the community and its economic benefit. He said that <br />prior to September 11, 2001, the airport had been generating a net surplus operating income to <br />create seed money for its capital projects with the goal of not having to rely on any other form of <br />support. Since September 11 and the transfer of the bond debt, the airport was no longer in that <br />position. The airport would need to focus on air service even more to generate enough revenue <br />to provide sufficient funds for matching federal grants. The airport had created a reserve large <br />enough to pay the bond payments and continue a modified capital program, but that was not <br />sustainable. <br /> <br />Mr. Noble called attention to the performance measures associated with the service profile. He <br />noted that landing weights in 2001 were down because flights were curtailed after September 11; <br />in 2002, operations were further affected by United Airlines' decision to move to smaller jets. As a <br />result, fee collections were down. Mr. Noble reported that the airport continued to receive high <br />marks from surveys for its ability to provide traveler support facilities and services. He noted that <br />fuel sales were down, although that trend had been evolving prior to September 11. <br /> <br />Mr. Noble reported that trends indicated that air travel growth over the next ten years would <br />double from current levels. He believed that was somewhat speculative given the airlines' recent <br />profitability levels. He noted that much air travel was subsidized by business travel, which was <br />also down, and which was likely to change as the airlines rethought their business fares. Mr. <br />Noble noted that airport revenues had fallen after September 11 while expenses went up, and <br />more of those charges were being passed on to the airlines as a result. The distribution of those <br />costs had increased from three airlines to four airlines. If the airport lost a carrier, it would have <br />fewer parties to spread its fixed costs to, placing the airport in a downward spiral from which it <br />would be difficult to recover. <br /> <br /> MINUTES - Eugene City Council June 25, 2003 Page 2 <br /> Work Session <br /> <br /> <br />