Airports Authority Board Approves Use and Lease Agreement for Airlines; Addresses Reagan / Dulles Imbalance

Published: November 12, 2014

New Agreement Allows Shift of Revenue to Better Manage Costs,
Provides Funding for $1 Billion Construction Program at Reagan

The Metropolitan Washington Airports Authority Board of Directors approved a new Use and Lease Agreement on Wednesday for airlines operating at Ronald Reagan Washington National Airport and Washington Dulles International Airport. The agreement will be effective January 1, 2015, for airlines at both airports and it includes a number of new provisions to address the passenger imbalance between the two airports resulting from recent airline actions to divest airline slots at Reagan National.

Those challenges include congested terminal facilities at Reagan National as a result of increased passenger activity, and a corresponding decline in passengers at Dulles International creating an imbalance in the efficient operations of the two-airport system.

The new Use and Lease Agreement allows revenue sharing between Reagan National and Dulles International for the first time. Although Congress directed the Airports Authority to operate Reagan National and Dulles International as a two-airport system, the Use and Lease Agreement that has been in effect since 1990 did not allow revenue generated at one airport to be used to cover costs at the other. The new agreement allows as much as $300 million in revenue to be shifted from Reagan National to help offset operating costs for Dulles International over 10 years.

Additionally, the new agreement includes a $1 billion capital construction program at Reagan National to help accommodate the recent and expected growth in passengers.  For decades, Reagan National’s passenger numbers were constant at approximately 16 million per year. In more recent years, Reagan National’s passenger numbers have grown to more than 20 million and are expected to surpass 22 million next year. Much of the growth results from airline slot allocation changes generating more passenger activity at Reagan National.

Noting that Reagan National and Dulles International operate as a two-airport system under federal legislation, Executive Vice President and Chief Operating Officer Margaret McKeough, who led the Use and Lease Agreement negotiations for the Airports Authority, said, “We needed greater flexibility to manage the system, and we have achieved that through provisions in this new agreement, which give us new financial tools that were not previously available.”

President and CEO Jack Potter thanked the airlines serving Reagan and Dulles “for their cooperation, support and spirit of partnership throughout the Use and Lease Agreement process. I believe we have an excellent arrangement that will benefit everyone going forward – the airports, the airlines and, most importantly, the customers we work together to serve.”

The capital construction program includes a new commuter concourse to provide enclosed facilities for the 14 outdoor boarding positions for commuter planes, which currently are accessed with bus service at Gate 35X. The construction program also will include a new parking garage to meet increasing demand and the relocation of security checkpoints to the ticketing level which will improve the flow of passengers between concourses and convert the National Hall shopping and dining area to post-security space to serve awaiting passengers. Additionally, the program will study additional long-term improvements that may be needed for Terminal A to accommodate anticipated passenger activity levels and relocate the Airports Authority corporate offices, which are currently on the site where the commuter concourse will be built.

In other action, the board elected new officers for 2015. The officers remained the same from 2014, Chairman Frank M. Conner III of Virginia, Vice Chairman Warner H. Session of the District of Columbia, and Secretary Quince T. Brinkley.

The Metropolitan Washington Airports Authority, established in 1987 by the governments of Virginia and the District of Columbia, manages and operates Ronald Reagan Washington National and Washington Dulles International airports, which together serve more than 40 million passengers a year. The Airports Authority also operates and maintains the Dulles Airport Access Road and the Dulles Toll Road and manages construction of the Silver Line project, a 23-mile extension of the Washington region’s Metrorail system into Loudoun County, Va. No tax dollars are used to operate the toll road, which is funded by toll revenues, or the airports, which are funded through aircraft landing fees, rents and revenues from concessions. The Silver Line construction is funded by a combination of toll-road revenues, airport contributions and federal, state and local government appropriations. The Airports Authority is led by a 17-member board of directors, appointed by the governors of Virginia, Maryland, the mayor of Washington, D.C., and the president of the United States, and generates more than 387,000 jobs and 4.5 percent of GDP in the National Capital Region.