IMMF Midway Feasibility Study
A DOCUMENT TO CREATE SOUND FISCAL POLICY FOR THE MIDWAY ATOLL
AT NO TAXPAYERS EXPENSE
We begin by mentioning the basic rule that any justifiable fiscal
policy should enjoy the strong desire and commitment by those in charge
of the policy to ensure its success.
Midway Atoll is unique in that it is at the same time both a Wildlife
Refuge and a National Memorial. Its islands offer to the public
beautiful beaches and sunsets, excellent opportunities for boating and
fishing, and a significant natural and historic resource. Of critical
importance is that its airport remain an alternate landing site for
extended twin-engine operations (ETOPS) in the north central Pacific,
and for search and rescue missions run by the U.S. Coast Guard. All of
the foregoing factors must be kept in mind when creating any operating
plan for the Midway Atoll.
This document includes a cost/revenue statement for the month of July
2001, the only month in its six-year tenure in which the Midway Phoenix
Corporation (MPC) made a profit while administrating the Midway Atoll.
An analysis of this statement and some overall recommendations will
follow.
STATEMENT OF OPERATIONS by MPC for July 2001:
Revenues:
Guest Operations:
Lodging……………………………………….$124,836.95
Per Diem Lodging………………………… . $20,815.00
Clipper House Sales…………………….. . $18,991.40
Galley Sales…………………………………. $27,465.72
Bike and Cart Rental……………………… $14,237.50
Tavern Sales………………………………… $9,222.25
Gift Shop Sales…………………………….. $19,881.15
General Store Sales………………………. $13,675.48
Long Distance Revenue…………………. $8,275.19
Fishing and Diving Revenues………….. $8,073.97
Internet Revenue…………………………… $1,061.65
Mini Bar Sales………………………………. $2,723.75
Total Guest Revenues:………………… $319,260.01
Air Transport Revenues:
Airfare……………………………………… $3,439.05
Shipping and Weight Revenue…….. $2,820.00
Total:………………………………………. $ 6,259.05
Fuel, Airport and Equipment Operations:
Dockage Service Income………………….. $210.00
Fuel Sales–Aircraft…………………………… $69,694.65
Fuel Sales–Boats…………………………….. $39,236.81
Fuel Sales–FWS………………………………. $952.00
Landing Fees…………………………………… $5,960.00
Total Fuel, Airport & Equipment:………………… $116,053.46
All Other Revenue:
Employee Recreation Revenue……………….. $11,760.00
Medical Billings Guests…………………………. $2,851.00
Miscellaneous Revenue……………………….. $35,979.40
Boeing Support……………………………………. $66,000.00
Total All Other Revenues:…………………. 116,590.40
TOTAL REVENUES FOR JULY 2001:….. $558,162.92
Transportation:
Aloha Charter Expense………………………….. $85,200.00
Aloha Fees and Expenses……………………….. $8,123.21
Vessel and Boat Expense………………………… $7,379.52
Total Transportation:…………………………… $100,702.73
Travel:
Airplane Tickets………………………………. $13,316.58
Travel………………………………………………. $7,472.39
Recruiting Services…………………………….. $643.84
Total Travel:………………………………….. $ 21,432.81
Fuel Consumed by Fixed Base……………. $ 30,275.28
Fuels Consumed by MPC Vehicles………. $2,850.35
Galley and Cost of Food…………………….. $18,290.72
Satellite and Fixed Telephone………………. $677.22
Telephone Long Distance……………………. $1,249.67
Telephone Supplies and Equipment……… $379.75
Material, Supplies and Maintenance…….. $15,913.08
Airport Expense………………………………….. $984.00
Medical Supplies…………………………………. $1,807.68
Freight……………………………………………….. $1,753.85
Office Supplies……………………………………. $1,009.31
Employee Recreation Expense………………. $745.42
Total General Island Support:……….. $ 75,936.33
All Other Expenses:
Advertising…………………………………… $3,148.99
Professional Services…………………….. $1,122.19
Phoenix Services………………………….. $11,000.00
Taxes and Licenses…………………………. $10.00
Bank and Card Fees………………………. $1,011.91
Miscellaneous Expenses………………… $1,180.16
Lease Expense to MDY…………………… $22,800.00
Total All Other Expenses:………………. $ 40,273.25
Total Expenses:…………………………… $444,759.94
Total Revenues:……………………………. 176,232.48
Total Net Loss:……………………………… $268,528.46
ANALYSIS:
The purpose of presenting a low-tourist month for analysis becomes
obvious when one looks at the financial data for the month of January
2000: that is, it demonstrates that tourism to Midway is essential for
the financial viability of the Midway Islands.
The net loss for operating Midway Atoll in January 2000 was
$268,538.46. The loss rises to $372,951.48 if one excludes the revenues
from tourism and visitors. Total fuel sales for that month were
$35,907.99, which is pale in comparison to the revenues from Guest
Operations ($104,423.02).
Again, the striking conclusion is that tourism is vital to the
financial success of Midway Atoll and that fuel sales fall far short in
making the Atoll financially solvent.
To this end, it is imperative that an experienced, committed entity be
in charge of the total operations at Midway Atoll. All of its
individual revenue sources are invariably linked and, as such, must be
under one chain of command. Anything less will result in financial
failure, leading inevitably to the closure of the airport, as well as
to the closure of the Midway Atoll itself.
TOTAL REVENUES:……………………………….. $558,162.92
TOTAL EXPENSES:……………………………….. $532,025.22
NET PROFIT:……………………………………….. $26,137.70
JULY 2001
ANALYSIS OF THE REVENUE/EXPENSE STATEMENT FOR THE MONTH OF JULY 2001:
Based on the above revenue/expense statement, one can conclude that it
is possible to make a profit in the operations of Midway Atoll if
reasonable rules of governance are applied. July 2001 was chosen
because it was the only month MPC made a profit. July was also chosen
because it is a peak tourist month and one in which a cruise ship did
not visit Midway. A cruise ship visitation during this time period
could have substantially increased the revenues. This same source of
revenues was lessened when the U.S. Fish and Wildlife Service (USFWS)
increased the restrictions for visiting cruise ships.
From the above revenue/expense statement, it is also clear that fuel
sales alone are insufficient to offset the administrative expenses
($532,658.91) of running Midway. It is therefore axiomatic that, based
on the foregoing data, all of Midway Atoll’s assets be utilized to
ensure its financial viability. For this reason, the Midway Atoll
should be viewed as a “histo-eco-tourist” destination.
Along these lines, it is important that the Midway Airport continue to
maintain its Type 139 certification by the Federal Aviation Association
(FAA) to ensure that the airport: (1) continues to act as an extended
range alternative landing site for twin-engine aircraft (ETOPS) which
cross the north central Pacific; (2) continues to be available to the
U.S. Coast Guard’s search and rescue missions and (3) continues to
ensure the “histo-eco-tourism” status of the Atoll.
Specifically, the FAA requires a Type 139 Airport Certification for
“the operation of land airports which serve any scheduled or
unscheduled passenger operation of an air carrier that is conducted
with an aircraft having a seating capacity of more than 30
passengers.” Without this certification, a sound fiscal policy is
impossible.
There are a potential number of other sources of revenue that are
“histo-eco-tourist” friendly. These resources can be developed if
this document is found to be acceptable to Assistant Secretary of
Interior, Judge Craig Manson.
Critical to the long-range success of operating Midway is a prior
written statement by the USFWS/DOI which delineates the specific rules
of operation and restrictions before a contract with the private sector
is agreed upon. This statement is absolutely necessary so that the
rules of the operation and restrictions are not changed after the fact,
which has led us to where we are today.
Moreover, a complete financial picture requires a thorough study to
determine the cost of upgrading Midway’s infrastructure to standard
operational levels, as well as the maintenance costs of such
infrastructure.
To conclude, the International Midway Memorial Foundation (IMMF) would
recommend a permanent Advisory Board of Governors including the USFWS,
National Park Service (NPS), International Midway Memorial Foundation,
U.S. Coast Guard, U.S. Navy, FAA and the private sector corporation
operating Midway Atoll. This Board would be responsible for overseeing
the best interests of Midway and report back to the DOI quarterly in
its first year of operation.
The International Midway Memorial Foundation (IMMF) is privileged to
have had the honor of preparing this document for Judge Manson’s
review. The Foundation also expresses its special appreciation to the
Midway Phoenix Corporation \1\ for its assistance in providing and
explaining the financial statements included above, and to the Boeing
Corporation for its support and willingness to assist in the production
of this document.
—————————————————————————
\1\ The IMMF wishes to stress that it has no financial or other
relationship with Midway Phoenix Corporation. The use of the financial
information is for the sole purpose of demonstrating that Midway Atoll
can be operated on a sound fiscal policy if reasonable rules of
operation and restrictions apply.
Prepared by the Board of Directors and Trustees of the
International Midway Memorial Foundation on January 8, 2003
James M. D’Angelo, M.D.
President/International Midway Memorial Foundation
ADDENDUM:
STATEMENT OF OPERATIONS FOR MPC
JANUARY 2000
Revenues:
Guest Operations:
Lodging………………………………………. $ 33,459.21
Per Diem Lodging………………………….. $1,300.00
Transient Lodging…………………………. $17,070.00
Clipper House Sales………………………. $2,881.49
Galley Sales………………………………… $21,736.51
Tavern Sales…………………………………. $1,201.25
Gift Shop Sales…………………………….. $6,189.95
General Store Sales……………………….. $7,747.42
Long Distance Revenue………………….. $9,519.19
Bike and Cart Rental………………………. $3,080.00
Mini Bar Sales………………………………… $238.00
Total Guest Operations Revenue:…. $104,423.02
Air Transport Revenue:
Airfare………………………………………… $21,285.91
Shipping and Weight Revenue……… $3,891.68
Total Air Transport Revenue:……. $ 25,177.59
Fuel, Airport and Equipment Operations:
Fuel Sales–Aircraft…………………….. $ 31,002.08
Fuel Sales–Boats………………………. 5.40
Fuel Sales–OSE………………………… 167.50
Fuel Sales–FWS………………………… 354.00
Landing Fees……………………………… 1,979.01
ETOPS………………………………………. 2,400.00
Total Fuel, Airport & Equipment:… $ 35,907.99